First published on OpenOwnership
At the end of last year Nigeria published Africa’s first beneficial ownership register, and the first globally to focus on the lucrative oil, gas and mining sectors. The OpenOwnership team has been assessing the register’s performance and analysing the quality of the data that’s been disclosed. The register itself is a solid first step, with good functionality and innovations such as the inclusion of licencing data, but our preliminary analysis is that more work needs to be done on data quality, echoing issues seen with Nigeria’s pilot data disclosures in 2015.
OpenOwnership’s director, Thom Townsend, said:
“Nigeria deserves credit and should be extremely proud of publishing the first public beneficial ownership register in the region and linking the data to the nationally vital oil, gas and mineral sectors to aid its anti-corruption efforts. This is a solid first step and OpenOwnership stands ready to support Nigeria’s continuing journey to beneficial ownership transparency.”
OpenOwnership has worked with the Nigerian Corporate Affairs Commission on the development of legislation for a public beneficial ownership register of all companies in Nigeria. We also offered advice to the Nigerian Extractive Industries Transparency Initiative (NEITI) to help address the challenges of data collection.
The register and its data: expert reaction
The register is searchable by companies, assets and individuals and NEITI intends to keep it continuously updated as more information becomes available. From a user perspective, the website performs and functions well.
Significantly, the data is available to bulk download, allowing for systematic analysis of all companies on the register. This means that users can carry out basic investigations on company data, such as checking how many companies have declared their beneficial owners. It also means that the data can be used in connection with global data sets, potentially including OpenOwnership’s global register which already hosts data from the NEITI pilot conducted in 2015.
One area that requires attention is unique identifiers for companies. Currently the register only lists names, which can be confusing when entities have similar names or human error leads to mistakes during data submission. This may also hamper efforts to use the data more widely in connection with other global data sets as users must be provided with enough data points to tell companies apart. Similar issues will be found with the identities of beneficial owners; full names are currently provided, but structured name information would be a welcome improvement; for example, breaking names into first name, last name and title.
Many of those who are listed as beneficial owners are actually companies based in offshore jurisdiction, making it difficult to trace the true beneficial owners. One approach to this challenge is to always require the disclosure of a natural person as the beneficial owner (in line with legislation for all Nigerian companies) while retaining the requirement to disclose direct shareholders to enable traceability.
Where companies are exempted from declaring a beneficial owner (for example, wholly-owned subsidiaries of publicly listed companies) this should be flagged in the data, to allow mistakes and dishonesty to be distinguished from expected absences.
We note that links to stock exchange listings for public companies are provided but not yet working; this will be a useful feature of the portal once working. Related to this, it isn’t possible to distinguish if the beneficial owners listed are companies or persons. The data that has been released seems to be based on shareholdings, with the threshold for disclosure set at a laudable 0%. This low threshold should require the vast majority of companies to publish their beneficial owners and makes it harder to disguise ownership by dividing shares among proxies or creating complex corporate structures.
Significantly, the NEITI portal is the first to collect data on politically exposed persons (PEPs), allowing users to investigate who the movers and shakers are in their extractive industries, including anyone who might be connected to politically powerful people. Unfortunately, the bulk downloads don’t yet include data on nationality, age and PEP status of the beneficial owners, but at least these can be viewed on the website itself. The register is also the first to connect beneficial ownership data with extractives data. This could be a gamechanger, particularly with the links to licencing data, a known high-risk area for corruption.
Publish early, publish often and always improve
OpenOwnership’s technical experts will be conducting a more thorough review in the new year, with the ultimate aim of importing this data into the global register. Challenges such as data quality are by no means unique to Nigeria, and in 2020 we look forward scaling up our work to advance beneficial ownership transparency in Nigeria, drawing on emerging good practice from other contexts. As a regional leader, we hope that Nigeria will formalise its membership to the Global Beneficial Ownership Leadership group in 2020.