How Eco-Friendly is Nigeria’s Foreign Aid Portfolio?
There is a lack of clean-up funding provided to Nigeria by international donors, especially in light of the total amount of external funding spent on developing Nigeria’s oil and gas sectors.
Two years ago, the Deepwater Horizon explosion turned a spotlight on lesser-known sites of environmental degradation caused by extractive industries. Many saw parallels to the last fifty years of oil leakage in the Niger Delta (also see here or here ).
We were curious how the costs of the two spills compared, so we examined the estimated crude oil spilled vis-à-vis the actual clean-up costs. The results indicated an alarming lack of clean-up funding provided to Nigeria by international donors, especially in light of the total amount of external funding spent on developing Nigeria’s oil and gas sectors. Considering Nigeria’s role as one of the world's top ten oil exporters, it would appear that donors benefit from natural resource extraction in the Niger Delta without shouldering much of the environmental remediation burden.
Oil remains a contentious issue in Nigeria. A recent tanker explosion highlighted the fatal combination of poor infrastructure and a combustible natural resource. Last year, an independent report revealed that the damage from a 2008 Shell oil spill was 60 times greater than originally estimated.
Our original questions remain mostly unanswered.
1.) Is foreign aid to Nigeria mostly ignoring, worsening, or remediating the
environmental damage caused by oil?
2.) How does Nigeria compare to other Sub-Saharan countries with similar levels of
We isolated all Nigerian aid between 1973 and 2008, and collapsed the environmental categories into four types: “dirty”, “environmental”, “neutral”, and “unsure (not enough information)”. (Click here for data used in this report.)
Given that Nigeria agreed to a massive debt forgiveness deal with the Paris Club in 2005, we excluded neutral projects with “debt relief” purpose codes. (Between 2003 and 2007 alone, donors committed $16.7 billion in debt relief to Nigeria, a full 32% of all Nigerian aid since 1973.)
While the majority of incoming aid flows are environmentally neutral (e.g. health, education, civil society support), dirty aid (e.g. extractive industries, agriculture, livestock) accounts for a third of all Nigerian aid committed during this 35-year period.
When viewed over time, the environmental profile of international assistance to Nigeria seems to mirror the country’s tumultuous history. Following an annulled election in June 1993, the United States and other key donors imposed sanctions on the Nigerian military dictatorship and suspended most aid programs. After the country’s return to democracy, the international funding floodgates opened, resulting in a spike of environmentally neutral aid.
However, the environmental composition of Nigerian aid is not unusual when compared to its peers in Sub-Saharan Africa. We averaged 2000-2008 environmental vulnerability scores in Sub-Saharan Africa, as reported by Yale’s Environmental Performance Index (EPI), and compared these averages with incoming aid flows since 1980. Of the dozen states with the lowest EPI scores in Africa, Nigeria has received the highest percentage of environmentally friendly aid: 12.5%. Given Nigeria’s troubling record of oil spills, the high levels of aid for locally-oriented projects with explicitly environmental aims (9.25% of total) suggests much of this environmental (eco-friendly) aid is related to oil spill response.
Interestingly, there is a positive correlation between the proportion of “dirty” aid received and a recipient government's level of environmental performance. In the chart provided below, lower EPI scores represent lower levels of environmental policy performance. This pattern suggests that more environmentally risky funding goes to African states with policies and institutions that can handle such risk.
One would hope that “dirty” aid to Nigeria is being targeted to local governments with relatively high levels of administrative capacity and oversight. The World Bank’s “Mapping For Results” initiative shows substantial Bank funding for energy, mining, and industry projects in Nigeria’s oil-rich southern Delta regions. But this begs the question: how is such aid being distributed relative to the specific locations of oil fields, wells, and spills?
This question cannot be answered without more transparency from the donors and oil corporations operating in Nigeria. The World Bank’s recent initiative to geocode active extractive industry sites as well as project locations in Ghana might serve as a good model. An online platform mapping Nigeria’s oil drilling sites and international aid activities, overlaid with sub-national indicators of government regulation and environmental risk, could lead to smarter targeting of environmentally impactful aid projects.
This is a continuation of the First Tranche’s look at the environmental impacts of development assistance. See here for related posts on the subject.