Extractive Sector Openness, Anti-Corruption, and Economic Recovery

The opaqueness of Nigeria’s oil and gas sector is an age long challenge which is also embarrassing. It has defiled previous reforms efforts and poised to thwart future efforts if special care is not taken to eradicate the opaqueness in Nigeria oil sector. The complications of Nigeria oil sector to proposed reforms lies on the long stay in politics by Nigeria military. The military regimes confused Nigerians with reform pretenses but ended up plundering the extractive sector to the extent that many former military top brass is speculated to be wealthier than some West African states.

Within these periods, that also include brief civilian regimes, there are reports that about $400billion dollars have been stolen from oil money since independence in respective of the rules left behind by the colonial masters and the 1990s and early 2000 oil and gas reforms. Between 1999 and 2016, the same sector has lost an unbelievable amount of money that could have remedied some of the most crucial development challenges around education, health and infrastructure.

The big questions remain “why has openness eluded Nigeria in the extractive sector even when the players are majorly from countries that are seen as open societies? Why has corruption in the oil and gas become more entrenched than the production of crude itself? Why has it been difficult for extractive sector MDAs and NPPC to comply with the provisions of Freedom of Information law? Why is there no clear knowledge of what quantity of crude that Nigeria produces? Why is Nigeria not always bothered to recover unpaid funds owed it by oil companies but prefers to source for loans to fund the 2017 budget? Why does contract, law and policy infringements, rebranded as remediation issues, almost impossible to remedy over several years?

An attempt to proffer response to the above questions will draw one much closer to the economics of openness or put succulently the implication of openness to a nation whose major source of funding comes from this opaque sector – oil and gas.

One may be quick to place the blame on the regulatory agencies, but on a second though, it is not possible for a sector that has too much unaccountable funds to listen to anybody on reforms. They simply will prefer the status quo to remain.  At some point, it was noted that NNPC’s recurrent expenditure was about a little higher than that of the entire federation.

Therefore extractive sector was unable to respond to FOI laws because they have too much funds to shut almost everybody up, including the possibility of handling those from where the FOI request emanated. With near zero transparency in critical areas of oil and gas sector, there is no way Nigeria can get appropriate revenues.

Nigeria has lost a huge amount of monies to lack of openness in the oil and gas sector.  And, this is why, no matter how you look at its application, the current anti-corruption war, makes a lot of sense. It makes lesser sense when many efforts are not channeled towards sanitizing the oil and gas as well as mining sector which accounts for over 80% of Nigeria’s annual income. If extractive sector, which contributes more than 80% of Nigeria’s income, is left to corruption in this magnitude, what then is the fate or hope of the nation? If the majority of Civil Society Organizations are not speaking out against extractive sector corruption, then they should be checked if a spell has been cast on them. The economy is tired of being criminally milked. That is why it suddenly went into recession without warning.

To revive the extractive sector by riding it of fraud, waste and abuse, means reviving Nigeria’s economy. The strict application of many anti-corruption strategies and laws will certainly aid the economic recovery efforts. With the advent of Open Government Partnership, Open contracting policy and Beneficial Ownership register, can the corruption in extractive sector end? Yes, if the stakeholders strictly apply the rules and CSOs determined to stretch violators. No, if there is no extra measure that will be put in place to correct loopholes, then these reforms will end up in the note book.

OGP is government’s intention to partner with stakeholders on public openness. The extractive sector should be used as a pilot for the early and easy entrenchment of openness which will eventually drive away extractive sector corruption. When the extractive sector is open, corruption will be driven away and the economy will essentially bounce back. There is a strong organic link between extractive sector openness, anti-corruption fight and Nigeria’s economic recovery. This is the reason why all Nigerians should support the roll out of Open Government Partnership.

Emeka Ononamadu

 National Coordinator, PWYP-Nigeria