Nigeria’s economy depends primarily on rents from the extraction and sale of mineral resources. The country’s extractive sector includes oil, gas, and mining, oil predominates, with the country being one of the world’s largest oil producers and the second largest in Africa. Nigeria also holds the largest natural gas reserves on the continent. In 2020, the sector contributed 8.2% of the total real GDP of US$432.3 billion. On the transaction level, the oil and gas sector generated over US$20.4 billion in revenue in 2020. However, while the Nigerian extractive sector is large and complex, the country suffers badly from the “resource curse”—a paradox of underdevelopment amidst astounding resource wealth. A major driver of this paradox is that the extractive sector is still very poorly governed, and remains largely unaccountable to citizens and communities.
There are several paths to explore that could lead to unlocking extractive-industry funds to support the endowment and operational needs of a foundation. These include for advocating changes to current legislation and regulations so that a percentage of oil proceeds that are currently allocated to support the state or national government budget are redirected to flow to such a foundation. Future extractive Production Sharing Agreements signed between the Government of Nigeria (GoN) and extractive companies could also be a source of on-going funding. Perhaps the most promising route to securing funding for a foundation in this asset class would be working closely with the Nigerian Extractive Industry Transparency Initiative (NEITI). NEITI is monitored and supervised by the Office of the President of Nigeria through the Office of the Secretary to the Government of the Federation and as such could serve as a conduit to the GoN in exploring options and moving proposals into action.
Possible Focus of a foundation from extractive industry proceeds
Current pressing socioeconomic needs that funds from extractive sector could be used to address include public health, education, public infrastructure, youth employment, women empowerment, and environmental remediation. These issues are especially pressing in the oil, gas, and mineral producing communities where decades of extraction have left communities socially dislocated and their environments badly needing remediation. Government policies—including the establishment of government-run funds—to address these needs have been laudable but have mostly been limited by institutional weaknesses, implementation failures, and corruption.
With this in mind, a foundation resulting from the capture of a portion of proceeds from extractive industries—which typically have outsized impact on rural, indigenous, and otherwise marginalized communities—could thus be usefully dedicated to climate change mitigation and adaptation measures that affect those communities. Other possible foci of an extractive-based PtP foundation could include rural electrification, sanitation, and information technology deployment and/or education and support for civic participation among women and youth in affected communities.