Executive Summary

The Nigeria Extractive Industries Transparency Initiative (NEITI) is a subset of the global Extractive Industries Transparency Initiative (EITI), and for some time NEITI has been regarded by many actors as the global EITI's flagship programme, or at least one of the two foremost national chapters of EITI (along with Azerbaijan's.) As Peter Eigen, chairman of the board of EITI, put it, with respect to global EITI: The great moment of triumph was when President Obasanjo of Nigeria said I am going to allow the companies operating in Nigeria to publish what they pay to me, to my government, and in fact I will make it mandatory: they have to publish what they pay and I will publish what I received. That was basically the breakthrough.

This report seeks to explore the extent to which NEITI has lived up to its goals, potential and reputation, in terms of two broad goals: improving transparency, on the one hand, and fostering better governance (including civil society participation), on the other. It reaches a few broad conclusions. The six main points outlined below are expanded in a more detailed list of conclusions at the end of this report.

1. NEITI's shining success consists of the audit reports of the 1999–2004 oil sector accounts themselves. These reports, which are publicly available, contributed to significantly better transparency in Nigeria's oil industry, collecting and publishing an array of detailed and useful information for the first time. Nothing remotely like this has been done before, let alone published. The reports went far beyond the basic core requirements of global EITI; it produced not only raw data on the industry and on tax and other fiscal matters; but it also provided crucial and useful insights into processes involved in the industry that have helped many insiders and outsiders to see the oil sector in overview for the first time.


2. EITI and NEITI did not drive reforms in Nigeria. Instead, they piggybacked upon major reforms that were happening anyway. NEITI was allowed to flourish, temporarily, amid the reformist political climate from 2003 to 2006. Although NEITI did not drive reforms, it did shape some of the outcomes – notably the audit reports – of processes of reform.


3. Measured against EITI's and NEITI's broader goals of fostering better governance and accountability, the initiative has not shown impressive results, and so far it is hard to see how better transparency has led, in turn, to better governance in Nigeria.


4. Civil society is supposed to be a key end user of EITI reports, but NEITI has performed poorly in this respect. NEITI's attempts to build capacity in civil society have shown meagre results: although it has informed civil society it is hard to find evidence that it has significantly empowered or energized it, or enabled it in any serious way to 'call Nigeria's rulers to account', as some have put it. This cannot be achieved simply by providing civil society with information – including the publication of a popular audit to make otherwise hard-to-understand audit reports comprehensible to a much broader audience. Some non-governmental actors have expressed the hope that is a matter of not having put enough effort and resources into supporting civil society; this report argues that the problems involved are deeper and more structural and will not be overcome simply with more effort in support of civil society initiatives.


5. The audience that has made most meaningful use of the NEITI reports are mostly located within elite circles and in government. These circles include the National Assembly, various ministries, advisers, policy-makers, and so on. NEITI can point to some successes here. The reports may also have been a boon to oil industry consultants in particular.


6. Measured against the narrower goals identified by David Goldwyn in his dealings with Nigeria's rulers – to increase transparency and trust in the system – a stronger, though still not overwhelming, case can be made for calling NEITI a success.

The political momentum for NEITI has now mostly stalled, although prospects for future reform have not withered entirely. A second NEITI report including the 2005 data was finalized in 2007, but was only published in August 2009. The initiative is not entirely dormant, but the vitality that used to characterize NEITI has largely ebbed Given that Nigeria has often been held up as arguably EITI's showcase project (with the possible exception of Azerbaijan), these conclusions potentially pose serious questions for the global initiative as a whole. These statements should be accompanied by a note of caution. First, Nigeria is a special case; as Goldwyn noted:

Nigeria was sui generis. The reasons they wanted such a broad-based audit are unlikely to be repeated elsewhere: every country has a different problem. For example, in Latin America, most of the data is already public. In Trinidad you have a different problem: educating the public in a polarized political environment; in Peru the issue is sub-national derivation.

It is the personal belief of this author, based on some 15 years' research into the politics of oil-producing countries along the West African coast, that it is often a mistake to extrapolate lessons drawn from mineral-dominated states such as Nigeria and apply them to other types of countries. Whatever conclusions are reached in this report about the effectiveness or otherwise of transparency in promoting positive change, the only safe lesson to draw is that these are applicable to Nigeria – and perhaps partly to some other mineral-rich states. Mineral resources provide rulers with the potential for unusually strong untrammelled power, severely curbing the citizenry's influence. These constraints are often not present in non-mineral states, where the causal link between transparency and better accountability and governance is likely to be entirely different. If transparency has not had the desired effects in Nigeria, as this report suggests, that does not mean it cannot work elsewhere.

What is more, transparency reforms may take very many years to bear fruit, and it may simply be too early to draw firm conclusions. In particular, Nigeria has embarked on but has not completed the process of validation – under which candidate countries have to meet certain quite intrusive standards. If civil society cannot organize properly, or if there is not a free press, for example, validation will not happen.

Nigeria has until 9 March 2010 to complete this process. This, plus the fact that this was an extremely limited research project in terms of funding and time allocated, suggest strongly that more research in years to come would be worth considering.