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The Challenges of Benefit Transfer to Oil Producing Communities in Nigeria — A chat with Ken Henshaw

*This chat with the Executive Director of We the People was conducted by Budgit on Twitter and first published on Medium in October 2020


The challenges of benefit transfer to host communities in oil producing states is certainly not a new conversation. In fact, the discourse has been a laser focus in recent years, with perceptive opinions from stakeholders and players in Government and the Extractive Industry, on the persistent challenges of poverty, infrastructural decay and employment dearth in the region–over the years–despite the systems of benefit transfers put in place by the Federal Government.

The issues are multidimensional; hence, the most workable solution is the careful overhauling of all the current systems of benefit transfer to oil producing regions, including the Amnesty Program, Niger Delta Development Commission (NDDC), and the 13 per cent Derivation Fund, among others.

Recently, BudgIT Nigeria had a chat with Ken Henshaw, Executive Director of We The People, who also trains different teams of transparency and accountability advocates from NGOs and communities on ways to monitor the revenues accrued to State and Local governments in the oil producing states.

The engagement deep dived into the challenges of Benefit Transfer to Host and Impacted Communities in the Niger Delta region, and the way forward.

Ken’s approach and insights were explicit, especially on the woes of poverty and underdevelopment in host communities — which are further strengthened — by the lack of a proper framework for determining the extent to which benefits from the sector have impacted local communities.


BudgIT: Are host and impacted communities benefiting from oil production taking place in their communities?

Ken Henshaw: Benefits from oil extraction are very limited. It is safe to say that oil hosts and impacted communities are not benefiting reasonably from oil extraction activities. Visiting oil host and impacted communities, you will immediately notice that these places are not different from other less endowed parts of the country. The levels of poverty, infrastructure decay and destitution are the same, or worse. The problem has been escalated by the destructive effect of oil exploitation. As a result of oil pollution, the traditional livelihood sources of the people have been compromised. The people can no longer make a living from fishing and farming.


BudgIT: What are the top reasons why oil communities are not benefiting as much as they should?

Ken Henshaw: The major reason oil producing communities are not benefiting from oil extraction is because policies meant to transfer benefits to the people have consistently failed to do so. The problem isn’t lack of policies, but the translation of policies into action. Since the 1960s, attempts have been made to ensure more benefits get to communities that produce oil. We have had the Niger Delta Development Board, the Niger Delta Basin Dev. Authority, 1.5% Committee, OMPADEC, etc. They have all failed. Corruption is also a major problem. The recent revelations by the National Assembly on the scale of corruption is a case in point. This level of corruption runs through every aspect of the management of benefits to communities.

So today, we know about the extent of corruption in the NDDC. We are convinced that there are same or even worse levels of corruption in the management of other interventions like 13% derivation, MNDA, and so on. Nobody is checking. There is also the lack of participation which is a major issue. In planning development activities and interventions, no agency responsible for managing community funds actually consults people of the community. Sadly, benefits are treated as gifts to the people.

Imagine a road is constructed for the people from their resources, and the people see it as a blessing from a benevolent Governor, rather than a benefit that they are constitutionally entitled to. Lack of participation also means lack of ownership. The people do not see the projects as theirs, they tag the projects “government projects”, “NDDC projects”, and so on. This eliminates the element of ownership.

The government at the state and national level must share in the blame. There is absolutely no framework for determining the extent to which benefits from the sector have been impacting local communities. Why did it take 20 years to know that NDDC wasn’t performing? Is anyone looking at the impact of 13% derivation after 20 years too?

BudgIT: Some revenues go to Niger Delta through at least four existing Benefit Transfer Schemes, namely, (NDDC, 13% derivation, Amnesty program, Min. of Niger Delta Affairs). Is there any strategic coordination as regards how these monies are spent to improve their chances of impact?

Ken Henshaw: Unfortunately, all the agencies tasked with working to develop the Niger Delta are working at cross purposes. There is no system of joint planning or coordination. Sometimes projects are awarded twice by different agencies who are not talking to themselves.There is also the rush to execute big capital projects. Big projects mean big contracts. The Niger Delta is littered with thousands of abandoned and decaying projects worth trillions of Naira.

As a result, the de-facto principal purpose of the agencies isn’t development, they rather not collaborate and plan. Everyone wants to work in isolation and secrecy. Nobody wants prying eyes.

BudgIT: What is the current impact of both oil spillage and gas flaring in these communities?

Ken Henshaw: Oil spills remain a near daily occurrence in Niger Delta communities. The effects are devastating. Sometimes on account of age or human activities, piles rupture and spill oil that pollute farmlands, rivers amongst others. The effects of oil spills are immediate and devastating. A few barrels of oil in the river sends thousands of fisher folks into starvation and destitution. Tens of thousands of fishes die and float. Mangroves which are the breeding ground of several fish and aquatic life species die off. Rivers can no longer sustain life. Whole communities live with this daily.

Gas flaring is another challenge in the Niger Delta not because there are no options, but because the government and oil companies have consistently failed to stop it. Deadlines to end gas flaring have continued to be shifted from 1979 till 2030. The government prefers paltry fines paid by oil companies. And even these fines do not go to the communities. Flared gas causes various illnesses including heart diseases, distortions to the epidermis, lung complications, etc. It is for this reason that life expectancy in the Niger Delta is lower than in other places.


BudgIT: How do we improve benefit transfer to oil producing communities?

Ken Henshaw: First we need to ensure that the leadership of these frameworks are not appointed out of political considerations. They need to be people of character and merit. Secondly, it is important that members of target communities are taken along in all aspects of benefit transfer planning and management. You can’t have an NDDC that has no structure for talking to the 25million people it serves. That is unacceptable.We also need to establish a system of monitoring and evaluating resources in this region. This will greatly change the narrative.

A poverty ridden host community

When giving the conclusive remarks, Adejoke Akinbode, Senior Programs Officer at BudgIT, opined that the core pillar of any Benefit Transfer Scheme or Policy by the Government is the effectuation of an accountability system, where detailed breakdown of accrued revenues and budgets are opened and accessible by the citizens for public scrutiny. This would invariably ensure that benefit-sharing mechanisms translate into measurable benefits for host and impacted communities.