The mining sector is one strategic sector in Nigeria for revenue generation, employment creation and diversification of the economy. The establishment of mining buying centers has the potential of not only reviving the solid mineral sector but also establishing Nigeria as an important Mining destination and mining contribution to the overall sustainability of the Nigeria economy. Buying centers will   also ensure minerals are properly priced and sold. It is said that without effective buying   centers, underground sales had robbed both the local miners and the country of expected financial gains through non-payment of taxes, royalties and other beneficiation from the mining sector in the country.

Nigeria is endowed with abundant mineral resources occurring in over 500 locations spread across the 36 states of the federation and the federal capital territory, Abuja. In Nigeria, the high prospective minerals /metals include the following: metallic which include gold, iron ore, cassiterite, columbite, tantalite, lead-zinc and copper ores, Industrial minerals like Limestone, brayte, Kaolin, dolomite, silica and bentonite & other clays, feldspar, Marble; energy minerals like coal, bitumen, exotic gemstones like sapphire, emerald, Tourmaline, Aquamarine, Garnet, Topaz, Zircon, Amethyst Citrine and Smoky quartz and dimension stones. And also the categorization of some minerals with high economic potentials for further development which includes barytes, lead, Zinc and gold.

The government mining buying centre and the private mining buying centres should be strengthened and all the necessary policy and institutional framework towards the operation and maximization of the benefit of this important value addition process encouraged to ensure optimization of benefit of the sector to all the stakeholders.

Nigeria have more than 93 certified Private mineral buying centers and more than 10 prototype Minerals Buying Centers created by the federal government across the country but these has been largely ineffective and underutilized. With these centers the country would be able to achieve the following; the maximization of profit from the artisanal miners and other stakeholders including the government, control of illegal mining dues, improved profit maximization, provision of the necessary infrastructure and regulatory framework across the value chain, enforcing compliance by mining operators on payment of royalties and mineral revenue.

The buying centers are to serve as standardization centers to enable artisanal and small miners’ cooperatives and operators receive fair premiums for their labour as they concentrate on production. The centers will indirectly ensure the enforcing of compliance by mining operators on payment of royalties, taxes and others on minerals.

The absence of solid mineral buying centers and lapidaries has enabled the flourishing of cartels who engage in illegal sale of minerals and illegal mining of the country’s minerals, with resultant loss of mineral revenue from taxes and royalties. One of the biggest problems we have in mineral exploitation in the country is smuggling. Some of these solid mineral resources were exported and sold back to the country at exorbitant rates and without the government and other stakeholders deriving the needed benefits. It is not good for us to take gold out of Nigeria and get it registered as gold from Niger, Togo or Ghana. The establishment of various mineral buying centers and lapidaries across the relevant zones in the country would be a good one as such step will encourage the artisanal miners to sell minerals in-country and production can be monitored for taxes and royalty collection.

Buying centers should be standardized to reflect the kind of KC process. The Kimberley process was set up in 2003 as a certification scheme to clean up the diamond supply chain and make sure that the diamond trade does not finance armed conflict. The ‘KP’, as the process is known, requires member states to set up an import and export control system for rough diamonds. The buying centres should explore the ideas of the Kimberley process.

To achieve the optimization from the buying center the government needs to do the following; Engagement and communication with all the stakeholders on the benefit of utilizing the buying centers, the establishment and deliberate policy of the government to promote the use of buying centers and thirdly the government should establish a viable policy, infrastructure and regulatory framework that will support the buying centres.

A well-managed and regulated buying Centre will help curb the following loopholes in the mining sector of the economy:

  1. Poor access to markets and support services,
  2. Chronic lack of investment capital,
  3. Low level of consideration for health and safety.

Also the significant negative impact on the environment will be easily traced and monitored.

4. Miners operating without legal mining rights would be easily traced,

5. Gender issues and child labour prevalence curtailed and

6. Conflicts in mining and minerals tracked and sorted out.

Buying centers are essential if the stakeholders will be able to realize the potentials of this sector with all the benefit and interest accruing to the sector.

Paul. O. Ogwu

PWYPNigeria

ogwupaulo@yahoo.com

The use of EITI audit on social expenditure and its impact on the citizenry is exemplary as it is one of the genuine ways of measuring the effectiveness of natural resource management. The objective of EITI is to assist member countries in reversing the regime of secrecy and opacity through the periodic audit of the extractive sector and widespread dissemination of the findings of the audit reports, which contains the payments made by extractive companies to the government in form of taxes, royalties, signature bonuses, rents and management of such resources.

Social and economic spending of extractive revenue helps the economic growth and well-being of the citizenry. The resource management no matter how altruistic is about the citizen impact and benefit of the natural resources found in an area. These spending and distribution are from taxes, royalties and payments levied by central, regional and local governments from the extractive companies. The extractive companies often make contributions to regional or local governments, federal communities, non-governmental organizations or other third parties in the areas where they operate and also they contribute to social corporate responsibility (CSR) in where they operate.

Social expenditures can take many forms. They may involve cash payments such as donations, grants or other types of cash transfers, the construction of roads, infrastructure, schools, or the provision of services like training and health care for the host communities. In some cases, these social expenditures are based on legal or contractual obligations entered before the right to explore the resources by the host communities or the government. In addition, the revenue received by the government may be spent providing social services or other needs of the government.

The contribution or lack of contribution helps in building or sustaining some level of social and civic trust within the community and the country. Revenues from natural resources are often more challenging to manage than revenues from other sectors especially some mono economics or economics with weak tax regime. Government revenues may vary as production and prices fluctuate from one year to the other and this hinders planning and sustainability. That is why it not advisable to solely depend on natural resource revenue for most of the country income.

Social spending and impact is also the best way to asserting the level of effective management of the natural resource revenue by the country with natural resources. It is easier to track because it is the basic benefits that citizens can relate with and benefit from. It is equally a lead from the tracking of revenue by the government through another process of the EITI which is revenue reporting by the government. Nigeria NEITI was one of the few counties that first pioneered the social expenditure reporting through the release of the first report on the Fiscal allocation and expenditure report 1999 to 2011 which look at the transfer to the subnational government and other covered entities for some selected states and covered entities. The finding from the report exposed the lack of or poor utilization of the social expenditure from the subnational government ie health, education and human capital development. Even at the national level just like the subnational level, the bulk of the expenditure is spent on the recurrent expenditure which is the payment of salaries and another overhead cost to a small percentage of the population.

It is pathetic even at the national level the countries budget which is funded mostly by the revenue from the extractive especially oil and cas that make up of more than 80% of our national budget. From the budget up to 70% to 75 % fully funded recurrent expenditures of salaries, emolument and overhead cost over the years for less than 2% of the population and 30% hardly funded capital project which the majority of the citizenry benefit from. This loop side nature of the public finance management and expenditure have resulted in the country having an abysmal performance in all the basic measurement of the citizen well-being and benefit from the extractive revenue.

Let us look at the countries abysmal statistics which shows the level of the mismanagement of the little expenditure from natural resources in Nigeria. Nigeria is ranked 152 in 188 ranking on Human Development Indexes (HDI) 2017.It is estimated that the country has about 87 million people out of the estimated 180,000 million est 2016 in abject poverty (less than $1 per day). An out of school children of 13.5 million which is the highest in the world. An infant mortality of 69.8 death per 1000 (2015) and maternity mortality (814 deaths /100000 (2015). The country spends about 3.7% of her GDP in the health sector. In addition, the transparency international rating places Nigeria 148 out of 180 (2017). Nigeria also has a debt to GDP ratio of 21.5% (2017) with a substantial part of the revenue going to debt servicing. The latest “Commitment to Reducing Inequality (CRI)” index released two weeks ago at the annual International Monetary Fund and World Bank (IMF/WB) meeting in Bali, Indonesia, revealed that one in 10 Nigerian children do not reach their fifth birthday. All these show a country that needs to diversify her economy from the extractive sector to be able to have a significant issue in the country’s economy and investment in social welfare.

However, we should all bear in mind that Nigeria is not a rich country when you do a comparative analysis of the production output from oil and gas with some other oil producing countries and the population of Nigeria. Also the country’s GDP and PPP shows the country is still a relatively poor country. Nigeria is ranked 23rd in the world oil reserve per capita, and $ 23,400 which is among the lowest of all major oil producers. The Country needs to diversify the economy with the oil income although this is always affected by the volatility in the oil sector and the shoddiness of the subsidy regime in the downstream sector of the oil and gas sector. If the deregulation of the downstream sector is effectively done this could free up the resource to effectively invest in the social services sector which will, in turn, improve the human development index of the country.

The EITI aim of using the reporting and data from the social and public expenditure can best be effective for the citizenry to hold the different stakeholders accountable. Experience has shown that the most effective tool in citizens questioning the management of natural resource is the EITI report on the Fiscal Allocation and Disbursement report as shown in Nigeria. When the finding is effectively disseminated and the findings and mismanagement tied to the resources, it would have provided the citizenry, even in the remotest of villages, the tool to hold their leaders and public officials accountable. This reduces the incidence of corruption and natural resources revenue mismanagement. This will also ensure that good macroeconomic policy, resource mobilization, social services availability, infrastructure development, and effective stakeholders participation and engagement is uphold.

Paul Ogwu

PWYP Nigeria

In a bid to implement the global EITI requirement, NEITI audit reports clearly points out remediation issues that will impact policies, legislation and operational procedures if adequately addressed. PWYP Nigeria believes that if the remediation is adequately addressed, there will be a great improvement in the Nigeria’s Extractive sector. NEITI findings highlight key issues of which some have been since 1999 relating to different agencies and these issues have continually remained in subsequent audit reports, thus the need to adequately carry out advocacy on the remedial issues and engage the stakeholders or companies who have continually showed lapses in the data or operational reports supplied in the audit reports.  This was the basis for the engagement.

Some of these covered entities includes NNPC, DPR, PPPRA, FIRS, NAOC, MOBIL/ESSO, WALTERSMITH, SHELL, SNEPCO, PLATFORM, ORIENTAL ENERGY, PILLAR OIL, NIMASA, and CBN. It is however sad to say that some of these companies or agencies did not turn up for the meeting.


NEITI audit reports, clearly point out remediation issues that will impact policies, legislation, and operational procedures that will check corruption in the extractive sector if adequately implemented.


Over the years, the Nigerian government and the covered entities has shown slow or little compliance to the remedial issues. Civil society, citizens and the media seem to have experimented several ways to bring about remediation but the result has not been very successful. It is to this end that Publish What You Pay Nigeria resorted to engaging some of these covered entities to advocate for remediation of the NEITI Audit reports.

PWYP and other CSOs held a media engagement and advocacy to some media houses in a bid to push for the president to assent to the PIGBs. This advocacy visit was in an effort of Publish What You Pay Nigeria with its partners to increase awareness of the state of the PIBS and the need for the President to assent to the bills which have already taken over 17 years to get to his office.

PWYP Nigeria has organised a media briefing on the Petroleum Industry Bills. The event which took place on the 25th of June 2018 in Abuja was aimed at calling on the President and the National Assembly to expedite action on the PIBs stating the huge economic loss on the economy and consequent effect on transparency in the Oil & Gas Sub-sector of the economy.  Read and download the Press Statement here PWYP Press Statement On The Lingering Passage Of The PIBs (Abuja – June 25, 2018)

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The extractive sector in Nigeria remains the highest source of foreign exchange for its economy. The sector however has been plagued with opacity, corruption and inadequacies in its financial processes. Over the years, Audit Reports of the Nigerian Extractive Industries Transparency Initiative (NEITI) has highlighted these inadequacies and proffered recommendations to help ameliorate these lapses. The focus of this paper however is on the involvement of women and youth in the extractive sector for inclusive participation and sustainable development as a recommendation to help imbibe transparency and sustainability in this sector.

The year 2015 marked a defining moment for the global development effort with the adoption of the Sustainable Development Goals (SDGs) in September, 2015. While countries in Eastern and Southern Africa have made progress against the Millennium Development Goals (MSGs), gaps remain and several issues that were not part of the MDG framework was taken up by the SDGs, such as urbanization, resilience, inequality and governance.

The extractive industries remain a male-dominated industry as compared to the other industries in Africa. It is important to involve women in it because women have the same “right to development” as men, so if extractive industries diminish their access to economic and social development, this human right has been violated. Since women are also often the cornerstones of most Nigerian communities especially in the Niger-Delta region, with key roles in ensuring the health, nutrition, education and security of those around them, investing in women and assuring their participation is not only key for their own development, but also for the socioeconomic development of their families and communities.

A deliberate effort by Nigerians to emulate good practices from other climes in the world on gender and the extractive industries will therefore help guide governments, the private sector, civil society organizations and other stakeholders in developing policy, programmes and legislation that will do a better job of addressing challenges facing women affected by—and hoping to benefit from—the extractive industries sector.

Unfortunately, women entrepreneurs’ participation in the extractive industries meets obstacles and is often influenced by negative perceptions, attitudes, and discrimination related to gender stereotypes. In some countries, these stereotypes stray into downright superstition. For example, some communities believe that having women present at mine sites has a negative impact on productivity, by causing explosions in the mine or driving veins of ore deeper into the earth (Efitime, Heller and Strongman 2009). Women also face more tangible obstacles in buying land, opening bank accounts or obtaining loans. In some cases where they have been able to receive loans, they are subject to unfavorable terms, including high interest rates and short repayment periods (Kelly and others 2013). All of these obstacles result in fewer women working in the extractive industries, running their own companies or scaling up their business to create jobs (Michelitsch 2014).

In contrast, women in developing countries, tend to be overrepresented in the informal sector and in self-employment where jobs are lower-paying and less secure (United Nations 2007). If the jobs created in extractive industries are not inclusive, it could result in risks to social stability, inclusive growth and even conflicts. Sustainable job creation, in my view, could contribute to meeting social goals such as creating more equal opportunities for women and youth.

On the issue of women and youth involvement in projects in the host communities (Communities where oil exploration and mining are taking place), Professor Glynn Cochrane, who established Rio Tinto’s community relations system in 1995, has commented that ‘in order to help the poor, it is necessary to know what they want and the extent to which they can help themselves with their own knowledge and social capital’ (Cochrane 2009: 12). He noted further that offering poor people pre-designed projects and programmes to alleviate their poverty ‘overlook[s] the fact that poor people have ideas, knowledge, and aspirations; that they wish to be treated with respect and as potential partners in any plans for them’ (Cochrane 2009: 3), as he had observed in several decades of involvement in mining sector community development programmes. If they are to succeed in the long term, projects need to be chosen, designed, managed, and implemented by the beneficiaries themselves, with all necessary support from partners and donors.

Evidently, despite the many years of oil exploration in the Niger Delta, the region still suffers infrastructural and socio-economic development and this could call to question the use of the funds generated and ploughed back into the society by the International Oil Companies (IOCs) and other indigenous oil companies through various forms like Signature bonuses, Royalties, Corporate Social Responsibilities, 13% derivatives etc.

Of course, if people neighbouring an extractives project are poor and have little infrastructure available, then it may seem easy to see what they apparently need—schools, roads, clinics, economic opportunities, etc. but that is not the point. The point is that, in order for them to become economically empowered and self-motivated about their future development, they need to be enabled to plan and chart their own destiny, with the help and support of companies and other development agents. There are numerous examples demonstrating that what people assess as their own needs may be quite different from what ‘experts’ say they need. This results in the failure of projects, which rarely receive community support once any initial grants, funds, or gifts from the project promoters are finished. The way to promote the sustainability of social investments is to empower people by giving them the choice of what projects they want to pursue, and the dignity and autonomy to make their own decisions. This is the essence of participation.

Participatory planning, in which community groups determine their own development priorities and design their own community development projects, is an approach to social investment that is more likely to lead to sustainable, community-supported initiatives than projects designed by external experts. Extractive companies can work with their host communities to facilitate the participatory planning process, if needed, and should then cooperate with communities and local governments to work out the intersections between the varying priorities of the different stakeholder groups. The areas where the interests overlap will be the most fruitful ones for development cooperation. Some national governments, such as Tanzania’s, have their own participatory planning processes in place (O&OD), so companies can work with local government and communities to discover areas of mutual interest for social and economic investment.

In all of these, the participation of women and youth of the host communities should be a critical factor to be considered as their participation will greatly benefit the communities and ensure sustainability of such projects.

The vibrant youth population of Nigeria (women inclusive) should not be ignored but encouraged to participate at all levels of the extractive sector. Where knowledge is lacking, deliberate efforts to build the capacity of the youth need to be made by all levels of government, CSOs, IOCs, NGOs and development partners. The involvement of women and youth in all extractive processes including exploration, policy making, monitoring and evaluation and community development projects will not only ensure inclusiveness but will also promote sustainability and ownership which will in the long run lead to more transparency and accountability in the sector.

Nigeria has made steady progress with the implementation of the Extractive Industries Transparency Initiative (EITI) since inception in 2004. NEITI (Nigeria extractive Transparency Initiative) through a legislator in 2004 was established in Nigeria but was backed up by the NEITI act 2007. Since the inception of NEITI in Nigeria, NEITI has produced several reports in the oil and gas sector, solid minerals and Fiscal Allocations and Statutory Disbursement (FASD) Audit report.  For 16 years NEITI has audited the three different sectors by producing 7 oil and gas reports, 4 reports on solid minerals and 1 FASD report. Unfortunately, the impact of the initiative in terms of delivering the core objectives of improving transparency and overall governance of the extractives sector is still generally low not for lack of effort but the stakeholder unwillingness  to reform. This is because most of the remedial issues raised in all the reports have not really been implemented. NEITI reports should by now move beyond merely publishing reports to show evidence of more positive impact and results in the extractive sector.

A major concern is that the numerous governance process and operational gaps recorded in all the NEITI audit reports so far produced are yet to be addressed neither have the government shown considerable interest in addressing them. However, there are some government policies and initiative in NEITI reports.  The NNPC   still have some outstanding payment yet to be remitted to the federal government. Remediation is the process of implementing recommendations contained in the reports towards addressing the identified gaps and improving overall sector performance. Some of the recurring issues in the NEITI oil and gas report include:

  1. Weak arrangements around the domestic crude oil allocation.
  2. Opaque and discretionary license and lease award processes.
  3. Weak arrangements for monitoring and measuring crude and liquids, from well-heads to terminals.
  4. Year 2000 Memorandum of Understanding (MOU)-fiscal terms- between NNPC and Joint Venture Companies.
  5. Petroleum Profit Tax (PPT) underassessment and issues with other taxes and income.
  6. Loss of gas income for the Federation and Production Sharing Contract (PSC) Gas Agreement.

Also the covered entities should address some of the lingering remedial issues covered in the NEITI audit Reports. Some of these covered entities include ;NNPC,     DEPARTMENT OF PETROLEUM RESOURCES,   NIGERIAN ASSOCIATION OF PETROLEUM EXPLORATIONS, SNEPCO and NIGERIAN AGIP ,  OANDO, NECOND,  TOTAL/MOBIL/SPDC, SHELL PLATFORM PETROLEUM,ORIENTAL ENERGY,   PILLAR OIL,  NIMASA,   FEDERAL INLAND REVENUE SERVICE (FIRS)  ,  CENTRAL BANK OF NIGERIA (CBN)

It is important the NEITI Act is reviewed to give it power to reprimand the covered entities that have refused to implement the NEITI audit reports, findings and remedial issues. NEITI should also expand her relationship with the different stakeholders that have influence like EFCC and ICPC to ensure that the under declaration, underpayment and other sharp practices have enforceable penalties attached to them.

The implementation of the NEITI remediation and audit reports cannot be fully implemented without the different stakeholders on the demand side showing an effective advocacy for the implementation of the reports. The CSO members that work in the extractive sector should take the lead in pushing the government to show more will and determination in ensuring comprehensive reform in the extractive sector of Nigeria. In addition, NEITI should work comprehensively with the civil society organisations to ensure buy in and partnership towards ensuring the implementation of the EITI standards.

In order to address the remediation of the audit findings, the Federal Government first set up the Inter-ministerial Task Team (IMTT) in 2006. After 7 years with only minimal progress at remediation recorded, the government reconstituted the IMTT in late 2013.  The Inter-ministerial Task team (IMTT) should be made to have only officers with the authority to make input and take the decision in the institutions they represent. Hence, there is the need for other stakeholders, especially civil society, to support the IMTT to effectively execute the remediation of NEITI audit findings.  Civil society participation in all the aspects of EITI implementation is essential not only for the fulfilment of the necessary requirements but also because it could ensure that the right amount of pressure needed to influence reform is generated.

For effective reform in the extractive sector, the different covered entities and institutions should show a determination to improve on the process and also implement the recommendations of the NEITI audit reports. They should see NEITI and other institutions as partners whose sole aim is to improve the governance architecture. Institutions like NNPC, DPR, Ministry of Petroleum Resources and other covered entities should make the remedial issues as urgent towards ensuring a strong and corruption free extractive sector.

The reoccurrence of some of the issues in the NEITI audit reports should be discouraged and appropriate administrative sanction should be implemented against agencies and MDAs that have refused to implement the audit and remedial issues.

It is encouraging that some of the recent reforms in the sector have inputs from the findings and activities of NEITI. We have an instrument that if well managed and utilised, will go a long way in making the extractive sector the dream of all well meaning Nigerians.

Ogwu Paul Okwuchukwu

PWYP, Nigeria.