Nigeria’s institutional fight against dirty oil - CNBC Africa

Nigeria’s institutional fight against dirty oil

Western Africa

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Downtown Lagos, Nigeria. PHOTO: Getty Images

“We’re coming from a history in which a few years ago, I would have sat with a bank CEO in my office and said to him, ‘You know, we’ve looked at your books, you’ve stolen 200 billion. I’m chairman of the committee of governors, why don’t you just pay me 10 per cent and let’s sort it out’”, said former central bank governor Sanusi Lamido Sanusi at the 16th annual Nigerian Economic Forum in 2011.

“We’re coming from a history in which people who are rich never go to jail.”

Nigeria, like many countries in the world, has been synonymous with corruption both within financial and governmental institutions, as well as down to the everyman.

According to Transparency International’s 2013 Corruption Perception Index, Nigeria scored 25 out of 100, based on a scoring  where 0 means that a country is perceived as highly corrupt, and 100 means that it is perceived as very clean.

Sanusi has however been at the forefront of challenging the levels of corruption on a banking and administration level.

Since 2009, his banking and central bank reforms have uprooted various inconsistencies and aspects of misconduct, planting more transparent and sturdy frameworks to steer Nigeria’s financial system away from its previous rot.

(READ MORE: Sanusi reforms still at the helm of Nigeria's financial system)

Sola Adegbesan, head of global markets at Stanbic IBTC, told CNBC Africa, “Governor Sanusi, I think, will go down in history as one of the most important central bank governors that Nigeria’s had. It can’t be taken away from him that he, in his tenure, he averted a huge crisis that hit the financial industry with the bailouts of the banks”.

(WATCH VIDEO: Sanusi speaks out after suspension)

“I think the method and the success of that bailout will be read in history by other markets and other countries as the template to go about a bailout without the significant disruption that normally comes with this.”

Due to Sanusi’s exposure of misconduct and misappropriation of funds at the Nigerian National Petroleum Corporation (NNPC), the presidency has since begun an audit of the state-owned oil company.

Last year, in a letter to President Goodluck Johnathan, Sanusi explained that the discrepancy of roughly 20 billion dollars in missing state revenues had been discovered within the NNPC.   

Despite the discrepancy, the Nigerian Extractive Industries Transparency Initiative (NEITI), which was founded in 2004, is mandated by law to oversee accountability and transparency within Nigeria’s oil, gas and mining revenues. At a time when oil theft and oil-related corruption is rife, the NEITI’s role is as crucial as ever.

Femi Oladehin, partner at Argentil Partners, explained, “The reality is that if you look at Nigeria’s history, and the NNPC’s history as well, it’s a history that’s replete with accusations of corruption, instances where the Nigeria Shell Petroleum Company itself cannot account for the sales that it’s made or for funds that have been in its custody. These accusations go as far back as the ‘70s”. 

Similarly, the Economic and Financial Crimes Commission has also created a Special Team on Petroleum Subsidy (STPS) to investigate petroleum subsidy fraud in the country.

Despite analysts and market watchers fearing the worst for Nigeria’s economy since Sanusi’s suspension, anti-corruption institutions specifically created to expunge vices in Nigeria’s most important resource could give a glimmer of hope to investors.

(WATCH VIDEO: Sanusi/Jonathan fallout dents Nigerian banking sector)

Kayode Akindele, partner at 46 Parallels, added, “Investors were also looking at 2015 elections and getting a bit worried, and normally before elections investors normally leave the Nigerian market."

“What is important is that government now tries to build confidence in that the decisions it made were made for the best interest in the Nigerian market and try and build confidence with the investors.”