BICC: Occasional Paper V „Potential and reality of NEITI“

BICC_Niger Delta

Peace in the Niger Delta, following the implementation of the amnesty for militants in October 2009, is very fragile. This period of fragile peace is the right time to consider how some of the problems surrounding oil extraction in the Niger Delta can be addressed. Arguably, the violent conflict in the Niger Delta is a result of accumulated grievances related to the resource curse. As the international Extractive Industries Transparency Initiative (EITI) is purported by many as a means to overcome such a resource curse, this Paper investigates the extent to which its Nigerian version, the Nigeria Extractive Industries Transparency Initiative (NEITI) can mitigate the resource curse in the Niger Delta.

The analysis shows that a lack of transparency and accountability related to the centralization of oil extraction management was indeed partly responsible for the negative outcome in the Niger Delta. Not all the suffering in the Niger Delta, however, can be explained merely by the opaque governance of the oil revenues. Other explanatory factors relating to the Nigerian state are its multi-ethnic and flawed federal character as well as its low developmental effectiveness. Some practices of the international oil companies and the illicit trade in oil represent further impediments to overcoming the resource curse. Hence, revenue transparency initiatives have a certain, albeit limited, potential to mitigate the resource curse in the Niger Delta. The Nigeria Extractive Industries Transparency Initiative (NEITI), launched in 2004, produced two important audit reports in 2006 and 2009, which documented an appalling lack of government oversight over production volumes and oil companies’ calculation of payments. The publication of revenues may help the Niger Delta people to hold the government accountable for its spending decisions. However, there are limitations to NEITI’s potential to contribute to greater popular participation in decision-making and to enhanced accountability of the government and oil companies, arising from NEITI’s design and the context of a ‘petro-state’:

The study comes to the conclusion that NEITI’s impact is clearly limited by its political context. Mere transparency may not lead to greater government accountability if the precondition of free and fair democratic elections is not given. Being in fact a government institution, NEITI is subject to the dynamics of a ‘petro-state’—a lack of institutionalization, a tendency to personalized rule and politics of patronage. Within the confines of the Nigerian state, NEITI does not seem able to generally improve government and oil company accountability as it is dependent on other Nigerian political and judicial institutions to have an impact. NEITI itself is not the driver of change, but other political forces, such as the group of Nigerian reformers, Nigerian NGOs under the umbrella of Publish What You Pay, and the international community (EITI, international donors, the auditors and consultancy firms), are the agents of change.

Please find the full pdf version of Occasional Paper “Niger Delta” at:

http://www.bicc.de/uploads/pdf/publications/papers/occ_paper_05/occasional_paper_V_06_10.pdf

For more information please contact:

Susanne Heinke, spokesperson BICC, pr@bicc.de, ++49 (0)228 911 96 44