Nigeria: #EcologicalFund: How Federal Government Diverted N93.7 Billion Meant for Ecological Interventions

Nigerian governed funds meant for ecological interventions diverted
31 December 2019

Abuja — Nigeria is a country blessed with many resources. A young vibrant population, abundant mineral resources (which are either not fully explored or whose potentials are exploited by only a few in power).

Besides, the country's diaspora population has swag when it comes to impact. Or how do you beat the remittances of US$25 billion which according to PwC, represented 6.1% of GDP in 2018?

Another thing Nigeria is blessed with, yet, poorer for it, is the well-scripted policies that later turn out to be underground avenues for diversion of funds and overt misappropriation. Many funds meant for emergency management have ended up being used for elections, agriculture loans and travel expenses.

Audit reveals major diversions took place during the presidencies of Jonathan and Buhari.

Unfortunately, the Federal Government of Nigeria shows no regard for the Auditor General's recommendation to discontinue processes that divert and misappropriate constitutionally appropriated funds.

Moreso, key government institutions do not consider the grave social implications of diverting each single Naira from the special intervention fund under their auspices.

It is sad to note that lives have been lost, access to affordable healthcare and good education have been undermined at every instance of fund diversion.

The Nigeria Extractive Industries Transparency Initiative (NEITI) audit process have reported how beneficiary agencies of government divert or embezzle refunds. At other instances, they show how these agencies have either engaged in contract corruption or neglected their core function of ensuring that paying institutions remit the exact amount due.

The latest audit report by NEITI looked into the financial operations of revenue-generating and beneficiary agencies from 2012 to 2016. This audit scan revealed among others, how the Federal Government led by Jonathan, and then, Buhari, diverted NGN93.7 billion meant for the Derivation and Ecology fund.

The report noted that between 2012 to 2016, the Government directed the Ecology Fund Office (EFO) to release funds for various projects that were clearly out of the purview of the Agency.

The Federal government memos for the loan of N93,768,951,164, according to NEITI, states reasons such as funding of budget deficits and advance to States and Local Governments to meet shortfalls in their revenue. However, these monies were termed loans and did not spell out the recovery or repayment process.

Many of such loans ended up being bad debts and so render the designated use of the funds impossible. For example, Sahara Reporters quoted the Auditor General's comment with regard to this FG's loan in 2016 saying "the 2017 budget did not include any appropriations for the repayment of these borrowings.

To show these actions were deliberate and with the likelihood of corruption, NEITI lamented how it's auditors were denied documentation to carry out a thorough evaluation. They captured their frustration saying "we were unable to verify the projects and not given access to the relevant supporting documents and records."

The Ecology Fund Revenue

The Ecological Fund was established in 1981 through the Federation Account Act (1981) and has passed through three stages of modifications in 1984, 1992 and 2002. It is an intervention facility established to address serious ecological problems across the country.

The fund's sources of revenue are statutory allocation (which is 1% of FGN share of allocation of Federation Account) and Excess Crude allocation. The statutory beneficiaries of this fund are the National Emergency Management Authority and any state in the federation facing ecological problems.

The NEITI report from 2012-2016 shows that a total of N276.51 billion was allocated to the fund for the period of December 2011 to November 2016. This is shown in the table below.

Transfer from the Federation Account to Derivation and Ecology Fund

    2012    2013    2014    2015    2016    Total 
 Month N'Million   N'Million N'Million N'Million N'Million N'Million
  Jan    4,865    4,358    4,507    4,653    3,254      21,637 
  Feb    3,896    5,796    4,771    3,929    2,760    21,152 
  Mar    6,494    7,166    5,008    4,548    2,565    25,781 
  Apr    6,121    5,796    5,038    3,275      2,217    22,447 
  May    4,175    4,992    5,037    2,844    2,079    19,127 
  Jun    4,255    5,822    7,057    3,274    2,285    22,693 
  Jul    4,133    8,368    6,148    7,782    4,667    31,098 
  Aug    4,663    4,628    5,194    4,015    3,554    22,054 
  Sep    5,484    5,365    5,335    3,365    4,147    23,696 
  Oct    3,808    5,101    4,848    3,039    3,080    19,876 
  Nov    5,626    5,714    4,687    3,830    3,787    23,644 
  Dec    8,177    5,098    4,894    2,811    2,325    23,305 
  Total   61,697    68,204    62,524    47,365    36,720    276,510 

Questionable Disbursements from the Ecology Fund

Sources: CBN 1.46% FGN Share of Derivation and Ecology account statement from 2012 to 2016, Summary of Gross Revenue Allocation by Federation Account Allocation Committee for 2012 to 2016 and OAGF 1.46% FGN Share of Derivation and Ecology Ledger 

Further analysis shows that 81% of the Fund's revenue was sourced from statutory allocation while the excess crude oil source accounted for just 19% as shown in the chart 'Questionable Disbursements from the Ecology Fund'.

Though the fund was set up clearly to address serious ecological problems across the country, NEITI submitted that "disbursements from the fund were made to beneficiaries outside the purpose of setting up the fund". The list below provides a peep into the questionable disbursements by the Ecological Fund Office on behalf of the Federal Government.

  1. The Sum of N2.5 billion released to the Nigerian Army for relocating and complete development of a new Barrack for the 176 Guards Battalion
  2. The sum of N1.47 billion released to Gombe, Nassarawa and Yobe State Governments as support to losses and damages of public property and place of Worship during the 2011 Post-Election Violence.
  3. The sum of N121.39 million released for procurement of materials to combat Ebola Virus outbreak at State Medical Centre, Abuja and 
  4. N223.50 million released to support Displaced Traditional Rulers in the North
  5. The sum of N786.5 million released to the Presidential Intervention Panel on IDPs in the North East
  6. N5 billion released to the Nigerian Foundation for the support of victims of Terrorism, approved by Mr President as part of Federal Government pledge

A number of investigative reports have shown how ecological projects are abandoned due to lack of funds to complete the projects. Of course, there are situations where corruption on the part of contractors and public officials is the reason for project failures.

Many important projects meant to mitigate the burdens of climate change on vulnerable communities remain abandoned or never initiated, regardless of the government's self-justification for the diversion and misappropriation of the Ecological funds. Consequently, livelihood and basic transportation are daily hampered by these decisions.

However, to ensure that the country adequately tackles its ecological challenges, including those encountered at the new frontier of climate change, it is necessary Federal government yields NEITI's recommendations that the ecology fund should be used for the purpose of its establishment.

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