Examination of Witnesses (Questions 140
- 159)
THURSDAY 16 JULY 2009
MR GARETH
THOMAS MP, MR
EAMON CASSIDY
AND MS
BEVERLEY WARMINGTON
Q140 John Battle: The methodology
of how you have done that, how you have focused on the sectors,
could be very encouraging, not only in Nigeria, not only in the
south.
Mr Thomas: Am I being too bold,
Mr Cassidy?
Mr Cassidy: I do not think so.
There is some very detailed analysis that underpins this. The
GEMS programme is based on a whole series of business climate
surveys that we did at the state level right across Nigeria. We
have done ten states. This is the first time this has been done
to international standards at the sub-national level. That yielded
really interesting results for what the obstacles were to private
sector development in those particular states. That is what we
have used for the GEMS programme. The numbers are pretty robust.
Again, it is very hard to predict when it will happen because
what we are really keen to do is not just to have jobs. These
have to be real jobs. This is not digging holes and filling them
in again. These are real jobs, real industries and real sectors
and people making money out of them. That has to be based on real
growth. To do that you really need to tackle the obstacles to
growth at the state level and get business growing and hiring
people because they actually need them to work, not just simply
to create jobs.
Q141 John Battle: We should not decry
job creation schemes. Digging roads and things is a good thing
to do and even building community centres and the rest of it.
We have done that in Britain but whether it is sustainable employment
generating money that then pays into the tax system as you would
want is a different order of magnitude altogether. It is also
the methodology of how this has been developed, because I think
it is well overdue in a way and you are there at the forefront
of it now.
Mr Cassidy: If it would help,
I can certainly pass to the Committee the very detailed analysis
that underpins the programme. There is some very technical, economic
analysis if you are interested.
Q142 John Battle: Yes, please. Moving
to financial exclusion and access to finance, I did not go but
the Committee met the head of the Enhancing Financial Innovation
and Access (EFINA) programme to look at financial exclusion and
people without a bank account basically. What do you expect from
that programme?
Mr Thomas: We are hoping that
we will be able to widen access to formal financial services by
about five million adults by 2011. One of the lessons from other
access to finance programmes that we have had in other states,
notably Kenya, has been the way in which you can use mobile phones
to help get access to formal financial services. Some of the work
that EFINA will fund will involve projects and new technology
to get access to financial services.
Q143 John Battle: I think it was
two years ago when Paul Mason was on News Night travelling
through Kenya. He was asking people if they had a mobile phone.
That might well have been DFID supported. He stopped on the roadside
and asked some women who were just moving cattle along did they
know what a mobile phone was. One pulled one out and said that
once she got to market she would be knowing the price of the goods.
Are DFID behind that programme, that move to the mobile system?
Mr Thomas: The EFINA project will
help to fund potentially a series of projects using that sort
of technology. The access to finance work in Nigeria but also
more generally that we fund across Africa and Asia is very exciting
because access to finance is one of the key blockages in helping
people achieve access to the things that are calibrated in terms
of the Millennium Development Goals. There is very little formal
conversation at political level often about access to finance.
One of the joys of coming back full time into the department is
that I have again responsibility for our growth policy work. I
am very keen to give a further push to see what else we can do
in terms of access to finance.
Q144 John Battle: We once did a report
a few years ago on remittances and Nigeria is one of the countries
which does receive a lot of remittances. If we now call it m-banking,
mobile banking is a way of transmitting remittances direct from
somewhere like Leeds or London perhaps into villages or towns
and cities in Nigeria, providing the regulation is right of course
so they do not lose the money. Is that being looked at as part
of the EFINA programme?
Mr Thomas: Given the huge impact
that remittances can have, we certainly have had a work programme
looking at how you can reduce the cost for example of sending
remittances as well as the question of regulation and getting
right things that can make sending remittances more difficult,
such as money laundering legislation. We have funded a whole programme
of work to track the different costs and financial services and
companies' products for sending remittances back so that people
had better access to what each product cost and so that there
was more competition in the sector. It may be something that we
want to return to more generally in terms of policy work. We are
just beginning to look at that.
Mr Cassidy: We do not know what
figure you could put on the overall level of financial remittances
to Nigeria. It is estimated at about $7 billion a year but that
comes in informally, in people's pockets. You can send it now
by text. You can send it through your mobile phone by buying credit
and use that to send to people, which they can sell in rural areas.
One of the things that this particular project will look at is
whether you can formalise that. It is looking at mobile banking.
There are some technical, legal issues to be sorted out about
who the bank is and who is holding the money once it is actually
going through the mobile phone network which are going to take
a little bit of working out, but it is certainly one of the ambitions
of this programme to make it easier for people to remit moneys
through mobile phone. There are 60 million mobile phones, I think,
in Nigeria and 150 million people. Quite a lot of people have
three because the networks do not work very well together, so
it is probably only 20 million really. That is a massive expansion
over the last couple of years. There is huge potential there to
use that network now for banking.
Q145 Andrew Stunell: Every bit of
evidence we took and everything we saw reinforced the fact that
Nigeria is a very diverse country. It has a complex system of
governance and there are many issues to overcome. Clearly DFID's
role in supporting an improvement of that is absolutely crucial.
I wonder if I could preface my question with an observation which
is that at the macro-international level the White Paper suggests
that DFID's support will in future be focused more on what we
might call the lame ducks and the conflict zones; whereas in Nigeria
itself it is concentrated on the more successful states and the
more peaceful states. There seems to be a slight discontinuity
between the direction of the White Paper and the current direction
of DFID investment in Nigeria. Bearing in mind the need to strengthen
governance in Nigeria which must essentially mean strengthening
the weaker parts of the governance of Nigeria, I wonder if you
would like to comment on whether DFID in the future would be adjusting
its priorities within the country to reflect the White Paper.
Mr Thomas: Let me come to the
question of the White Paper and where next with our Nigeria programme.
If I may challenge ever so slightly your interpretation of where
we have chosen to work, I do think Nigeria is fundamentally different
to the more conflict affected states and fragile states etc. It
is a very different state to a DRC for example. It is not aid
dependent. There is a small number of donors and as a result,
given the scale of the government's challenges, you do have to
pick very carefully who you work with. Our judgment has been that
it is clearly more sensible to work in those states and with those
institutions that are most keen to have access to expertise and
advice and who are most committed to trying to tackle poverty
in their areas. That has certainly informed the choice of states
where we have worked. I do not think you can say that Kano state
or Jigawa state are amongst the most well off states. I accept
you could argue that was the case with Lagos, but I do not think
in general that is a fair characterisation, not least because
also, beyond the deep engagement states, the other states where
we have worked, we have been much broader. We have worked in many
of the poorer states and the states where there have been particular
health challenges around maternal mortality, polio or malaria.
In terms of how the programme might change as a result of the
White Paper, I certainly expect for example our work on security
and justice and the focus in the White Paper on those areas to
be reflected in what we continue to do in Nigeria. We are beginning
to work on a future justice programme in Nigeria. That is in line
with the White Paper. There is a very strong focus on drugs in
the White Paper. The growth in employment programme that we have
just been talking about again reflects that. I think the third
area where we are beginning to do some work in Nigeria and beginning
to have some results and where I would expect to see further work
would be on climate change. We do want to more generally help
Africa's voice to be heard in climate change negotiations and
to help countries think through what the impact of climate change
means for them. In Nigeria already we are helping to support a
parliamentary committee that has been set up to look at climate
change and a network of civil society organisations and think
tanks, academics, etc., that has been formed looking at climate
change issues. Part of the conversation that I would expect us
to have going forward at ministerial level as well as at Beverley's
level and the head of office level is about climate change and
making the obvious points about the need for Nigeria to develop
its thinking, not only as a major voice in Africa in the run up
to those international negotiations but also thinking through
what it means for Nigeria and how it might need to adapt. You
think for example about how close many of Nigeria's towns and
settlements are to the coast and the potential implications for
Lagos of itself of climate change and you can see the obvious
work stream beginning that needs to be addressed and developed.
Q146 Andrew Stunell: Do you feel
that the Nigerian Government has a clear vision and sense of direction
about the kind of priorities you have outlined? To what extent
can DFID contribute to developing them?
Mr Thomas: I think it could certainly
be clearer. That is probably their view as well. They have a process
to develop such a vision. Indeed, Eamon as our head of office
sits on the steering group which is helping the Nigerian Government
to think through that. I suspect the ultimate vision paper that
emerges is not going to be dramatically different to the piece
of work that the previous regime did, the Nigerian Economic Empowerment
and Development Strategy, in 2005, which has set out some of the
major challenges that Nigeria needs to address. We have sought
to structure our support to coincide with those objectives.
Q147 Andrew Stunell: Do you think
they are evolving as realistic and achievable objectives?
Mr Thomas: I think there is more
work to do in that area. Inevitably, when governments change,
there can be a hiatus before a programme of development kicks
off again. We have seen that a little bit for all sorts of reasons
in Nigeria, not least the time lag before election results were
confirmed. It is a very different administration to the administration
that was there. My understanding from having just met the secretary
to the Federal Government, the Prime Minister equivalent figure,
is that there are some extremely capable people at federal level
who are clearly doing a lot of thinking through of the priorities
for Nigeria going forward and who are very keen to continue to
work with us. I would be optimistic about the future but there
are huge challenges, as you have picked up.
Q148 Hugh Bayley: I think the international
community set the standard far too low for the election in 2007
in terms of what would be found internationally acceptable. This
was a deeply flawed election. The man consideration internationally
seemed to be that there should be a peaceful transfer of power
to one of the candidates in the election. When it comes to the
2011 elections, what do you think the prospects are of having
elections which are free and fair, which are not marred by the
violent drive by shootings outside polling stations that we saw
and other gross violations of normal electoral practices at the
last elections? What will DFID be doing to create an expectation
in Nigeria and internationally that the standard of conduct for
elections needs to be radically different?
Mr Thomas: It is not just the
election process that we would say was by no means perfect but
the whole process of governance and democracy in Nigeria clearly
needs to develop and change in a very significant way. Of course
we would want to see elections take place without violence. We
will have programmes of observation and broader support to try
to make the elections as free of vote rigging and other electoral
challenges that you see in some states from time to time. I think
there is a far broader piece of work that needs to continue to
be done to change the nature of democratic governance in Nigeria.
In order to do that, we have to recognise that it is not that
long ago that military rule came to an end. The experience and
tradition of democracy, of political parties operating and having
their own internal democracy of civil society, engaging with those
political parties, is extremely young, to put it mildly. We have
a programme that seeks to strengthen the National Assembly and
strengthen increasingly state assemblies, that is seeking to work
with political parties and politicians in the National Assembly,
but is also seeking to build up civil society and media groups
so that the grass roots pressure that we are used to in the UK
is also seen in an increasing way in Nigeria too. I would accept
that the challenge to us is that part of the responsibility for
DFID has to be to work with government on trying to make the next
round of elections a further significant improvement on what has
gone before.
Q149 Hugh Bayley: What are the minimum
necessary electoral reforms that ought to take place before the
2011 elections to make it probable that you will have a genuinely
free and fair election?
Mr Thomas: There has been a piece
of work done in Nigeria looking at the elections in 2007 and coming
out with a whole series of recommendations. The government has
accepted 170 of what were 186-odd recommendations and put them
into its equivalent of a White Paper. We would want to see those
recommendations implemented as a minimum going forward. Clearly
there needs to be a substantial amount of work done in terms of
preventing violence. I accept there was violence. I think there
was less violence than we have seen in the past in Nigeria, so
that was an improvement. We want to see a further improvement
going forward. One of the key things we need to crystallise the
broader point is that we want the Electoral Commission to be able
to function on its own and to have a source of funding from the
government which does not make it dependent on the government
to operate on a day to day basis. That would be one of the most
important reforms that we could see and should expect to push
government for.
Q150 Hugh Bayley: What might that
source of funding be?
Mr Thomas: A separate allocated,
dedicated budget from the government's finances, allocated to
the Electoral Commission so that it does not have to come every
minute to ask for a specific part of what it needs to do on elections.
Q151 Hugh Bayley: To move on to the
question of the role of the National Assembly, as a Committee
we have argued previously that DFID does not give enough attention
to the importance of developing the capacity of country parliaments
in developing countries to amend legislation and hold the executive
to account. The White Paper pledges an amount equivalent to at
least 5% of budget support funds—we do not have budget support
in Nigeria—will be allocated to strengthening mechanisms
to make states more accountable. What proportion of the budget
in Nigeria will be allocated to mechanisms to make states more
accountable? What proportion of that money will go to parliaments?
We noted in the White Paper that although you list groups such
as the media and citizens groups, audit bodies and others, you
do not specifically mention parliaments or state assemblies and
we think you should have done. We would like to see a very clear
commitment both to the proportion of money to be spent on strengthening
mechanisms to make states more accountable and, as I say, an allocation
of that to strengthen elected assemblies.
Mr Thomas: I do not have a specific
figure that I can give you and tell you now what proportion of
the budget in Nigeria we are giving to support parliaments or
governments more generally. Working with the National Assembly
and working on governance issues is a significant part of what
we do. We have a Strengthening the National Assembly Programme
which is aimed at developing the capacity of a range of the committees,
for example, that are established in the National Assembly to
hold the executive accountable, be they committees on donors,
on health, on education, on women's affairs, on the Millennium
Development Goals. There has been a series of awareness raising,
training, for new members of the National Assembly, for committee
staff, on the functions of those committees, on what use has been
made of Nigeria's debt relief gains, on what effective budgeting
looks like, so that those parliamentarians can more effectively
do their jobs and challenge government and hold officials to account.
In a sense, given the huge turnover that took place at the 2007
elections and also beforehand, that is a very basic area of work
which needed to be done and will no doubt continue to need to
be done to strengthen the effectiveness of the National Assembly.
We are very clear that we want that work to continue. In a sense,
it has not stopped there because one of the ways in which parliamentarians
around the world draw their information from to challenge ministers
and officials is by working with civil society. Our funding has
helped to establish an office that liaises with civil society
that Assembly members can use. I should have said that there has
also been a whole series of different pieces of work to help parliamentarians
comment on, devise, engage with legislation on public procurement,
on the Extractive Industries Transparency Initiative and various
other public financial management work. What I would not accept
is the charge that we have not been heavily engaged in working
with national parliaments; we have been in Nigeria and I very
much see that work continuing. Indeed, not only do we want that
work to continue but we want to extend it to working with state
legislatures in the future as well.
Q152 Hugh Bayley: I am pleased to
hear that. You say that your Department is supporting the SNAP
programme—Strengthening the National Assembly Programme—and,
indeed, you did until the programme came to an end earlier this
year. Can you say how much has been spent on the SNAP programme
to date and how much DFID will be spending on similar initiatives
to strengthen the National Assembly in the future, and when they
will begin?
Mr Cassidy: Just one point, Mr
Bayley. It has not actually finished yet; it will finish at the
end of September. In total it was £2.7 million.
Q153 Hugh Bayley: Over how long?
Mr Cassidy: Over three and a half
years. At the moment we have spent, I think, about £2.5 million.
We have some ongoing programmes, including with the new donor
committee who you met when you were with us. The next programme
is called Deepening Democracy, which is going to follow on both
from SNAP and from the work we did around the last electoral process.
Again, we are trying to take a more integrated approach to working
on these issues. We hope that will be about £20 million in
total and that is still under design so we have not pre-allocated
yet exactly how much will be going to the National Assembly.
Q154 Hugh Bayley: That is £20
million over what period?
Mr Cassidy: Over five years.
Q155 Hugh Bayley: What proportion
of that £20 million will be spent on strengthening the capacity
of elected officials other than opposed to audit functions or
civil society or other parts? Not that these other parts are unimportant,
they are essential.
Mr Cassidy: I do not know the
answer to that yet. It will be at least one-third of it.
Hugh Bayley: At least a third. Can I
just say, before passing the baton to my colleague, that the Committee
went to Nigeria about five or six years ago and I came back then
deeply depressed about the very, very high levels of corruption
and very poor levels of transparency in government and the poor
quality of elected officials. On this occasion, although there
are still formidable problems with Nigeria's governance, I met
quite a number of public officials, elected officials, who I felt
were straight and committed and wanted to change things. That
is in part due to the work that DFID and other donors have done
to strengthen capacity and it is really important that you continue
and intensify this work in my view.
Q156 Chairman: My supplementary is
slightly treading on more delicate ground. What was mentioned
to us a few times was that part of the reason for the 80% turnover
was not a triumph for democracy, it was in fact people being deselected
for having had the audacity to fall out with the outgoing president
fundamentally and subsequent to the election those numbers who
had been elected to opposition parties were significantly defecting
to the government. In other words, it was gravitational towards
if not a one-party then a dominant party state because people
did not feel there was scope for opposition, yet at the same time
the chair of the donor committee explicitly and unprompted by
us said, "We need the opposition. We do not have an effective
opposition to enable us to work". I suppose what I am asking
is to what extent is it appropriate or proper for DFID's engagement
with the governance process to address those kinds of issues which
in the end are the determination of the Nigerian people, the Nigerian
parliamentarians and politicians but, nevertheless, have significant
implications for the direction of functioning democracy?
Mr Thomas: I am not against defections
from the opposition to the government, Chairman, particularly
at the moment! In terms of Nigeria, what I would try and use would
be, in a sense, the concept of the journey. There are still real
issues of the sort that you have just described and what I hope
our programme and others are helping to do is to build up the
democratic character of the political process in Nigeria. When
you consider where Nigeria was at the end of military rule, I
think we have to recognise that there is an awfully long way to
go. What our programme can do is help to continue that journey
and that change. In a sense, by training parliamentarians in how
to work on committees, how budgets work, what the significance
of particular legislation is, you do hopefully help to build the
capacity up for people to use their roles in parliaments to question,
probe and push, and in that way that type of accountability that
oppositions bring to parliaments we will hopefully start to see
in a more significant way.
Q157 Mr Sharma: Mr Bayley has already
touched briefly on the corruption side. What would you point to
as the main achievements in tackling corruption of the Nigerian
government under the previous President? Has the momentum to tackle
corruption at the highest levels been lost? How is DFID supporting
anti-corruption measures?
Mr Thomas: As the Committee may
be aware, we have provided support to tackle corruption in three
very obvious ways. One is to the Economic and Financial Crimes
Commission (EFCC), which is probably the leading anti-corruption
body. We are continuing to provide support, as we have discussed
already, in terms of strengthening governance systems, the audit
functions and the public financial management. We are probably
the leading partners supporting the establishment of the Nigeria
Extractive Industries Transparency Initiative. In terms of progress
of the President Obasanjo administration, I think between 2005-07
we saw about $5 billion of assets recovered that had been corruptly
purloined and the prosecutions of about 82 comparatively senior
people. I think there was a significant improvement in terms of
accountability for people who were guilty of corruption. There
are some questions being asked, as you say, about the current
government's commitment to working with the Economic and Financial
Crimes Commission. There are still prosecutions taking place.
Looking from the outside, one of the frustrations has been that
the allegations of corruption against a number of governors are
not being progressed as quickly as perhaps we would want. A series
of cases are continuing to be adjourned. I think there is also
a series of challenges around the capacity of the Economic and
Financial Crimes Commission anyway. It still has a shortage of
skilled investigators and prosecutors and it does depend on the
government to take forward cases that it identifies as being necessary
to progress. What we can continue to do is to provide further
support to the Economic and Financial Crimes Commission to build
up its capacity and its effectiveness. The international community,
including ourselves, needs to continue to press at ministerial
level in particular for the Federal Government and, indeed, state
governments to take the issues of corruption seriously and seek
to move Nigeria on to the next level in terms of addressing corruption.
Q158 Mr Sharma: What are the implications
of the recent removal of the Chairman of the Economic and Financial
Crimes Commission? How does corruption affect DFID's own ability
to operate in Nigeria?
Mr Thomas: One of the reasons
why we do not do budget support is because of our concerns about
the effectiveness of government and the government systems at
the moment, so in a sense that is one very direct way in which
our operations are affected. There are also very specific concerns,
which perhaps we will come on to, around the Niger Delta where
it is difficult for us to work. These partly relate to corruption
and partly to security issues. Corruption has an impact in those
very obvious ways.
Q159 Chairman: What about the removal
of the Chairman of the Commission?
Mr Thomas: At first glance it
does not send the best of signals in terms of the future direction
of the work of the Commission. Mr Cassidy, do you want to add
to that?
Mr Cassidy: I think it is very
clear that the work has been going on. As the Minister has said,
there are certain of the more prominent cases that have been a
lot slower going through than we had thought might be the case.
It is difficult to unpick what the reasons for that are. There
is a very slow legal process in Nigeria, so it is quite difficult
to say that is directly related to the removal of an individual.
There is no doubt that the pace has probably slowed. It is also
true, I think, that the net has been broadened and quite a lot
more people are being looked at and more cases than there were.
There are a lot more federal officials, for example, being investigated.
You can obviously take that in either of two ways: it is good
in that the net has been broadened, or you can say it is bad and
that is putting the spotlight on to different people and off others.
It is extremely difficult to say which it is. The work is ongoing
and we are watching very carefully. In our new Justice Programme
we will actually have provision to work with the EFCC if we think
that is a useful investment to make. It is also quite important
to note, coming back to Mr Sharma's question about how this influences
what we do, that governance is at the core of everything we do
in Nigeria, so you are not only tackling it with the EFCC you
are also tackling it with helping to build the systems to make
sure that money can be managed properly. You also tackle it through
programmes like GEMS, for example, the growth programme, which
helps to take discretion out of the system that helps to reduce
the number of licences that you need to open a business and, therefore,
reduces the number of opportunities there are in that process
for graft. We need at least a three-pronged approach: one is working
upfront in the anti-corruption effort; the other is helping to
build the systems; but then you also need to reduce the opportunity
for corruption. We are working on each of those.
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