A big deal

Nigeria undergoes Validation

This is part one of a three-part series of blogs that the Secretariat will be publishing in the coming weeks. The series draws on the early lessons and findings from Validation and brings the readers’ attention to the importance of Validation – not just an assessment tool, but also as a means of improving implementation and relevance of the EITI, learning from each other’s experiences and refreshing and energising processes in countries.

On the occasion of the 77th UN General Assembly, HE President Muhammadu Buhari reaffirmed his government’s commitment to the EITI: “We voluntarily signed up to EITI because we are convinced that transparent governance is an imperative for resource-rich developing countries like ours. Through the work that our national chapter of EITI has done over the years, it is clear that our faith is not misplaced. The National EITI has been empowering citizens with critical information they can use to hold government and other players in the extractive industries to account, and make recommendations that drive reforms in these strategic sectors of our national life.”

Last week, Nigeria EITI (NEITI) published a policy brief calling on President Buhari to “take the lead and infuse urgency into the process of passing a new law for the Nigerian petroleum industry.” NEITI said that “clear, unambiguous rules, predictable policy-making and efficient regulations have been lacking in Nigeria’s petroleum sector”, adding that NEITI’s “2013 audit of the oil and gas sector revealed that $10.4bn and N378.7bn (N3.2 trillion at the current exchange rate) were lost as a result of under-remittance, underpayments, inefficiencies, theft or absence of clear fiscal regime in Nigeria’s oil and gas sector”.

These figures are disputed. Nonetheless both these speeches highlight an important aspect of Nigeria’s implementation of the EITI: it is meaningful and has political support at the highest level. Given the size of the sector in Nigeria and its relevance for Africa’s second largest economy, this is a big deal. And as the EITI continues to become the leading platform for global progress on beneficial ownership disclosure, it has the potential to become an even bigger deal. It’s worth remembering in this regard that in May 2016 at the UK Summit on Tackling Corruption, President Buhari committed his government to “establish a transparent central register of foreign companies bidding on public contracts and buying property”, adding “we welcome the new 2016 EITI Standard, in particular, the requirements on beneficial ownership and the sale of the government’s share of production”.

Time for a check-up

Both of these events come at a time when Nigeria is undergoing Validation under the EITI Standard. Validation (think of it as taking the EITI to the garage for its regular service) is not new for Nigeria, and in fact Nigeria is compliant under the EITI Rules. It is, however, the first time that Nigeria – or any country for that matter – undergoes Validation under the EITI Standard. Not to beat a dead horse, but yes, this is also quite a big deal. Going back to the garage analogy, it’s like doing your first annual service after having upgraded from a Model T to a Tesla; you’re bound to find some surprises.

Working out the dents

For the EITI Board too, Validating a country like Nigeria is, well, a big deal. Part of the reason for NEITI’s success is that NEITI is first and foremost perceived to be an independent government auditing agency with a far-reaching mandate under the NEITI act. NEITI has an active communications department and is a regular actor in its own right in the country’s media. At the same time, NEITI’s double mandate to implement the NEITI Act and the EITI Standard raises important questions. To what extent can one expect Nigeria’s EITI multi-stakeholder group (known as the National Stakeholder Working Group or NSWG) to exert effective oversight over an independent government agency that is directly accountable to the President? Is it a problem that the NSWG has developed into more of a consultative body than a driver of implementation when the process is clearly producing tangible results?

Staying on the road

These are some of the questions that the EITI Board will be discussing at its next meeting in Astana later this month. One thing that is clear either way is that this Validation comes at a goodtime for the NSWG to take a step back and reassess a number of decisions that will help Nigeria make a full transition to the Standard. As one former NSWG Chair explained it to us, “Nigeria ran far ahead of the other implementing countries, developing the EITI and disclosing on areas that were not required by the EITI Rules. With the Standard the EITI has caught up with Nigeria and in some areas even gone beyond. This Validation can help Nigeria regain its pole position by highlighting the gaps”.