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Nigeria’s journey into beneficial ownership disclosures

By Orji Ogbonnaya Orji
27 September 2022   |   2:45 am
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

Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji

Nigeria’s journey into Beneficial Ownership (BO) 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, citizens’ disquiet over exclusion from access to information and data on “who owns what” in the industry often led 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, and 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 sectors. 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-Sahara 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 the 31st of October 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 initiative available in the public domain in sub-Saharan Africa, has BO information publicly disclosed by 43 oil and gas, an

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. Information is equally required on politically exposed persons.

To be continued tomorrow

Dr. Orji is the executive secretary/ceo of Nigeria Extractive Industries Transparency Initiative (NEITI) www.neiti.gov.ng @Drorjioorji. He wrote from Abuja.