What is NEITI?
NEITI is an acronym, which stands for the Nigeria Extractive Industries Transparency Initiative. NEITI is the national version of a global movement aimed at ensuring that revenues from oil, gas and mining sectors aid economic growth and reduce poverty. That global movement is called the Extractive Industries Transparency Initiative (EITI). It is a coalition of governments, companies and civil society groups, advocating for full publication and verification of company payments and government revenues from oil, gas and mining. EITI is based on the principle that improved transparency and accountability is a necessary condition for sustainable development in resource-rich countries. Nigeria voluntarily signed on to this initiative in 2004 and is today seen as a leader among EITI-implementing countries. The NEITI Act, the law backing the operation of NEITI, was signed on 28 May 2007.
What are the Extractive Industries?
These are the oil, gas and mining industries.
Why focus on the Extractive Industries?
All over the world, the extractive industries generate enormous revenues that should fund growth and development. In reality, however, this is rarely so. Resource-rich countries under-perform when compared to less-endowed ones; and their citizens are often plagued by poverty. This close correlation between natural riches, under-performance and poverty has been identified as the “resource curse.” EITI aims to reverse the resource curse by promoting prudent management and transparent governance of extractive resources.
In Nigeria, the strategic nature of the extractive industries cannot be over-emphasized. The petroleum sector alone accounts for more than 40 percent of Nigeria’s Gross Domestic Product (GDP) and about 85 percent of foreign earnings. However, despite enormous resources generated from this sector, more than 50 percent of Nigerians live below the poverty level. Improved transparency in the management of revenue from this sector will clearly be critical to economic growth, peace and sustainable development in Nigeria.
How does NEITI promote transparency?
NEITI fulfils its transparency mandate through a number of activities, chief of which is the annual audits of payments made by extractive companies and revenues received from them by government. This annual monitoring beams the searchlight on a sector that is traditionally opaque, thereby opening its operations to the larger public and ensuring more transparent governance of these non-renewable resources. Apart from beaming the searchlight, NEITI also empowers citizens and civic groups with vital information that can be used to demand accountability from companies and governments.
What else does NEITI do?
NEITI, according to its Act, is mandated to disseminate the outcome of the audits, fix lapses identified by the audits, ensure transparency in the management of government investments in the extractive companies, and build capacities of government agencies with statutory responsibility to receive and report payments by extractive industries. NEITI also conducts studies and undertakes activities aimed at ensuring that all Nigerians benefit from their God-given resources.
Who conducts the NEITI audits?
The audits are commissioned by NEITI, but conducted by independent auditors, chosen through a competitive, international tender process that is open to reputable auditing firms from within and outside the country. The audits, however, must conform to international auditing standards.
What happens after the audits?
According to the Act, NEITI is mandated to share the audit report with the National Assembly and the Auditor-General of the Federation, who within three months of receipt should publish any comment or action taken by government on the audits. NEITI is also expected to disseminate the findings of the audits to members of the public, the media and civil society. NEITI also works with the various stakeholders to fix the lapses identified by the audits.
What difference has NEITI made?
NEITI has made some significant difference within three years of existence. NEITI commissioned the first comprehensive audits of Nigeria’s oil and gas industry for the period 1999 to 2004. The landmark audits covered three areas: financial, physical and process audits. The audits discovered discrepancies between payments by companies and receipts by government agencies and also identified critical lapses in the governance of the extractive sector. Working with other stakeholders, NEITI has reconciled most of the discrepancies in payments and is leading the effort to remedy the identified lapses. NEITI also conducted a study that has resulted into a savings of over $1 billion to government in three years. The existence of NEITI has also induced more transparency in the operation of the extractive sector.
Is NEITI against Extractive Companies?
No, NEITI is not. In fact, NEITI is a coalition of government, civil society and extractive companies campaign for good governance. Transparency, as promoted by NEITI, is not anti-business. Rather, it enables trust-building, openness, rule of law and competition, all of which are known to be critical factors for business growth.
How is NEITI organized?
NEITI has a governing board called the National Stakeholders Working Group (NSWG). This is a multi-stakeholders body made up experts in the extractive sector and representatives of extractive companies, civil society groups, labour unions and the six geo-political zones. The NSWG is responsible for the formulation of policies, programmes and strategies for effective implementation of NEITI’s mandate. The Executive Secretary, who also serves as the secretary of NSWG, is responsible for the day-to-day administration of NEITI and heads the NEITI Secretariat.
Is civil society part of the process?
Yes. Civil society is an integral part of NEITI. In fact, NEITI is the first government institution with a formalized engagement with civil society. Apart from having members of civil society on its governing board, NEITI also has a Civil Society Steering Committee, which spearheads NEITI’s outreach activities. NEITI also has a full time Civil Society Liaison Officer. Civil society plays a critical role in the campaign for revenue transparency by deepening citizens’ awareness and holding companies and governments accountable.
Is revenue transparency enough?
Revenue transparency is not a cure-all, but it is a good starting point. Ensuring transparency in companies’ payments and government’s receipts empowers citizens and civic groups with critical information that can be used to ask necessary questions, to hold their leaders to account and to demand good governance. Revenue transparency is thus a necessary first step in ensuring that leaders manage resources prudently for the interest of all citizens. Expenditure transparency and coordinated demand for accountability are needed complements to ensure good governance and sustainable development.
Can I be part of this campaign?
Yes, you can, and you should. Empower yourself with information from NEITI and about the extractive sector. Ask questions about how your resources are being used. Join forces with individuals and groups working on revenue and expenditure transparency. Hold your leaders accountable at all levels—local, state and federal.
(For more information, please check our website (www.neiti.org) or send us an email (info@neiti.org).
