Transcript DEVELOPING TOOLS FOR CORRUPTIION CONTROL IN THE …

DEVELOPING TOOLS FOR CORRUPTION
CONTROL IN THE GOVERNANCE OF ENERGY
RESOURCE IN NIGERIA: A REVENUE
TRANSPARENCY MEASUREMENT APPROACH
Raji Oyegbade Azeez (Mr.)
Chief Statistician (Macroeconomic Statistics Department)
Abioye Felicia Anwuli (Mrs.)
Head (Field Services and Methodology Department)
Fafunmi Elisha A. (Mr.)
Head (Data Management Division)
1.0 INTRODUCTION

Notable energy resources in Nigeria from which revenues are being
sourced include;
 petroleum resource (oil), gas, hydroelectric power, thermal electric
power, bio-fuel, solar energy as well as coal.

Statistical measurement (profile) is the only way for a proper
diagnosis (analysis) of a sick economy and also the only check-up
(evaluation) for a healthy one

Developing and applying tools for corruption control in the energy
economy is a sure way to ascertain the viability of the energy sector
with respect to its revenue earning capability, its contribution to the
Gross Domestic Product (GDP) estimate and its significant support
for the annual national budgets.
Intro……

We can deduce that corruption control is essential to effective
governance and the management of energy resource.

This paper therefore focus on the deepening of empirical process
input to the measurement of energy corruption (i.e. attempt a
quantitative measurement of corruption in the energy sector).

Expected advantages over the corruption perception measurement
will include; determination of a more precise level of energy
corruption, planning a more effective remedial action to discourage
further loss of revenue via corruption and upgrading corruption
measurement tool to a macroeconomic indicator
2.0 PREVIOUS APPROACH TO DEVELOPING
CORRUPTION MEASUREMENT TOOLS.

Since 1993, the Transparency International (TI) has been conducting
the corruption perception Surveys to furnish corruption perception
index with which Nigeria along other countries of the world are
being ranked.

In 2008, Nigeria ranked 121 out of 180 countries that were
surveyed while in 2001, 2002, 2003 and 2004 it ranked 2nd most
corrupt nation in the world. In 2011, Nigeria ranked 143rd out of
182 Countries.

According to the TI, the ranking is intended as a tool to raise public
awareness about adverse impact of corruption on the economy and
public resources.

As from 2001 however, Nigeria and South Africa have consistently
disagreed with the rankings
APPROACH…..

The two countries opinion that the corruption indexes are derived from personal
judgments of sample respondents and are not adequate enough to depict the actual
level of corruption in Nigeria or South Africa.

Therefore clamored for a more precise indicator of level of corruption rather than
mere perceptions.

In 2007, the National Bureau of Statistics (NBS) in conjunction with the Economic
and Financial Crime Commission (EFCC) conducted a business survey of crime,
corruption and awareness of the EFCC.

The Survey showed that the police, the PHCN, the Water board and the tax
collection personnel are public officials who are deeply involved in corruption via
bribery.

A 2010 Global Corruption Barometer (GCB) which surveyed more than 91,000
people in 86 countries and territories showed that; 6 out of 10 people around the
World report paying bribes in the last year.
APPROACH…..

In the 12 months preceding 2010, one in four people paid a bribe to
one of the nine institutions and services, from health to education
to tax authorities.

The police are named the most frequent recipient of bribes
according to those surveyed, with 29 percent of those who had
contact with the police reporting that they paid bribe.

More than 20 countries report significantly more petty bribery than
in 2006, when the same question was asked in the barometer.

The biggest number of reported bribery payments in 2010 is in
Afghanistan, Cambodia, Cameroon, India, Iraq, Liberia, Nigeria,
Palestine, Senegal, Serra Leone and Uganda where more than 50
percent of people surveyed paid bribe in the past 12 months.
APPROACH…..

Almost half of all respondents say they paid bribes to avoid problems with
the authorities and a quarter say it was to speed up processes.

Most worrying is the fact that bribes to the police have almost doubled
since 2006, and more people report paying bribes to the judiciary and for
registry and permit services than did so five years ago.

Attempt at deepening quantification of corruption led the World Bank
(WB) to carry out survey of corruption.

Statistics from the survey showed that more than one million dollars is paid
in bribe yearly in Nigeria.

For one dollar offered as a bribe however, the damage caused is almost
twice the amount.The WB estimated the damage at 1.7 dollars.
3.0 MECHANISM AND THE METHODOLOGY FOR SOURCING
DATA AND ESTIMATING REVENUE CORRUPTION.

Corruption is a misuse of entrusted power for a private gain

Some argue that measuring it is more an art form than precisely defined
empirical process.

A flood of new work has however emerged, challenging the validity of
traditional corruption measurements and arguing for new and improved
tools for policymakers, civil society and other users of corruption
measurements.

Notable among the new work is the Revenue Corruption measurement
which is believed can source its raw data from the Nigeria Extractive
Industries Transparency Initiative (NEITI).

The initiative is a Nigeria version of a global movement which aimed at
ensuring that revenues from oil, gas and mining subsectors aid economic
growth and reduce poverty.
SOURCING DATA AND ESTIMATING
REVENUE CORRUPTION….

In extractive industries, revenues come in the form of Crude oil sales, tax,
royalty, bonus, dividend, penalty and levy. Revenue corruption is thus
measured by estimating the unreconciled ‘’differences’’ between the
payments by companies and the receipts by government.

In 2006 for example, companies paid in (as royalty) $4,457.9 million while
government received $4,418.5 million leaving an unreconciled difference of
$39.4 million.

The reliability of this methodology lies in the fact that every underpayment
of revenue usually arose from a misuse of entrusted power.

An authorization for the production, distribution, sales of extractive
resources as well as revenue receipts on behalf of government are widely
regarded as entrusted powers.
4.0 SOME ANALYTICAL CAPABILITY OF
THE NEWLY DEVELOPED TOOLS

Available record gave 148.832 billion dollars as the total
financial inflows to the Federation Account from the oil
industry for the period 2006-2008.

The sum is made up of 44.687 billion dollars for 2006,
43.781 billion dollars for 2007 and 60.364 billion dollars
for 2008.

However, the unreconciled difference between payments
and the receipt amounted to 91.9 million dollars coming
from royalty payment (2006) and the signature bonuses in
2006-2008.
ANALYTICAL CAPABILITY…..
The table below shows further analysis derivable from the tools.
Year/ Corruption
Indicator
2006
Royalty
Signature Bonuses
Total
2007
Royalty
Signature Bonuses
Total
2008
Royalty
Signature Bonuses
Total
As percentage of
the total revenue
As percentage
of the GDP
As percentage of
the Annual
Budget
As percentage of
the External Debt
9.9
2.2
12.1
95.4
21.3
116.7
29.9
6.7
36.6
125.9
28.1
154.0
8.9
1.2
10.1
77.3
101.2
178.5
21.2
27.8
49.0
113.7
148.9
262.6
9.1
0.1
9.2
96.6
0.5
97.1
131.7
0.7
132.4
5.0 SUMMARY OF THE RELEVANCE OF REVENUE
CORRUPTION MEASUREMENT AND THE
RECOMMENDATION ON ITS SUSTAINABLE PRODUCTION.

The survey of corruption perception has shown that
revenue collection is one of the corruption-prone areas
where monies are being lost to private pockets.

The newly derived tools can however complement this by
quantifying the actual level of revenue corruption and the
attendant damage to the energy economy.

The complementarities of both can thus be measured and
for sustainability sake, the following recommendations are
desirable.
Desirable Recommendations

Due to the guilt-induced nature of corruption, measuring
revenue corruption is usually met with difficulties and
constraints.

To circumvent the hindrance however, effective use should be
made of NEITI-derived revenue data via data sharing between
the National Bureau of Statistics (NBS) and NEITI.

NBS can explore the Statistics Act, 2007 to forge the expected
collaboration.

The NBS and NEITI can thus provide an enabling institutional
arrangement for a sustainable production and the management
of revenue corruption data.
Desirable Recommendations……

To bring into the right perceptive the corruption control
dimension of today’s energy economy the revenue corruption
variable should be subjected to further analysis using the
framework of the SNA (i.e. the System of National Accounts).

Use of the SNA framework is to reinforce the critical role of
the National Bureau of Statistics as the internationally
recorgnised Agency whose responsibility it is to produce and
manage essential macro-economic indicators in conjunction
with the United Nations (UN).

It is therefore very important to develop a Computer-Aided
Energy Enterprise Information Management System [EEIMS]
on a Data Warehousing Platform to reduce the unnecessary
wastage in managing energy related activities in the country
6.0 CONCLUSION AND THE REFERENCES.

Growing significance of energy resource in the national
economy instigates policymaker’s advocacy for good
governance in the sector.

The Policymakers also reasoned that good governance in the
sector will come about when the operators (i.e. the
Government Officials and the oil companies) exhibit greater
transparency in the payment s and the receipts of revenues.

Empirical evidence in this paper corroborated this standpoint
of the policymakers.
CONCLUSION……

As noted in the paper, the pre-2004 lack of adequate
analyzable raw data o n the energy revenue has been the
greatest drawback to a quantitative measurement of revenue
corruption.

With the possibility of sourcing revenue data as by-products of
the NEITI activities however, basic requirements for the
development of new quantitative tools have been obtained.

The paper therefore serves as a wakeup call to the official
statistics producers to accord priority to the sustainable
production of Revenue Corruption data and the consequent
production of the envisaged corruption control tools.
6.1 The References
6.1.1
ACTU Newsletter Vol.4/No.1 -2012.

6.1.2
NBS website www.nigerianstat.gov.ng

6.1.3.
NEITI website-www.neiti.org.ng

6.1.4
The Statistics Act, 2007-Federal Republic of
Nigeria, Official Gazette No 60,Vol.94, Lagos11th June, 2007

6.1.5..
Understanding NATIONAL ACCOUNTS –
Francois Lequiller and Derex Blades (ISBN
92-64-02566-9-© OECD 2006)

