PUBLIC ADMINISTRATION AND THE MANAGEMENT OF NIGERIA'S NATURAL RESOURCES POST 2015 ELECTION
Public Administration is very important for any country because it is the machinery that provides service to citizens and the public. But all over the world, there are challenges of public Administration requiring the need for constant reform and continuous improvement. The need for Public Administration Reform is widespread across the world such that the United Nations Development Project (UNDP) supports 380 projects in 112 countries covering various aspects of Public Administration Reform. Public Administration in Nigeria is faced with a lot of challenges. Meanwhile, the politics and economy of the country revolves around natural resources. The management and governance of natural resources is therefore crucial in Nigeria. This is particularly so as we approach the 2015 elections.
Nigeria is blessed with a lot of human and natural resources. Nigeria is the largest economy in Africa and is by far the continent's most populous country with a population of about 170 million people. However, despite the rich human and natural resource endowment, poverty is widespread with about 70 percent of the population living on less than one dollar per day. The oil sector is the mainstay of the Nigerian economy. The abundant natural resource in the country has turned to a curse. Nigeria has about 35 billion barrels of proven oil reserve and another 5 billion in development. The oil sector accounts for about 95 percent of expert revenues, 76 percent of government revenues and about a third of the nation's Gross Domestic Product. Similarly, Nigeria has an estimated 180 billion cubic feet of proven natural gas making it the ninth largest concentration in the world. Unfortunately, Nigeria flares about 70 percent of the gas it produces and reinjects only 12 percent making it one of the countries that flares the greatest amount of gas on planet earth.
There is an emerging consensus that the development of a country's natural resources should be designed to secure the greatest social and economic benefit for its people. But it is clear that the enormous oil resources of Nigeria have not translated into benefits for the citizens.
There are a lot of challenges in the oil and gas sector. There are no mechanisms to verifiably measure the volume of oil at the point of production i.e the well head. There is no independent, objective and fair oversight of the sector. There is serious environmental degradation. There are no regular independent audits to international standards. Even when there are reports on the environment such as the United Nations Environmental Project (UNEP) report, the recommendations are not implemented. There are controversies over what appropriate fiscal regime is fair, equitable and will allow for growth of investment in the oil and gas sector. There are a lot of issues with oil contract and license allocation.
The oil and gas sector in Nigeria is opaque with lots of allegations of corruption and management. In the recent past, there has been the House of Representatives investigation of subsidy regime in Nigeria, the Aig Imoukhede Technical Committee on Fuel Subsidy and the Ribadu Report of the Petroleum Revenue Special Task Force. All of these probes show that there is mega corruption going on in the oil and gas sector. Oil theft continues unabated despite the effort of government and security agencies. According to NEITI Audit report 2009-2011, Nigeria losses N578.990 billion annually to oil theft and NNPC owes government $5.8 billion from Liquefied Natural Gas which has not been paid into the federation account since 2006.
There are a lot of issues that need to be addressed which have bearing on Public Administration in the oil and gas sector in Nigeria. We will address five of them. The first issue is the legal framework for management of the oil and gas industry. Before or immediately after the 2015 elections, there is the need to settle the legal framework guiding the operations of the oil and gas sector through the passage of a Petroleum Industry Bill (PIB) that will guarantee proper management, transparency and accountability in the sector. There are issues to deal with in the current PIB including Community Host Fund; exemption of the national oil company from application of Fiscal Responsibility Act 2007 and Public Procurement Act 2007; gas flaring restoration of the environment and discretionary powers.
Section 116 of the PIB establishes a fund to be known as the Petroleum Host Community Fund {PHC Fund} which is to be used for the development of the economic and social infrastructure of the communities within the oil producing areas. All over the world, there are mechanisms to compensate host communities. In Alaska, USA, it is done through cash transfer. In Indonesia, funds are disbursed to improve governance at community level through expansion of citizens' role in setting priorities for spending. In Peru, a growing portion of oil and mining revenues is administered by regional and local governments. In Ghana, the government allocates 10% of total amount of royalties received to stool land through the Office of the Administrator of Stool Land. In Azerbiajan, the government pays for spaces occupied by pipelines 60 years upfront. In addition, the provision for exemption of the National Oil Company from the application of the Fiscal Responsibility Act 2007 and Public Procurement Act 2007 need to be removed from the bill. Similarly, the Provision that the flare out date of gas flaring will be determined by the Minister need to be amended. Furthermore, whereas Section 293 of the Petroleum Industry Bill (PIB) sought to hold operators in the sector responsible for the restoration of damages done to the environment, Section 293 (2) gives them an open window to shy away from this responsibility because sabotage of oil facilities and tampering of pipeline and storage facilities which this subsection exempts them from are all incidentals to this responsibility. The responsibility to safeguard the environment and the safety of the masses cannot be sacrificed for the criminal acts of a few people. Finally, the discretionary powers vested on the President and Minister of Petroleum Resources on oil licensing and other issues are too wide and it is subject to abuse. There is need to make the powers of the President and Minister subject to due process and institutions such as National Assembly, the Nigeria Extractive and Transparency Initiative (NEITI), Media and Civil Society Organisations to enhance checks and balances in the operation of the petroleum sector, which is a very sensitive sector to the Nigerian economy
The second issue is policy. Following the passage of the PIB, there is the need to elaborate on several policies that will ensure proper management of the oil and gas and indeed other natural resources. There is the need for clear policies separating regulation and business. In addition, there is the need for a systematic way of policy making and clear process criteria or mechanism for filtering policy ideas instead of reliance on the Minister to “determine, formulate and monitor government policy for the petroleum industry” as stated in the PIB.
The third issue is the need for rules, procedure and system that will bring about effectiveness, efficiency and accountability in the oil and gas sector. In every sector in Nigeria, there is the need for rules, procedure and system of doing things. This is the only way that corruption can be reduced. It has been proven that absence of transparency and accountability is a fertile ground for corruption in any society. According to the Robert Klitgaard formula, Corruption= (Monopoly + Discretion) – (Accountability + Integrity + Transparency)
\Wherever there is monopoly and discretion combined with absence of transparency, accountability and integrity, corruption thrives. One way to combat corruption is to create systems, mechanisms and procedure that make corruptible transactions difficult. This will include laws, financial guidelines, internal controls and due process. It must be emphasized that enactment of laws and creation of systems and mechanisms do not translate to improvement of transparency and accountability and elimination of corruption. There are several actions that can be taken to strengthen transparency and accountability. After enactment of the laws and creation of the systems, there must be a concrete strategy of implementation with what is to be done, who to do it, when and how. The capacity of officials to implement the laws and systems must be built to ensure clinical execution. The capacity of legislators on oversight especially in budget implementation need to be built. The capacity for Civil Society Organsisations for monitoring the implementation of the laws and the budget should be built. This should include the capacity to design and use tools to hold government accountable such as social audit, budget analysis, report card, use of technology, public interest litigation and protest/demonstration. The capacity of the media should be built to hold elected officials accountable as a constitutional responsibility.
The fourth issue is organisational structure. Many organizations perform poorly as a result of several interlocking factors including inappropriate structure, lack of understanding of their mandate; lack of or poor strategy to operationalise policies, weaknesses in the agencies or organizations in terms of capacity, competence, capability, culture, creativity and control (the six Cs of organizational effectiveness). Organisational structure is the formal system of tasks and reporting relationships that determines how employees use resources to achieve organisational goals. The important determinants of organisational structure include the nature of the organisational environment, the type of strategy the organisation pursues, the technology the organisation uses and the characteristics of the organisation's human resources. Passage of the PIB will result in unbundling of the NNPC and there will be the need to focus on organizational re-engineering and creating a structure that will be effective and efficient.
Finally, there is the need to address the issue of personnel. It is well established that the personnel of an organisation determines the performance and greatness of the organisation. The key to organizational performance are people. In fact, some scholars have pointed out that attitude is the basis for everything in life. Attitude determines how people react in adversity; ability to grow and to learn and ability to overcome challenges and create bond with others. It is a product of instilled beliefs, programming and (brainwashing). It is important to point out that attitudes are guided by underlying ethical values and beliefs. Ethics is the system of rules that governs the ordering of values. Ethics are moral principles or beliefs about what is right or wrong. The aim of ethics is to identify both the rules that should govern people's behavior and the 'goods' that are worth seeking. Ethics guide people in their decisions about what to do in various situations. Values are principles of conduct such as integrity, accountability and respect.
A strong positive attitude is required for success in any undertaking. Organisational scholars are agreed that employees with positive attitude tend to be more productive because they always see the accompanying opportunity with every challenge. Indeed, it can be argued that the possibility of a person to perform a task depends more on attitude than ability as the average human being has the inherent capacity to carry our most tasks. The average human being is known to use only about ten percent of its capacity. Geniuses are known to use about 30-40 percent. Therefore, the reform of any organisation requires the right kind of attitudinal change to get the desired performance. It is important to note that beliefs determine attitude and perception of reality. But we can change what we perceive by changing our attitude. As one scholar argued, we can consciously shift our attitude in order to change our beliefs or we can remain unconscious and allow our attitude to be determined subconsciously by our subconscious beliefs. It has been argued that a positive attitude depends far less on things going right outwardly than on an inner determination. Meanwhile, attitudes can be taught. This is why it is necessary to have a framework for attitudinal change in the oil and gas sector.
It is important to point out that the challenges of the management of natural resources is not unique to Nigeria. It is a global problem. It has been documented across the world that resource-rich countries have performed worse than those with smaller endowments leading to phenomenon that scholars now refer to as resource curse.
Countries that depend on oil for their livelihood are among the most economically troubled, the most authoritarian, and the most conflict-ridden in the world. When compared to countries dependent on the export of agricultural commodities, mineral and oil exporting countries suffer from unusually high poverty, poor health care, widespread malnutrition, high rates of child mortality, low life expectancy, and poor educational performance- all of which are surprising findings given the revenue streams of resource-rich countries. Scholars have shown clearly the linkage between overdependence on oil exports and the production of weak public institutions, authoritarianism, corruption, conflict and primitive accumulation of wealth through collection of bribes and contract inflation.
Despite this negative proposition, it is necessary to point out that over the past decade, there is an increased understanding of the problem and what needs to be done to turn resource curse into resource blessing. What needs to be done is to have a proper resource governance. Natural resource and environmental governance refers to the formal and informal institutional mechanisms used by society to address environmental issues and concerns that challenge it. It includes regulatory compliance and actions by civil society organizations, scientific community, the private and public sectors to deal with environmental issues. Natural resource governance is the set of strategies aimed at improving the transparency and accountability of governments and private companies during the licensing, exploration, contracting, extraction, revenue generation and allocation of natural resources.
Environmental governance is the sum of organizations, policy instruments, financing mechanisms, rules, procedures and norms that regulate the processes of environmental protection. The three key elements of environmental governance are adequate environmental laws and regulation with proper enforcement; good practice by companies and corporate responsibility and transparency and accountability with participation of communities and civil society organizations.
Over the years, there have emerged internationally recognized regulatory responses in the oil and gas sector. These include land use in a way that is environmentally sustainable; limitation of emission of gas, water and waste; proper economic instruments including royalties and taxes (e.g. pollution tax) and participation of communities and civil society organizations. In the recent past, the Natural Resource Charter has been produced with clear principles that can aid resource governance.
Civil society organizations have a great role to play in enthroning resource governance in Nigeria. Learning from experiences of the past, there is the need to organize in new ways using tacit coalition of organisations with different organisations focusing on issues that they have comparative advantage. The organisation for advocacy and campaigns for change should involve stakeholders with constituency and large following including labour organisations, professional organisations, religious groups, media, institutions, journalists, bloggers and celebrities. There is also the need to use multiple platforms including social media, town hall meetings, rallies and citizens gatherings.
Written by Otive Igbuzor, PhD, Executive Director, African Centre for Leadership, Strategy & Development (Centre LSD).