Policy Alert to organize citizens as centre of beneficial ownership, contract transparency reforms

Policy Alert, a citizens’ group in Nigeria, has conceptualized a new project titled: #WetinWeGain2 – Putting citizens at the centre of beneficial ownership contract transparency reforms in Nigeria, according to its Executive Director Tijah Boton-Akpan.

Policy Alert’s Executive Director Tijah Bolton-Akpan speaking during a workshop on Extractives Sector Data Journalism Workshop organized by the group in Aldgate Congress Hotel, Port Harcourt. September 15, 2021.

Policy Alert, which organized an Extractives Sector Data Journalism Workshop on Wednesday, September 15, 2021 in Port Harcourt to train journalists on the effective use of data journalism tools in their investigative report on the Nigerian extractives sector, described the project as one that seeks to push the stakes for the disclosure and uptake of extractive sector payments, beneficial ownership, contract details as well as information on other related reforms in Nigeria’s extractive sector as tools for more effective social accountability and improved community beneficiation.

In a concept note they developed the group said, in the course of their work on the initial #WetinWeGain Campaign, they have found that most stakeholders in extraction-affected communities do not understand current developments on beneficial ownership and contract transparency in the country, how their communities are implicated, how these new disclosures can improve their role as accountability actors, and the overall relationship between the governance of natural resources in their backyards, the resulting revenue flows to government, and the delivery of public services to their communities.

“Although these ongoing reforms have huge potential for transforming the way communities engage and how effectively they can access benefits from natural resources, current discussions no them have been limited to high-level policy spaces related to multi-stakeholder initiatives such as the Nigeria Extractive Industries Transparency Initiative (NEITI) and the Open Government Partnership (OGP). This project seeks to generate evidence, create public awareness, strengthen demand-side capacity, especially at the grassroots, and influence effective implementation of these extractive sector reforms. The project will focus on four states in the Niger Delta – Cross River (mining), Akwa Ibom, Rivers and Delta (oil and gas). It is a follow-on project to our earlier work, #WetinWeGain, which we implemented in 2019-2020 in partnership with Publish What You Pay (PWYP-UK),” Policy Alert added.

On the Context of the Project, the group wrote:

“Nigeria’s situation is a paradox of plenty in which huge natural resource wealth has failed to translate into economic wellbeing and sustainable development. The country, for instance, earned N24.1 trillion from the oil and gas industry between 2015 and 2019, representing 60.25 per cent of the combined budget figure during the period, yet it ranked 161st out of 189 in the 2020 Human
Development Report, and recently overtook India as the world’s poverty capital. Natural resource wealth comes with an inherent incentive for capture, corruption and rent-seeking behaviour. To worsen matters, citizens are often not involved in the production process or the computation of natural resource receipts. While initiatives such as the Extractive Industries Transparency Initiative (EITI) and more recently the Open Government Partnership (OGP) are already leading to supply-side improvements in availability of extractive and fiscal data, the resulting surge in transparency has not been sufficiently converted into effective demand by citizens for accountability, especially
at the grassroots.

“The disaggregation of payments to government and its entities by companies mandated to report payments to foreign governments under the European Union Accountancy and Transparency Directive and equivalent UK and Norwegian laws, or the Canadian Extractive Sector Transparency
Measures Act (ESTMA), has aided civil society actors such as ourselves to inform the public about the value of payments made by extractive companies and which government bodies were receiving payments for which operational projects in which locations. This has further strengthened the resolve and capacity of communities to demand improved benefits from government and companies. In addition to annual audits by the Nigeria Extractive Industries Transparency Initiative (EITI) such as the NEITI Oil and Gas Audit, the NEITI Solid Minerals Audit and the NEITI Fiscal Accountability and Statutory Disbursement (FASD) Reports, these disclosures provide evidence for accountability actors, especially community members to make a stronger case for a better deal. However, it has been noted that with the lack of access to extractive contracts by the public and the veil of secrecy around actual ownership of companies operating in the sector, it is always an uphill task to connect the dots between responsible actors, obligations and benefits, leaving room to speculation, violations of rights, and conflict.

“Contracts between governments and extractive companies for the exploitation of oil, gas and minerals are important documents that detail how, when, where, who is involved, and at what cost extraction occurs. While the constitution and other laws guiding business in the extractive sectors in Nigeria are publicly available and accessible, the specific contracts entered into by government with the companies, as well as associated licenses and permits, are shrouded in secrecy. The practice of hiding extractives contract details in Nigeria has over the years stolen from citizens the power to ensure that the best deals which most benefit development are attained and that they are effectively implemented. It has also encouraged massive corruption in the sector.

“Beneficial Ownership disclosure, which exposes conflict of interests among Politically Exposed Persons (PEPs), derives from the need to trace criminals who hide their identities behind corporate structures to defraud the country through corruption, tax evasion, undue favouritism, money laundering and illicit financial flows. Until recently, it was nearly impossible to determine who the real owners of extractive investments in Nigeria are. This situation seriously undermines development for the country. According to “The Trillion-Dollar Scandal,” a 2014 report by the ONE campaign, at least $1 trillion (more than seven times the amount of total aid flow to developing countries in 2015) is lost by developing countries every year to the use of anonymous companies and other fraudulent schemes.

“Nigeria launched Africa’s first public beneficial ownership register in late 2019, covering extractive companies and linked to Nigeria Extractive Sector Transparency Initiative (NEITI). Subsequent company registry reforms have provided an enabling legal framework for the implementation of beneficial ownership even beyond extractive sector. In the course of carrying out action research on transparency, accountability and participation in Nigeria’s extractive sector, Policy Alert explored links between Savannah, Seven Energy, Frontier Oil and Universal Energy. We discovered that Nigeria’s Beneficial Ownership register contained data that raised red flags. For example, the register listed Akwa Ibom Investment and Industrial Promotion Council as a 12.6% equity owner of Universal Energy Resources Limited, although, according to information available from documents we analysed, Akwa Ibom State sold its shares in Universal some years ago. A huge disparity in the equity stake of entities in an extractive project/company creates an opportunity for illicit financial flows and government revenues to emigrate into private pockets. Another
instance is the ongoing 2020 marginal field bid round, which had long been expected to restore predictability to the system for awarding oil licenses, but has unfortunately been marked by secrecy and appears to be going the way of previous rounds. A push for transparency in the remainder of the round would, in combination with Nigeria’s current contract and beneficial ownership disclosure obligations, open up details of the new operations to community members and thereby provide powerful and valuable evidence for social accountability.

“A strong implementation of reforms on Beneficial Ownership Disclosure, Contract Transparency, and Mandatory Payments to Government reporting will strengthen accountability and transparency in Nigeria’s extractive sector and help government plug financial leakages and maximize receipts and rents from natural resources necessary for quality service delivery to citizens. The foregoing becomes even more apt at this time given the positive policy context of Nigeria’s commitments on extractive transparency, especially payments disclosure, contract transparency and beneficial ownership, within the EITI and the Open Government Partnership (OGP). Our project will also ride on the wave of recent global developments in the field of Beneficial Ownership and Contract Transparency. For example, Publish What You Pay (PWYP) International had launched the #DiscloseTheDeal campaign last December to promote global interest and progress on Contract Transparency. The EITI International Secretariat on its part launched a global advocacy campaign on Beneficial Ownership on February 15, 2020. Mark Robinson, EITI Executive Director said: “The project will seek to mobilise political and stakeholder
commitment and build the technical capability required to publish and use complex data. It has the potential to scale beyond the extractive sector and beyond the programme’s initial group of focus countries.””

Policy Alert wrote the following as Statement of the Problem that the project aims to solve:

“Secrecy of contracts and company ownership in the extractives sector together combine to wreak untold havoc on revenues and continue to undermine the ability of citizens, particularly host communities, to demand accountability from government and companies. Over the years, billions of dollars have been lost in revenue leakages due to such secrecy. Until recently, Nigeria’s laws did not have express provisions requiring beneficial ownership disclosure. The 2020 Companies and Allied Matters Act (CAMA) in section 119 and 120 now requires such disclosure by persons who indirectly control a company. Beginning January 1 2021, Nigeria has also been required as an EITI implementing country to disclose extractive contracts. However, these transparency reforms will have limited utility for accountability without corresponding demand by citizens for accountability.

“It is not the first-time transparency in the sector has failed to translate to accountability. Over sixteen years of publishing annual audit reports on the oil, gas and mining sectors have led to what could be termed a “data overload” from the sector. While these reports have several remediation issues requiring policy fixes in the sector, with most of the issues recurring in reports for every subsequent year, community actors, civil society advocates and the media have not sufficiently utilized the available data to demand accountability and push supply side actors to action. Most
citizens are data illiterate, and very few journalists have the skill or patience for investigative reporting. Without upskilling, the increase in data supply appears to be creating confusion rather than clarity for demand-side actors, while most discussions on extractive sector transparency and accountability are limited to high level policy spaces, excluding community voices. It is therefore illusive to assume that the advent of contract transparency and beneficial ownership reforms will automatically translate to accountability in the sector. This proposal seeks to plug the existing gaps by providing citizens the tools that will enable them utilize recently available data in ways that will strengthen their voice and agency in extractive sector decision making while promoting more effective service delivery.”

On the Project Approach, Policy Alert wrote:

“This project will utilize a three-pronged approach, namely research, public awareness and advocacy, and demand-side capacity building. There will be three research activities. The first will be a baseline survey on citizens attitudes, uptake and utilisation of extractive sector disclosures, data preferences, and willingness to use data. The second will be a datathon where data buffs will scrape and organize data from various reports, contract documents and the beneficial ownership portals. The last will be a desktop and field research to investigate and publish four mini-case studies related to specific extractive projects earlier analysed at the datathon. This will provide evidence for community-led advocacy for stronger implementation of reforms and demonstrate the utility of recent domestic and international reforms on beneficial ownership, contract and payments disclosures for improved accountability and enhanced benefits for host communities.

“The capacity building component will involve a two-day Extractive Sector Literacy and Data Analytics Workshop for media, civil society and community representatives in each of the four states; a one-day Virtual Learning Session on Beneficial Ownership and Contract Transparency and a series of one-day Capacity Building Workshops for media on “Using investigative journalism to demand extractive sector accountability.”

“On public awareness and advocacy, we propose to develop and launch a citizen-friendly extractive sector news and open data portal, conduct advocacy visits to covered entities, produce advocacy handbooks for journalists and advocates, produce factsheets, policy briefs, explainer videos, commission blogposts and investigative reports, run a social media campaign, organize community-level meetings and hold a Policy Roundtable to disseminate findings and engage high level policy actors.

“The project will focus on four states in the Niger Delta – Cross River (mining), Akwa Ibom, Rivers and Delta (oil and gas). These four states were selected because they are all covered in the most recent NEITI Fiscal Accountability and Statutory Disbursement (FASD) 2012-2016 Report, and all have projects covered in recent Payments-to-Government reports. They also present a diverse range of policy responses on beneficiation.”

Finally, the following were listed as the Project Goals and Objectives

“Project goal:
A transparently and accountably managed extractives sector which contributes to sustainable social and economic development for the benefit of Nigerian citizens.

“Expected results
– Reduction of fiscal leakages and increased revenues for the Government of Nigeria.

– More democratic and citizen-responsive management of Natural Resources in Nigeria.

“Specific objectives
1. Investigate the linkages between extractive sector disclosures (such as NEITI Audit reports, FASD reports, payments to government data, contracts, beneficial ownership information, etc) and community beneficiation in the Niger Delta.

2. Influence policy level action and create public awareness in four states and nationally around ongoing reforms on contracts, beneficial ownership and payment disclosures in the extractive sectors.

3. Build capacity of citizens, particularly civil society, media and extraction-affected communities, to utilise evidence from EITI data, payments-to-government reports, extractive contracts and beneficial ownership disclosures as tools for extracting accountability from government and companies.”