Niger 2017 Validation

Introduction

Niger's Validation commenced on 1 November 2016.

On 26 October, Niger was validated against the 2016 Standard. 

Validation is the EITI's quality assurance mechanism and measures the progress countries have made in meeting the requirements of the EITI Standard. For more information about the country, visit the country page on eiti.org.

The Board's decision

Following the conclusion of Niger’s Validation under the 2016 EITI Standard, the EITI Board concluded that Niger has made inadequate progress overall in implementing the EITI Standard. In accordance with requirement 8.3.c.iii, the EITI Board agreed that Niger will be suspended and will need to undertake corrective actions outlined below. Having considered developments subsequent to Validation, the EITI Board also determined that Niger has made inadequate progress in meeting the EITI’s requirements on civil society engagement, which also implies suspension as per requirement 8.3.c.i. Progress with the corrective actions will be assessed in a second Validation commencing on 25 April 2019.

The Board recognised Niger’s pioneering role in demonstrating the relevance of the EITI to Africa’s largest uranium producer.  It recognised the country’s significant physical, institutional and strategic challenges as a land-locked country ranked at the bottom of the United Nations’ Human Development Index. Validation has confirmed that Niger’s multi-stakeholder group has actively engaged in all aspects of EITI reporting. Validation and subsequent assessments have also demonstrated the importance of the EITI to provide space for civil society oversight of the management of the extractive industries, amidst concerns from some stakeholders that civil society space is being closed.

In making its decision, the Board takes note of the Government of Niger’s efforts to ensure transparency provisions in the 2010 Constitution and expand EITI reporting to the oil and gas sector, including the midstream, and encourages it to implement this statutory openness through accessible, regular disclosure of information on the sector to its citizens.

Validation and subsequent assessments also put the spotlight on longstanding discussions among Nigerien stakeholders about the freedom of expression for civil society to demand information on extractives governance. The challenges for EITI Niger are to ensure freedom of expression about the sector for civil society and to establish robust mechanisms to channel voices not directly represented on the MSG into the national debate to ensure EITI implementation meets domestic challenges.

The Board welcomed ongoing efforts to automate EITI data collection as a first step towards mainstreaming EITI reporting under requirement 2-6. The Board takes note of these developments and looks forward to working together with Nigerien stakeholders on these issues. In the interim, the Board has determined that Niger will have 18 months to carry out corrective actions as outlined below.

Niger's progress by requirement

We recommend using Adobe Acrobat PDF reader to access all content and features in this document. You can download the program for free here https://get.adobe.com/reader/

Recommendations

The EITI Board agreed the following corrective actions to be undertaken by Niger. Progress in addressing these corrective actions will be assessed in a second Validation commencing on 26 April 2019.

  1. In accordance with requirement 1.2, companies should demonstrate that they are fully, actively and effectively engaged in the EITI process. In accordance with requirement 8.3.c.i, the company constituency is requested to develop and disclose an action plan for addressing the deficiencies in company engagement documented in the initial assessment and validator’s report within three months of the Board’s decision, i.e. by 26 January 2018.
  2. In accordance with requirement 1.3.c, the government must ensure that there are no obstacles to civil society participation in the EITI process. For the suspension to be lifted, the government should ensure that the civil society protocol is fully adhered to, including ensuring that civil society representatives are able to engage in public debate related to the EITI process and express opinions about the EITI process without restraint, coercion or reprisal.
  3. In accordance with requirement 1.4.a.ii, the MSG should ensure that its procedures for nominating and changing multi-stakeholder group representatives are public and confirm the right of each stakeholder group to appoint its own representatives. In accordance with requirement 1.4.b.ii and 1.4.b.iii, the MSG should undertake effective outreach activities with civil society groups and companies, including through communication such as media, website and letters, informing stakeholders of the government’s commitment to implement the EITI, and the central role of companies and civil society. Members of the MSG should liaise with their constituency groups. In accordance with requirement 1.4.b.vi, the MSG should ensure an inclusive decision-making process throughout implementation, particularly as concerns industry and civil society.
  4. In accordance with requirement 1.5.a, the MSG should maintain a current work plan that sets EITI implementation objectives that reflect national priorities for the extractive industries. In accordance with requirement 1.5.b, the work plan must reflect the results of consultations with key stakeholders. In line with requirement 1.5.c, the work plan must assess and outline plans to address any potential capacity constraints, identify and outline plans to address any potential legal or regulatory obstacles to EITI implementation, and outline the multi-stakeholder group’s plans for implementing the recommendations from Validation and EITI reporting. In accordance with requirement 1.5.f, the work plan must be updated annually.
  5. In accordance with Requirement 2.1.a, Niger must disclose a description of the legal framework and fiscal regime governing the extractive industries. This information must include a summary description of the fiscal devolution, an overview of the relevant laws and regulations, and information on the roles and responsibilities of the relevant government agencies.
  6. In accordance with requirement 2.2.a, Niger should ensure annual disclosure of which mining, oil, and gas licenses were awarded and transferred during the year under review, highlighting the technical and financial requirements and any non-trivial deviations from the applicable legal and regulatory framework governing license awards and transfers.
  7. In accordance with requirement 2.3, Niger should also ensure that the license holder names, dates of application, award and expiry, commodity(ies) covered and coordinates for all oil, gas and mining licenses held by material companies are publicly available.
  8. In accordance with requirement 2.4, Niger is required to document the government’s policy on disclosure of contracts and licenses that govern the exploration and exploitation of oil, gas and minerals through the EITI Report. This should include relevant legal provisions, any reforms that are planned or underway as well as an overview of contracts already published.
  9. In accordance with requirement 2.6, the MSG should provide an explanation of the prevailing rules and practices related to SOEs’ retained earnings and reinvestment. The government should also ensure annual disclosure of any changes in government ownership in SOEs or their subsidiaries, and provide a comprehensive account of any loans or loan guarantees extended by the state or SOEs to mining, oil, and gas companies.
  10. In accordance with requirement 3.2, the MSG should ensure future EITI Reports provide disaggregated production volumes and values for all key minerals produced in the year(s) under review.
  11. In accordance with requirement 4.1.a, Niger ensure that the materiality thresholds for selecting companies and revenue streams for reconciliation ensures that the exclusion of companies or revenues does not significantly affect the comprehensiveness of the EITI Report. The MSG is invited to consider whether setting a quantitative materiality threshold for selecting companies would ensure these aims are met. Niger should ensure that future EITI Reports clearly include all revenue streams listed under requirement 4.1.b in the scope of reconciliation. In accordance with requirement 4.1.c, the MSG should also ensure that the Independent Administrator assesses the materiality of non-reporting companies and government entities as well as provide its opinion on the comprehensiveness of the EITI Report. In accordance with requirement 4.1.d, the government should also ensure that future EITI Reports include aggregate information about the amount of total revenues received from each of the benefit streams agreed in the scope of the EITI Report.
  12. In accordance with requirement 4.3, the MSG and the Independent Administrator are required to consider whether there are any agreements, or sets of agreements involving the provision of goods and services (including loans, grants and infrastructure works), in full or partial exchange for oil, gas or mining exploration or production concessions or physical delivery of such commodities. Where the MSG concludes that these agreements are material, the MSG and the Independent Administrator are required to ensure that the EITI Report addresses these agreements, providing a level of detail and transparency commensurate with the disclosure and reconciliation of other payments and revenues streams. Where reconciliation of key transactions is not feasible, the MSG should agree an approach for unilateral disclosure by the parties to the agreement(s) to be included in the EITI Report.
  13. In accordance with requirement 4.4, the MSG should assess the materiality of any transportation revenues and disclose such revenues should they be assessed as material.
  14. In accordance with requirement 4.5, the MSG must ensure that the reporting process comprehensively addresses the role of SOEs, including material payments to SOEs from extractives companies, and transfers between SOEs and other government agencies.
  15. In accordance with requirement 4.6, it is required that the MSG establish whether direct payments from companies to subnational governments, within the scope of agreed revenue streams, are material. Where material, the MSG must ensure that direct company payments to subnational government entities are disclosed and reconciled in future EITI Report.
  16. In accordance with Requirement 4.9.a, the EITI requires an assessment of whether the payments and revenues are subject to credible, independent audit, applying international auditing standards. In accordance with requirement 4.9.b.iii and the standard Terms of Reference for the Independent Administrator agreed by the EITI Board, the MSG and Independent Administrator should:
  1. examine the audit and assurance procedures in companies and government entities participating in the EITI reporting process, and based on this examination, agree what information participating companies and government entities are required to provide to the Independent Administrator in order to assure the credibility of the data in accordance with Requirement 4.9. The Independent Administrator should exercise judgement and apply appropriate international professional standards[1] in developing a procedure that provide a sufficient basis for a comprehensive and reliable EITI Report. The Independent Administrator should employ his/her professional judgement to determine the extent to which reliance can be placed on the existing controls and audit frameworks of the companies and governments. The Independent Administrator’s inception report should document the options considered and the rationale for the assurances to be provided.
  2. ensure that the Independent Administrator provides an assessment of comprehensiveness and reliability of the (financial) data presented, including an informative summary of the work performed by the Independent Administrator and the limitations of the assessment provided.
  3. ensure that the Independent Administrator provides an assessment of whether all companies and government entities within the agreed scope of the EITI reporting process provided the requested information. Any gaps or weaknesses in reporting to the Independent Administrator must be disclosed in the EITI Report, including naming any entities that failed to comply with the agreed procedures, and an assessment of whether this is likely to have had material impact on the comprehensiveness and reliability of the report.
  1. In accordance with requirement 5.1.a, the MSG should ensure that the allocation of extractives revenues not recorded in the national are explained, with links provided to relevant financial reports as applicable.
  2. In accordance with requirement 5.2.a, the MSG should assess the materiality of subnational transfers prior to data collection and ensure that the specific formula for calculating transfers to individual local governments be disclosed, to support an assessment of discrepancies between budgeted and executed subnational transfers.
  3. In accordance with requirement 6.1.a, the MSG should agree a clear distinction between mandatory and voluntary social expenditures prior to data collection and ensure that material mandatory social expenditures are comprehensively disclosed in future EITI Reports. Where beneficiaries of mandatory social expenditures are a third party, i.e. not a government agency, the MSG should ensure that the name and function of the beneficiary be disclosed.
  4. In accordance with requirement 6.2, the MSG should consider the existence and materiality of any quasi-fiscal expenditures undertaken by extractives SOEs and their subsidiaries, ensuring that all material quasi-fiscal expenditures are disclosed in future EITI Reports.
  5. In accordance with requirements 6.3, the MSG should ensure that future EITI Reports provide the contribution of the mining, oil and gas sectors to GDP in absolute terms and an estimate of informal sector activity (6.3.a) as well as comprehensive extractives employment figures, in absolute and relative to total employment (6.3.d) for the year(s) under review.
  6. In accordance with requirement 7.1, the MSG must ensure that EITI Reports are comprehensible, actively promoted, publicly accessible and contribute to public debate. Key audiences should include government, parliamentarians, civil society, companies and the media. In accordance with requirement 7.1(e), the MSG should also ensure that outreach events, whether organised by government, civil society or companies, are undertaken to spread awareness of and facilitate dialogue about EITI Reports across country. The MSG should discuss the role the EITI could play in achieving national priorities and how it can generate public debate around natural resource use.
  7. In accordance with requirement 7.4iv-v, the MSG should ensure that future annual progress reports include an assessment of progress with achieving the objectives set out in the work plan including the impact and outcomes of the stated objectives, as well as a narrative account of efforts to strengthen the impact of EITI implementation on natural resource governance. This should include an overview of the multi-stakeholder group’s responses to and progress made in addressing the recommendations from reconciliation and Validation in accordance with Requirement 7.3

The MSG is encouraged to consider the other recommendations in the Validator’s Report and the International Secretariat’s initial assessment, and to document the MSG’s responses to these recommendations in the next annual progress report.


[1] For example, ISA 505 relative to external confirmations; ISA 530 relative to audit sampling; ISA 500 relative to audit evidence; ISRS 4400 relative to the engagement to perform agreed-upon procedures regarding financial information and ISRS 4410 relative to compilation engagements.

Next Validation date

A second Validation will commence on 26 April 2019.

Impact of the EITI in Niger

Documentation of progress

Impact: Objectives of EITI Niger’s successive work plans have expanded to the fight against conflicts of interest and integrating real-time disclosures in national systems. According to its own metrics of strengthening EITI reporting, the EITI has only had a moderate impact in Niger. While EITI reporting has successfully been expanded to the oil and gas sector, including midstream refining, its contribution to public debate has remained marginal at best. The most tangible impacts of implementation appear to have come as a result of crises, rather than through reform of national systems, and do not appear coordinated. The Court of Counts launched audits of government’s extractives revenues for the first time as a result of corrective actions required by the EITI Board during its first Validation, under the EITI Rules. The results of the Court of Counts’ audits, themselves delayed beyond the EITI’s two-year timeliness rules, are not integrated to the EITI process from which they originated. The EITI has also helped ensure space for civil society to demand information on extractives governance, with the EITI Board intervening to secure the release of civil society activists members of the MSG in 2014. Yet civil society, companies and donors have tended to commission research into hot-topic issues such as subnational transfers, production figures and environmental impacts entirely independently from the EITI. By circumventing the data collection and analysis tool that is the EITI, stakeholders have only weakened it.

With MSG members only tangentially accountable to their constituencies, discussions at MSG meetings appear to have remained detached from social, economic and political realities. Dissemination and outreach to areas outside Niamey that host extractives activities have tended to be one-way channels where the EITI Reports are distributed, without necessarily content adequate to meet local demands for information. While such events have provided outlets for popular debate about extractive industry management, the feedback mechanisms to MSG discussions and the drafting of key EITI documents appear to have been weak at best. Only by strengthening its own representativeness will the MSG ensure the information it works to disclose is pertinent to national priorities. Driven by the Permanent Secretariat, the MSG has been proactively involved in drafting large parts of Niger’s EITI Reports, accounting for over 90% of the work according to stakeholders consulted. While successive Independent Administrators have played only a supporting role executing the quality assurance and reconciliation of financial data, the time has come for the MSG to seek technically-proficient input to key scoping and materiality decisions in line with the ToR it had adopted for annual EITI reporting. The MSG’s online reporting project could be leveraged into a fully-fledged online data portal, mainstreaming disclosures under as many EITI requirements as possible into a single platform updated in a timelier basis than Niger’s EITI Reports. There is clear scope for linkages to ongoing domestic reforms and sources of international support, such as the initiative backed by (OSIWA) to develop online data portals in certain francophone African implementing countries.

Despite significant logistical challenges, Niger’s vibrant civil society has generated a robust national debate on public management of the country’s resources, from uranium to oil. However, these have tended to be more punctual activities rather than sustained outreach. There is significant scope to leverage the more active dissemination and outreach characteristic of the period until 2015, drawing on CSOs’ extensive experience and networks and more active engagement from government and industry. Whilst limited and combined with broader CSO consultations on extractive industry governance, dissemination and outreach have highlighted significant popular demand for information that EITI Reports could in part disclose, including subnational transfers, production figures and environmental provisioning. The challenge for EITI Niger is to establish robust mechanisms to channel voices not directly represented on the MSG into the national debate, from local communities to parliamentarians and anti-corruption watch-dogs, to ensure EITI implementation meets domestic challenges. The EITI has tended to remain in a silo in Niger as a parallel process more focused on compliance than on addressing locally-important challenges. While EITI implementation has led to important reforms such as annual, albeit often delayed, Court of Counts audits of government extractives revenues, the EITI has not fulfilled its potential as a platform for integrating such reforms into a coherent and consistent programme.

While the government’s rhetoric clearly links EITI to other anti-corruption efforts, the operational contacts have been only preliminary in practice. In policy terms, the government draws on concepts of transparency and good governance in its reform proposals, such as the long-mooted Charter on Good Governance in the Extractive Industries or the planned reform of the Mining Code, even if roll out has been slow. Several senior government officials consulted drew the link between Niger’s improvements in Transparency International’s Corruption Perception Index and its EITI implementation, even if such links appear tangential. Niger remains at the bottom of the United Nations’ Human Development Index and faces significant security challenges. Niger’s score in the World Bank’s Doing Business ranking has improved in recent years, from 174th in 2008 to 150th in 2017, but it remains un-rated by credit rating agencies (World Bank, 2017).

Sustainability: There is significant high-level political support for integrating at least some aspects of EITI reporting into government systems. Yet while senior government officials consulted highlighted the need to integrate EITI into national government systems, there is little evidence that the government has moved to disclose in a routine manner more information required under the EITI Standard to date aside from through the Court of Counts’ government extractives revenues audits (the Court of Counts was still working on finalising its 2013-2014 audit in January 2017). However, there is significant scope to work with government entities to ensure key EITI data most in demand is disclosed in a timelier manner. The MSG could start by using the EITI Niger website for the low-hanging fruit. It could review the physical copies of the Journal Officiel, scanning, uploading and categorising the full copies of what mining and petroleum contracts had already been published. The Tax Department’s (DGI) work on single tax identification numbers for all taxpayers should also significantly streamline EITI reporting, if rolled out to all revenue-collecting entities. The DGI could also leverage the MSG’s work on summary data tables of EITI data, already produced for the 2013 EITI Report, to start implementing a GFS-type revenue classification system, which would allow the government to disaggregate extractives revenues in real time in its Financial Operations Dashboard (TOFE). The ongoing reforms of the mining and petroleum cadastres in MMID and MPE should be leveraged to publicly disclose license information in real-time. The MSG has the potential to act as a coordinating platform implementing a standard of open extractives data.

Despite the political change of the 2010-2011 period, the prime ministerial decrees institutionalising the EITI have not been updated since 2008. While the decrees provide legal backing for EITI implementation, there is an urgent need – recognised by the MSG itself – to revise the framework in light of current practice. The government has consistently provided funding for EITI implementation since inception, earmarking funds within the Prime Minister’s Office to EITI Niger during the elaboration budget in September-November every year. The AfDB’s PAMOGEF, a key source of funding for non-core activities, was extended by six months from its original end date to June 2017, but the MSG will need to approach development partners to secure funding for activities such as dissemination and developing a beneficial ownership register.

Innovations and lessons learned: The MSG has expanded the scope of Niger’s EITI reporting beyond basic requirements even before the EITI Standard was agreed in 2013, including the refinery SORAZ in the scope of reporting since the 2011 EITI Report and some information on artisanal and small-scale mining until the 2014 EITI Report. While this has in part addressed local concerns, there is scope for expanding the granularity of disclosures about the Zinder refinery in particular to support the vibrant debate about the future direction of Niger’s oil and gas industry. With debate raging over the channels for exporting part of Niger’s forecast 60,000 bpd production once the Agadem oil production is expanded in coming years, more detailed information about pipeline transport and refining as in Chad’s EITI reporting could would serve more meticulous public debate.

Civil society led dissemination and outreach in local languages until 2015, despite capacity and logistical constraints, was another key strength of the EITI Niger process. While security priorities have affected the level of resources dedicated to public outreach, the vibrant public debate over extractives governance including in resource-rich areas provides fertile ground for EITI implementation to provide at least part of the information in highest demand. As highlighted by many CSOs consulted, the quality of Niger’s laws and regulations is rarely matched by their implementation. By providing a mechanism for public oversight of the implementation of extractives governance, the EITI should provide an effective channel for debate amongst the broadest cross-section of stakeholders including grassroots community associations, unions, traditional rulers, national NGOs and the media.

In a process driven by the Permanent Secretariat, the MSG has been particularly engaged in the process of EITI reporting, which appears to have become a routine compliance procedure for most companies operating in Niger’s mining and petroleum sectors. The MSG now faces the twin challenges of drawing on third-party professional expertise to ensure the quality of its EITI reporting continues to improve on an annual basis, while ensuring that its findings and recommendation build on and feed into on-going reforms. The MSG is highly encouraged to draw on the professional opinion of its Independent Administrators as it builds its online reporting platform. It must also liaise closely with other reformers in government to ensure EITI Reports are effective trackers of the implementation of reforms and provide pertinent recommendations for further reforms. To capitalise on its potential, EITI Niger must become more than the sum of its parts.