Case Study: The Chevron GMOU Experience

Background: In 2005, Chevron Nigeria Ltd. (CNL) initiated a new strategy to support Niger Delta communities in its operating area. The strategy, called the Global Memorandum of Understanding (GMOU), represented a significant departure from oil industry standards.

Oil was discovered in the Niger Delta in the early 1960s, but local populations have suffered environmental damage, loss of livelihoods and major disruption of their social institutions. Since the early 1990s, violence against oil operations has increased and as much as one-third of production has been shut-in.

Oil companies have spent tens of millions of dollars on infrastructure, health and education facilities in the Niger Delta. Yet a vast majority of these projects are in poor condition or have been completely abandoned. Chevron recognized that many projects failed due to a lack of community “ownership.” The GMOUs were designed to address this problem by forming partnerships with community leaders and local non-governmental organizations (NGOs).

GMOU Concept: Community development decisions should be made by communities themselves, in a democratic and transparent process. Chevron would continue to provide funding on an annual basis, but planning and management of local projects would rest with community representatives who would function as incipient community foundations. These Regional Development Councils (RDCs) would also work closely with local and state government and the Niger Delta Development Commission (a government agency) to address highest priority community needs. All decisions on local projects would be made in a participatory process, beginning with community focus groups that included women and youth. Ideally, the Councils would develop a successful track record and attract additional funding from other sources, including private foundations and others with an interest in improving civil society in the Niger Delta.

Operating Model: CNL negotiated three-year agreements with eight RDCs, formed to represent the interests of some 425 communities with an estimated population of 850,000 near the company’s on-shore facilities. The agreements were also witnessed and signed by state and local government representatives.

Development funds for each RDC are deposited into a special bank account to pay contractors and other technical service providers as required. The Councils are supported by Project Review Committees (PRCS) that include technical experts such as engineers and development professionals. These committees develop project scopes, qualify contractors, oversee construction, and monitor and evaluate functioning projects.

Planning: After the GMOUs were signed in late 2005, a team of Nigerian and international development experts proposed to conduct “sustainable livelihoods assessments” in each RDC. This approach was also intended to begin developing momentum for community ownership of projects.

As a first step, the development team developed a training module for RDCs on basic community development principles, organizational management and financial administration. Next, the team trained and certified 36 individuals from 29 local NGOs to conduct sustainable livelihoods assessments.

These specialists then trained and engaged community members as co-facilitators, and split into 19 teams based on their existing knowledge and working relationships with various communities. Other training was provided to RDC accountants, to assure that their record-keeping would comply with donor requirements; and to the Project Review Committees, on project planning, contracting, monitoring and evaluation.

SLA field work commenced in June, 2006 and was completed in December of that year. At least 850 community residents participated in focus group discussions, interviews, community tours and transect walks, as well as in town meetings to validate research results. The discussions challenged community members to distinguish between “wants” and “needs.” Using this information, each RDC approved a three-year development plan that included high priority projects with the greatest likelihood of success.

Results: Projects are underway in all RDC areas. Many projects involve riverine transport, potable water and electrification. Micro-credit is another high priority, especially for women’s groups. New agreements have been negotiated with the RDCs. Government engagement in local development planning has increased, and relationships are strengthening between local communities, their traditional leaders and government representatives. And most important, violence has reduced dramatically. Communities and oil workers are safer as a result.

This community engagement model has been adapted by other oil companies in the Niger Delta.

Terra Group role: The Terra Group was asked to design and manage the new program through its first two years. TG senior partners identified NGO partners, developed training programs for the RDCs, PRCs and local NGOs; organized regular staff meetings to discuss progress; recruited subject matter experts on development issues and planning; supported local NGOs in drafting the sustainable livelihoods assessments and community development plans; assured that the RDCs and their plans would conform to international donor and lender standards; developed monitoring and evaluation protocols; reviewed communications plans; and supported efforts to harmonize GMOU principles with other Chevron ventures in Nigeria.

Susan Reider and Deji Haastrup, “Community-Driven Development: A New Approach to Social Development in the Niger Delta,” SPE Economics & Management, October, 2013, pp. 34-39.