Nigeria’s journey into beneficial ownership disclosures

Nigeria’s journey into Beneficial Ownership disclosures did not happen, it was caused. Increasing citizens’ desire to push the boundaries of oil, gas and mining industry reforms beyond disclosure of company payments and government revenue receipts led to the need for more specific information and data on who owns what. The public demands for this challenging disclosure were also based on the increasing public trust in the Extractive Industries Transparency Initiative process in Nigeria. There was also the perception that NEITI’s disclosures so far have been incisive, bold and courageous. The public demand for information and data on beneficial ownership was also considered key in shaping the direction of resource governance reforms in a transitional economy like Nigeria. Besides, many believed that BO disclosure was important if Nigeria must plan to use verifiable and credible data.

In most countries, the citizens’ disquiet over exclusion from access to information and data on “who owns what” in the industry often leads to resource wars and conflicts. Many of the conflicts are linked to perceived suspicion of elite capture of natural resource generation, mobilisation, allocation and utilisation that tend to alienate the citizens, and throw many into avoidable poverty and deprivation in resource-rich countries. Agitations for information and data also fuel suspicion of elite parasitism, rentier-state culture and insensitivity to generational equity considerations in the share and allocation of natural resource assets for the benefit of the citizens.

The citizens that seek BO information as part of extractive industries’ independent reports further argued that BO disclosure will help to widen the scope, content and dimension, the potential to use the reports for constructive civic engagements that would yield visible impacts. They further argued that unmasking the identities of the real owners of oil, gas and mining assets, determining how those assets were acquired, the quantity, quality, location and real value of the assets were critical success factors if the EITI process was to be really effective in tackling opaqueness in Nigeria’s natural resources management.

From our engagements, the citizens’ growing interest in BO disclosures revolves around the strong linkage between ownership of these assets, revenue flows into the federation account from the sector, prudent utilisation, support for national development and poverty reduction. The point being made by the citizens was specifically that except information on beneficial owners of extractive industry assets in Nigeria is put in the public domain, any other reform in the extractive industry would be undermined by resource capture to the detriment of the citizens.

Against this background, in 2013, Nigeria volunteered, alongside 11 other EITI-implementing countries, to pilot the reporting of BO in the oil, gas and mining sector. Hence, in the NEITI Oil and Gas and Solid Minerals Audit Reports of 2012, which were released in 2014, BO information was published. However, the request for BO disclosures attracted instant resistance within the industry. Many opposed this additional request and questioned NEITI’s real motive. They argued that the request conflicted with the confidentiality clause in the agreements usually signed as part of NEITI’s rules of engagement with covered entities.

It was therefore a welcome development for implementing countries when the global EITI in 2016 made it a requirement for disclosures of information and data on who owns extractive assets in resource-rich countries. The EITI 2016 Standard provided wider clarity on the concept, context, content, and comprehensiveness of BO implementation. It equally defined its meaning and scope, stakeholders mapping, rules of engagement, issues, challenges, desired outcomes, benefits and impacts. Companies and covered entities were required to provide information and data strictly on basic excel spreadsheets as part of NEITI industry reporting. An in-depth analysis of the information disclosed provided credible justifications for citizens’ demands that BO information disclosure would be useful for EITI implementing countries, largely in sub-Saharan Africa, who are struggling with challenges of institutions that are too weak to address complex issues in the extractive industry. These issues include complex ownership structures that aid tax evasion, capital flight and fraudulent allocation of these valuable assets.

All EITI-implementing countries were expected to publish a beneficial ownership roadmap by January 2017 and commence full implementation by January 2020. The need to develop an implementable roadmap on BO reporting in Nigeria and to seek wider inputs and ideas from stakeholders necessitated a one-day consultative workshop which was held on October 31, 2016 with funding and technical support from the Natural Resource Governance Institute (NRGI).

The road map unfolded by the EITI provided more specifics that helped Nigeria to develop a workable home-grown approach peculiar to our circumstances. For instance, the 2014 guidance note issued by the Financial Action Task Force defined BO as the natural person or persons who directly and ultimately own or control the corporate entity. It equally specified that disclosure of this information is essential to build public trust, track utilisation of revenues derived from the sector, and curb incidences of crime such as money laundering, terrorism financing, tax evasion, sponsorship of insurrection and outright economic sabotage.

On legal framework, Nigeria initiated the amendment of the Companies and Allied Matters Act (CAMA) to include provisions on mandatory disclosure of beneficial owners. The amended CAMA was signed into law on August 7, 2020. One striking feature of the amended legislation was its deliberate specific provision to widen the concept and scope of BO disclosure to cover persons with significant control, leveraging on the United Kingdom model. Under the new CAMA, disclosure of BO information became wider, more specific and obligatory. Besides, the Corporate Affairs Commission was equipped with the required mandate to establish and publish a national register of beneficial owners of all companies in Nigeria. The project is being supported with a World Bank grant of over $400,000 under the Open Government (multi-donor) Trust Fund. The national BO Register project is seen by the anti-corruption community in Nigeria as an expansion of the web-based BO portal launched by NEITI in 2019.

The NEITI BO portal, the first by any EITI implementing country globally, and the first of such an initiative available in the public domain in sub-Saharan Africa, has BO information publicly disclosed by 43 oil and gas, and 189 solid minerals companies respectively. As of the time of writing this report, the portal is being updated with additional BO information. The specific information required includes the real names and identities of the real owner/shareowners of the companies, their date of birth, and national identity number. The Information is equally required on politically exposed persons. However, stringent measures are taken to protect legitimate rights, liberty and freedom of the asset owners in managing the disclosures and use of the information. Any intention to misuse this information for any purpose other than public interest is discouraged. Data gathering by NEITI on BO in the ongoing 2021 report is currently being managed under the new automated process that guarantees efficient data security and reliability. The 2021 Report is expected to be released by the end of 2022.

Nigeria’s leading roles within the global EITI in the implementation of BO were strengthened by two major factors. The first is the current government’s anti corruption agenda and support for anti-corruption institutions. This was conveyed publicly by the President, Major General Muhammadu Buhari (retd.), while addressing the London Anti-Corruption Summit in 2016, where he committed Nigeria to the establishment of a public register of Beneficial Owners. Buhari explained that the measure was a reaffirmation of the country’s commitment to EITI and the Open Government Partnership (OGP).

The second factor is the deployment of the BO portal which improved Nigeria’s significant ranking in the global EITI, strengthened stakeholders’ confidence and has helped to shape the direction of the country’s multi-stakeholders engagements to deepen BO implementation as an integral part of EITI process in Nigeria. Of specific note is a success story of BO in Nigeria where Beneficial Ownership Transparency has already demonstrated its ability to be utilised as a tool for domestic resource mobilization and tax effectiveness with the declaration by the Mining Cadastral Office (MCO) that since it began using Beneficial Ownership data in its license renewal process, it has realised over 100% increase in its revenue collection since 2019.

The national launch of Opening Extractives on November 9 last year, and the establishment of Opening Extractives Network in Nigeria on March 21, 2022 with collaboration and partnership between NEITI, Open Ownership and BHP Foundation, were designed to deepen the BO process, minimise risks and maximise opportunities in BO implementation in Nigeria.

The recent introduction of Opening Extractives to advance Beneficial Ownership implementation in EITI member countries is most timely and progressive, given the myriad of issues that BO implementation has thrown up in the developing countries. The first of these issues is mutual suspicion by governments, companies and even some sections of civil society that the real reasons for current global pressure on BO disclosure remain unknown. This suspicion may be closely linked to levels of institutional resistance to information and data disclosure, compliance apathy, disinformation and disinclination towards BO implementation and compliance as part of the EITI framework. There are also the challenges of the skills gap in the ability of civil society and the media in most developing countries to assume independent leadership roles in the use of available BO information and data as tools for advocacy and accountability. On the part of the government, enlightenment and education of key state actors, bureaucratic and political institutions as well as relevant agencies is still a huge task. The enlightenment approach must be defined by comprehensive content that addresses the fears and concerns that frustrate access to BO information.

For the extractive companies, while the IOCs and other covered entities appear informed largely at the top echelon, the operators at the lower cadre most times feign ignorance, expecting orders from above.

To deal with the challenges, NEITI has established a companies’ forum and an inter-agency committee respectively on BO. These two platforms made of all relevant companies and government agencies covered by NEITI/EITI process are for purposes of enlightenment, education, information sharing and efficient feedback. On the side of government agencies, the NNPC, the regulatory institutions in the oil and gas industry, the Corporate Affairs Commission, the Federal Inland Revenues Service, the Office of the Attorney General of the Federation and Ministry of Justice, the Central Bank of Nigeria, and the Office of the Accountant General of the Federation are members of the committee. These key agencies that either collect, maintain custody, or manage oil and gas revenues have designated roles to play in BO disclosure. NEITI-Companies Forum was also established to agree on templates for mandatory disclosure of BO information and data as part of EITI compliance requirements.

On its part, the NEITI civil society steering committee set up as part of the NEITI multi-stakeholders group continues to track progress, conduct monitoring and oversight on BO implementation by government agencies and companies. NEITI is currently providing support and training programmes to strengthen the capacity of civil society to carry out this role.

The Opening Extractives Network is composed of the Mining Cadastral Office, Ministry of Mines and Steel Development, the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority. Others are the Ministry of Petroleum Resources, the Federal Inland Revenue Service, the Corporate Affairs Commission and the Federal Ministry of Finance. While NEITI is the chair and the secretariat of this network, the two anti-corruption agencies – the ICPC and EFCC – are also members. Already, a peer learning programme was held for the Open Extractive in Accra Ghana from July 5 to July 7, 2022. At the Accra Opening Extractives Workshop, these agencies interacted with other implementing countries from Ghana, Liberia and Zambia, and reviewed the respective work plans on the implementation of BO under the Opening Extractives programme. It was also a regional forum to share experiences and lessons learned to help participants define the way forward.

For Nigeria, NEITI has already commissioned a study on stakeholders’ preferences, roles and responsibilities mapping to drive an inclusive in-country comprehensive communication strategy on BO as a project.

Dr Orji is the Executive Secretary of Nigeria Extractive Industries Transparency Initiative