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PIA: Pollution and Host Communities

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By Jerome-Maeario Utomi

Like every new invention which comes with opportunities and challenges, the passage by the National Assembly and signing into law of the Petroleum Industry Bill about two years ago by the President Muhammadu Buhari-led federal government, after about 17 years of protracted back-and-forth debates, was greeted with mixed feelings. While some hailed the development, others welcomed it with scepticism.

Aside from the belief that the coming of PIA will make innovation possible within the petroleum sector, those who expressed happiness about the coming of the Act predicated their joys on the fact that the provisions, as sighted in PIA, will assist straddle the middle ground in the nation’s petroleum sector which has for a very long time manifested, proved to be a sector with neither primed nor positioned potentials.

Supporting this assertion is the graphic description by PIA advocates of how the new Act will locate, harmonize and strategically engineer prosperity among the operators of the up, mid and downstream sectors of the oil industry while turning the host communities into a zone of peace and democratized development via the 3% allocation to the host communities as captured in Chapter 3 of the Act.

In the opinion of this piece, this joy expressed by stakeholders for reasons qualifies as apposite, especially when one commits to mind the fact that for decades, the operational templates of the players within the industry, particularly the International Oil Companies (IOCs), have for decades been reputed for non-compliance to set rules and devoid of international best practices.

In fact, industry watchers have, at different times, and places argued that before the advent of PIA, the sector was confronted by the following weaknesses; the existence of multiple but obsolete regulatory frameworks which characterize the oil and gas exploration and production in Nigeria.

Secondly, the federal government failed to get the nations’ refineries back to full refining capacity. Thirdly, the Petroleum Ministry’s inability to get committed to making IOCs adhere strictly to the international best practices as it relates to their operational environment.

Fourth and final is the non-existence of clear responsibility/work details and action plans for government agencies and parastatals functioning, monitoring/regulating the sector.

The above failures have, as a direct consequence; cast a long dark shadow on both the ministry and the sector.

To further explain these points beginning with the first challenge, it is worth noting that the business of crude oil exploration and issues of oil production in the country is regulated by multiple but very weak laws and Acts- of which most of these laws are not only complicate enforcement but curiously too old-fashioned for the changing demands of time. Thereby, creating loopholes for operators, especially the IOCs, to exploit both the government and host communities.

Some of these laws/Acts in question operated for over five decades without achieving purposes, and they include but are not limited to; the Petroleum Act of 1969, The Harmful Waste (Special Criminal Positions etc), Act 1988, Mineral Oil Safety Regulation 1963, Petroleum (Drilling and Production) Regulation 1969 (Subsidiary Legislation to The Petroleum Act), The off-shore Oil Revenue (Registration of Grants)Act 1971, Oil in Navigable Act 1968, Petroleum Production and Distribution (Anti Sabotage) Act 1975, Associated Gas Re-injection Act 1979, Associated Gas Re-injection (continued Flaring of Gas) Regulation, Associated Gas Re-injection (Amendment) Decree 1985, Oil Pipeline Act Chapter (CAP) 338, Laws of the Federation of Nigeria (L.F.N.) 1990, and Gas Flare prohibition and punishment) Act 2016 among others.

Even as the above remains lamentable, facts have since emerged that instead of providing the anticipated legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry and the host communities, the Petroleum Industry Act (Act), like the other failed laws that it came to replace, has contrary to expectation become different things to different peoples.

To many, PIA is not only an evil wind that blows nobody any good but a toothless bulldog that neither bites nor barks. To others, it is but is a palliative that cures the effect of sickness while leaving the root cause to thrive.

To the host and impacted communities, the Act has become a first line of conflict between crude oil prospecting, exploration companies and their host communities. It is a law that has come to steal, kill and destroy. Members of this group have come to a sudden realization that nothing has changed.

Without going into specifics, concepts, provisions and definitions, there is also greater evidence that points to the fact that the underlying premise behind PIA enactment has been defeated, the eliciting reason for concern that what is currently happening between oil companies and their host communities may no longer be the first half of a reoccurring circle, but, rather the beginning of something negatively new and different.

Take, as an illustration, if PIA is fundamentally effective and efficient, why is it not providing a strong source of remedy for individuals and communities negatively affected by oil exploration and production in the coastal communities? If these frameworks exist and have been comprehensive as a legal solution to the issues of oil-related violations, why are the IOCs operating in the country indulging in selective implementation of the Act?

Why is the Act not enforced by the federal government and other relevant agencies? Why are these hosts and impacted communities still suffering at the hands of the crude oil exploration and production companies operating in the Niger Delta region?

While answers to the above questions are expected, this piece, however, believes that there are reasons why these issues raised about PIA failures and failings cannot be described as unfounded.

The facts are there and speak for it.

On 28th of March 2023, the people of Kantu/Odidi, host communities to Odidi Flow station, OML 42 in Gbaramatu kingdom, Warri South West Local Government Area of Delta State, staged a peaceful protest against the non-implementation of PIA.

While calling for holistic repair works on the Trans Forcados Pipeline (TFP), which runs through OML 42 in Warri South West LGA to Forcados Terminal in Burutu LGA of Delta State, the protesting communities gave the operators a 7-day ultimatum to commence genuine implementation of the PIA process and payment of the 3% of 2022 operating expenses as stipulated by the PIA with immediate effect to enable the communities to resume implementation of developmental projects in the communities,  warning that failure to do so may lead to the shutdown of operational activities in the OML 42 Asset.

Lamenting that the TFP pipeline was constructed in the early 1960s and has outlived its lifespan long ago, leading to continuous pollution of the environment and destruction of the ecosystem, creating hardship for the locals, the communities stressed that TFP is one of the major pipelines destroying the environment because it has expired and cannot withstand the pressure of crude oil transported through it.

They, therefore, demanded full replacement of the said pipeline instead of the sectional repair works being planned by NEPL/NECONDE without recourse to its negative implications on communities and the environment, particularly since sectional repair works will not stop further leakages.

Kantu/Odidi protest occurred at a time when the dust raised by the 14 days ultimatum/threat issued to another oil company by the oil-rich community of Tsekelewu (Polobubo) in Warri North Local Government Area of Delta State was yet to settle.

In that particular ‘event’, the people of Tsekelewu (Polobubo) also threatened to shut down ongoing exploration activities of Conoil Producing Limited if the company failed to reach a definite agreement with the community on the implementation of Chapter 3 of the Petroleum Industry Act (PIA) for the Tsekelewu bloc of communities, supports this assertion.

The Host Community lamented that they adopted the option due to the seemingly snobbish attitude of the management of Conoil Producing, as the company’s management had refused to honour letters asking for a meeting with the TCDA on the issue of the PIA implementation.

Away from the persistent highhandedness of the IOCs, this piece is also of the position that PIA is as weak, defective and insufficient as the laws/Acts it was enacted to replace when it comes to pollution prevention, monitoring and control within the sector.

In fact, it will not be characterized as an overstatement to say that it shares the same body and spirit with the now rested Harmful Waste (Special Criminal Positions etc), Act 1988. The major defect with the referenced Act was signposted in its definition of harmful substance based solely on its impact on human beings and does not include its impacts on the environment and animals.

It focused only on the commission of any action or omission by persons without lawful authority. Thus, where an organization has a license to store waste resulting from production, they are seemingly omitted from the ambit of the Act, but the law failed to take into consideration the inadequate storage or inadequate waste management system by licensed firms or groups. Such failure or oversight is glaring and inherent in PIA.

Adding context to the colossal damage harmful substances arising from crude oil production have caused the nation, the National Oil Spill Detection and Response Agency  NOSDRA reports show that oil spill incidents occurred 921 times in 2015, resulting in a loss of 47,714 barrels of oil, the highest within the period under review. In 2016, 688 cases of oil spills occurred, culminating in a volume of 42,744 barrels of oil. In 2017 and 2018, 596 and 706 cases of oil spills occurred and resulted in the spillage of 34,887 and 27,985 barrels of oil, respectively. Oil spills occurred on 732 occasions, spewing 41,381 barrels of oil in 2019, and 455 cases were recorded in 2020 with 23,526 barrels of oil. In 2021, companies reported 388 incidents, resulting in 23,956 barrels of oil.

The report also observed that oil spills should be closed off within 24 hours. And oil companies are required to fund the clean-up of each spill and pay compensation to local communities affected if the incident was the company’s fault.

Despite these beautiful provisions, there exists no appreciable instance within the period under review where such obligations to host communities have been obeyed. This piece also holds the opinion that under the PIA regime, no operator can claim a clean hand when it comes to obeying such laws in Nigeria, and the regulatory agencies have never bothered to hold them accountable for such failures.

Still on inefficiency and insufficiency of PIA provisions to effectively control pollution arising from crude oil exploration and production, this author, in a similar intervention, after a visit to the Niger Delta region, stated that a tour by boat of creeks and coastal communities of Warri South West and Warri North Local Government Areas of Delta state would amply reveal that the much-anticipated end in sight of gas flaring is actually not in sight. In the same manner, a journey by road from Warri via Eku-Abraka to Agbor, and another road trip from Warri through Ughelli down to Ogwuashi Ukwu in Aniocha Local Government of the state, shows an environment where people cannot properly breathe as it is littered by gas flaring points.

To a large extent, the above confirms as true the recently published report, which among other concerns, noted that Nigeria has about 139 gas flare locations spread across the Niger Delta both in onshore and offshore oil fields where gas which constitutes about 11 per cent of the total gas produced are flared.

Apart from the health implication of flared gases on humanity, their adverse impact on the nation’s economy is equally weighty. For instance, a parallel report published a while ago underlined that about 888 million standard cubic feet of gas were flared daily in 2017. The flared gas, it added, was sufficient to light up Africa, or sub-Saharan Africa, generate 2.5 gigawatts (Gw) of power or produce 50 million barrels of oil equivalent (boe) or produce 600,000 metric tonnes of liquefied petroleum gas (LPG) per year, produce 22 million tonnes of carbon dioxide (CO2), feed two-three liquefied natural gas (LNG) trains, generate 300,000 jobs, able to attract $3.5 billion investment into Nigeria and has $350 million carbon credit value’. This is an illustrative pointer as to why the nation economically gropes and stumbles.

Banking on what experts are saying, the major reason for the flaring of gases is that when crude oil is extracted from onshore and offshore oil wells, it brings with it raw natural gas to the surface and where natural gas transportation, pipelines, and infrastructure are lacking, like in the case of Nigeria, this gas is instead burned off or flared as a waste product as this is the cheapest option.

It, therefore, remains an ugly narrative that the choice to flare gas in the country is largely predicated on economies. This has been going on since the 1950s when crude oil was first discovered in commercial quantities in Nigeria.

While Nigeria and Nigerians persist in encountering gas flaring in the country, even so, has, successive administrations in the country made both feeble and deformed attempts to get it arrested.

In 2016, before the advent of PIA, President Muhammadu Buhari led administration enacted Gas Flare Prohibition and Punishment), an act that, among other things, made provisions to prohibit gas flaring in any oil and gas production operation, blocks, fields, onshore or offshore, and gas facility treatment plants in Nigeria.

On Monday, September 2, 2018, Dr Ibe Kachikwu, Minister of State for Petroleum (as he then was), while speaking at the Buyers’ Forum/stakeholders’ Engagement organized by the Gas Aggregation Company of Nigeria in Abuja, among other things, remarked thus; ‘I have said to the Department of Petroleum Resources, beginning from next year (2019 emphasis added), we are going to get quite frantic about this (ending gas flaring in Nigeria) and companies that cannot meet with extended periods –the issue is not how much you can pay in terms of fines for gas flaring, the issue is that you would not produce. We need to begin to look at the foreclosing of licenses’. That threat has since ended in the frames, as there has been little or nothing to get the threat actualized.

The administration also launched the now abandoned National Gas Flare Commercialization Programme (NGFCP), a programme, according to the federal government, aimed at achieving the flares-out agenda/zero routine gas flaring in Nigeria by 2020. Again, like a regular trademark, it failed.

Away from Buhari’s administration, in 1979, the then federal government, in a similar style, came up with the Associated Gas Re-injection Act, which summarily prohibited gas flaring and also fixed the flare-out deadline for January 1, 1984. It failed in line with the leadership philosophy in the country.

Similar feeble and deformed attempts were made in 2003, 2006, and 2008. In the same style and span, precisely on July 2, 2009, the Nigerian Senate passed a Gas Flaring (Prohibition and Punishment) Bill 2009 (SB 126) into law, fixing the flare-out deadline for December 31, 2010- a date that slowly but inevitably failed.

Not stopping at this point, the FG made another attempt in this direction by coming up with the Petroleum Industry Bill, which fixed the flare-out deadline for 2012. The same Petroleum Industry Bill (PIB) got protracted till 2021 when it completed its gestation and was subsequently signed into law by President Buhari as Petroleum Industry Act (PIA).

To win, the nation must borrow a ‘soul in order to raise a body’. They must seek solutions from the countries that are presently doing well in these areas where we are facing challenges.  Part of that effort will require going beyond PIA to recognise the region as a special area for purposes of development. This demand cannot be described as unfounded as it is historically based, logical and factually supported.

Recall that the colonial government, long before independence turned down the demand for a Calabar/Ogoja/Rivers (COR) region/state.  But identified the Niger Delta as a troubled spot and recommended to the then Federal Government that the region be regarded as a special area for purposes of development.

Without any shadow of a doubt, I hold an opinion that the federal government’s inability to treat the region as such set the stage for and nourished the restiveness in both the region and the sector.

Most importantly, the people of the region must be directly involved in the management of their resources.

Jerome-Mario is the programme coordinator (Media and Public Policy) at the Social and Economic Justice Advocacy (SEJA). He can be reached via [email protected]/08032725374.

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Publication Standards and Predatory Publishing in Africa

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Timi olubiyi Predatory Publishing in Africa

By Timi Olubiyi, PhD

I pray that the new year, 2026, unfolds with fresh opportunities, meaningful growth, and endless possibilities. Amid the many emerging topical issues, this piece focuses on a troubling trend in academia: the growing reliance on predatory publications and the declining pursuit of reputable, recognised journals.

For many academics, particularly early-career scholars, mid-career academics facing promotion bottlenecks, adjunct and contract lecturers under publish-or-perish pressures, and even senior scholars navigating international mobility aspirations, evolving global performance metrics, and global competitiveness, this piece is intended as a lifeline, offering clarity, guidance, and reassurance at a critical moment in evolving scholarly environment.

Predatory publications are sometimes legitimate outlets that promise rapid academic publication but without the expected integrity of research or known ethical reputation, and oftentimes quality is compromised for cash for these publications. This alarming trend is not only undermining careers but also diminishing the visibility and impact of knowledge in shaping global scientific discourse.

From an African perspective, the damage caused by predatory publishing goes far beyond wasted money; it quietly erodes academic credibility, blocks international mobility, and traps scholars within local systems that increasingly struggle to meet global university standards.

Predatory journals thrive where demand for publication is high, and support structures are weak. In many African universities from observation, promotion and appointment criteria emphasise quantity over quality and indexed publications.

The disturbing finding is that often times there are no clear differentiation between indexed and non-indexed publication. As a result, many university-based journals have become the default publishing route but these journals are largely not indexed in reputable databases like Scopus, Web of Science, ABDC (Australian Business Deans Council) and ABS (Association of Business Schools) journal ranking systems which should increase quality and standards. These non-indexed journals journals are sometimes institutionally encouraged, yet they rarely offer the global visibility, citation impact, or academic recognition required for international competitiveness.

For a scholar whose work never leaves these local publishing ecosystems, the world remains largely unaware of their research, no matter how insightful or relevant it may be. Yet perhaps the most painful consequence of predatory publishing is loss of global opportunities, and systematic underestimation of impact.

African academics are frequently judged as underperforming, not because they lack ideas, rigour, or relevance, but because their work is largely invisible on global platforms. From the author’s observation, a striking number of African scholars have no Scopus profile at all, or profiles are with very low visibility, despite years of teaching and publishing as experienced lecturers, senior researchers, and even professors. This invisibility feeds a damaging cycle because when it comes to international evaluation limited indexed output is seen and it is assumed that African scholars have limited scholarly contribution, while local systems continue to reward these non-indexed publications that do not translate into global recognition.

The danger becomes most visible when academics attempt to cross borders physically or professionally. Because for international job applications, visiting fellowships, postdoctoral positions, and global research collaborations increasingly rely on transparent metrics: indexed publications, citation records, journal rankings, and evidence of international engagement.

An academic who has published extensively in non-indexed or predatory journals may appear productive on paper locally, but he is invisible internationally. Hiring committees in Europe, North America, Asia, and increasingly the Middle East are trained to recognise predatory outlets; rather than viewing such publications as achievements, they quickly interpret them as red flags, questioning the rigour, ethics, and peer-review exposure of the candidate.

In this way, predatory journals do not merely fail to help academics they actively ruin their global prospects. The contrast between quality publishing and predatory publishing is very clear and obvious. Because quality publishing follows strict academic standards like peer review, transparency, and ethical practices, predatory publishing on the other hand ignores these standards and mainly exists to collect fees from authors without providing real scholarly value.

A single well-placed article in a reputable indexed journal can open doors to international conferences, editorial invitations, collaborative grants, and academic networks.

For example, Nigerian and Kenyan scholars who publish in respected international journals often find themselves invited to review manuscripts, join global research teams, or contribute to policy-oriented projects at the African Union, World Bank, or UN agencies. These opportunities rarely come from non-indexed or predatory outlets because such journals are not read, cited, or trusted beyond narrow circles. Visibility, in the modern academic world, is currency, and predatory journals offer the illusion of productivity without the substance of impact.

So, what is the future of African academics in a globalised academic labour market? As universities worldwide shift toward international rankings, global partnerships, and research impact metrics, African scholars’ risk being locked out not because they lack intellectual capacity, but because their work is trapped in publishing systems that the global academy does not recognise. The danger is a growing academic isolation, where African knowledge circulates locally but fails to influence global debates or attract global opportunities. The solution lies not in rejecting local journals outright, but in redefining academic ambition and preparedness.

African academics must increasingly think beyond local promotion requirements and prepare for international exposure from the outset of their careers. This means understanding journal indexing systems, targeting reputable outlets even if acceptance takes longer, and valuing revision and rejection as part of scholarly growth. Universities, in turn, must reform promotion criteria to reward quality, indexing, and impact rather than sheer volume. Training in research methods, academic writing, and ethical publishing should be institutional priorities, not optional extras.

Governments and regulatory bodies can support this shift by funding open-access publication in reputable journals and discouraging the use of predatory outlets in academic evaluation. The suspenseful reality is this: African academics stand at a crossroads. One path leads to rapid local advancement built on fragile publishing foundations, offering short-term comfort but long-term invisibility. The other path is slower, more demanding, and often frustrating, but it leads to global relevance, intellectual exchange, and genuine academic mobility.

Predatory journals promise speed and certainty, but they quietly close doors. Quality publications demand patience and rigor, but they open the world. For African scholars seeking international jobs, collaborations, and influence, the choice is no longer optional it is existential. The future of African academia depends not just on producing knowledge, but on ensuring that knowledge travels, is trusted, and is seen. In this new year and beyond be different, be intentional, be visible, and be globally relevant. Good luck!

How may you obtain advice or further information on the article? 

Dr Timi Olubiyi is an expert in Entrepreneurship and Business Management, holding a PhD in Business Administration from Babcock University in Nigeria. He is a prolific investment coach, author, columnist, and seasoned scholar. Additionally, he is a Chartered Member of the Chartered Institute for Securities and Investment (CISI) and a registered capital market operator with the Securities and Exchange Commission (SEC). He can be reached through his Twitter handle @drtimiolubiyi and via email at [email protected] for any questions, feedback, or comments. The opinions expressed in this article are solely those of the author, Dr. Timi Olubiyi, and do not necessarily reflect the views of others.

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Game of Power: Throne Reclaim

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kano politics

By Abba Dukawa

Kano politics has been thrown into fresh uncertainty following reports that the Kano State Governor, Abba Yusuf, is planning to defect from the New Nigeria Peoples Party (NNPP) to the All Progressives Congress (APC).

For years, Rabiu Musa Kwankwaso aspired to be Kano’s undisputed political kingmaker. He only succeeded in realizing this ambition by installing his perceived political godson as the current governor of Kano State.

His earlier attempts had failed; notably, the current governor is the only candidate Kwankwaso attempted to install twice.

Even before the recent attempt at reclaiming the political and power throne by its rightful owner, there were widespread insinuations that the relationship between the political godfather and godson was far from cordial, despite both camps publicly maintaining that all was well.

The governor’s recent move to cross over to the ruling party has been strongly opposed by the state party leadership and the NNPP’s national leader, Senator Rabiu Musa Kwankwaso. This development has triggered internal disagreements within the NNPP, particularly between supporters of the governor and loyalists of the Kwankwasiyya movement.

Since news broke of Governor Abba’s intention to defect to the APC, claims have circulated  that he was acting with Kwankwaso’s consent.  Those who believed that Governor Abba planned to defect with Kwankwaso’s approval made a grave misjudgment.

This is not a coordinated plan; rather, it is a political conflict akin to that between a father and a son.

From a rational political standpoint, the situation reflects a deep and intense struggle—a clear attempt at reclaiming the throne between the Governor of Kano State and the leader of the Kwankwasiyya movement, Senator Rabi’u Musa Kwankwaso.

By all political indicators, the governor’s effort to reclaim the throne appears aimed at securing absolute control and liberating himself from total submission to the national leader of the Kwankwasiyya movement.

In response to the unfolding conflict, the NNPP national leader has intensified efforts to rally federal and state lawmakers, local government chairmen, and party structures to remain loyal to him. Kwankwaso’s reaction has been firm but defensive.

Kwankwaso, addressing them, reportedly stated that it was evident the governor was abandoning the NNPP for the APC and that any member wishing to follow him was free to do so. He reminded them that they won the election by divine grace alone, asking rhetorically: “Will the God who gave us power in 2023 not still be there in 2027?”

He has denied any involvement in defection plans and reaffirmed his loyalty to the NNPP and its ideology, warning supporters against what he described as “betrayal. However, events on the ground tell a different story, as several local government chairmen, along with state and federal lawmakers, appear to be gravitating toward the governor’s camp.

Ahead of his anticipated defection and in a bid to strengthen his political base, the governor has reportedly been working behind the scenes to secure the support of National Assembly members and NNPP members of the State House of Assembly and the local government council chairman.

Although no official statement has been issued by the governor’s office  since reports of the planned defection emerged, the body language of prominent government officials suggests that the plan is already in motion and that it is only a matter of time. So far, only the Speaker of the State Assembly, Yusuf Falgore, has publicly endorsed the governor’s planned defection. Sources also indicate that a significant number of local government chairmen have joined the governor’s defection train.

Blind Kwankwasiyya members ideologues fail to distinguish between political betrayal and the pursuit of independence. Politics, after all, is about survival and adaptation.

Most Kwankwasiyya members are youths. Where were they when Kwankwaso parted ways with Hamisu Musa, Musa Gwadabe, and Dauda Dangalan? Kwankwaso rose under mentorship before charting his own course. Where were they when Abubakar Rimi broke away from Aminu Kano in ’79-’80, pursuing his own path? When Abdullahi Ganduje split from Kwankwaso, he faced ridicule and insults.

These same critics should appreciate Abba Gida-Gida’s restraint in not publicly recounting the unpleasant experiences surrounding his emergence as governor under the NNPP.

The Kwankwaso–Abba conflict is, at its core, politics in its truest form—a search for solutions and self-determination. There is a clear distinction between betrayal in politics, the pursuit of solutions, and the quest for independence from total submission.

If Governor Abba succeeds in taking the bulk of NNPP’s structure to APC, it’ll be a major symbolic blow to Kwankwaso’s influence . It seems Kwankwaso’s biggest fear is Abba taking the state with him, leaving him with a movement without a state .

The plan Abba defection from the New Nigeria Peoples Party (NNPP) to the All Progressives Congress (APC) could reshape Kano’s politics significantly- APC regains dominance in Kano, strengthening its position ahead of 2027- NNPP’s national relevance takes a hit, struggling to recover from losing its only governor Kwankwasiyya faces a tough test without state power, potentially losing influence. New alliances might emerge as Yusuf’s move triggers political recalibrations across the North.

Game of Power: Throne Reclaim

Dukawa writes from Kano and can been reached via [email protected]

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How Nigeria’s New Tax Law Could Redefine Risk in the Banking Sector

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Nigeria’s New Tax Law

By Blaise Udunze

Nigeria’s new tax identification portal goes live nationwide tomorrow, Friday, January 1, 2026, marking a pivotal moment in the country’s fiscal and financial governance. Designed to modernise tax administration and strengthen taxpayer identification, the reform reflects a decisive shift in economic strategy by a government grappling with shrinking oil revenues, rising public debt, and widening fiscal deficits.

At the centre of this shift is a deeper integration of identity systems, banking data, and tax administration, most notably the adoption of the National Identification Number (NIN) as a tax identification mechanism for operating bank accounts. In parallel, banks will also begin charging a N50 stamp duty on electronic transfers of N10,000 and above, following the implementation of the Tax Act.

Individually, these measures may appear modest, even reasonable. Collectively, however, they signal a fundamental reordering of the relationship between the state, banks, and citizens with far-reaching implications for banking business, customer trust, financial inclusion, and credit creation.

Banks at the Centre of Fiscal Enforcement

Under the new tax framework, Nigerian banks are no longer merely financial intermediaries or corporate taxpayers. They are increasingly positioned as collection agents, reporting hubs, and frontline enforcement points for government revenue policy.

The linkage of NIN to tax compliance, combined with transaction-based stamp duties, reinforces a stark reality that the banking system has become the most visible and accessible channel through which the state now extracts revenue from citizens.

This expanded role exposes banks to a new layer of risk not just financial or operational, but social, reputational, and political risks that extend far beyond balance sheets.

A Structural Shift in the Banking, Tax Relationship

Historically, banks played a facilitative role in tax compliance, primarily through payment processing and remittance support. The use of NIN as a tax identifier marks a structural departure from this model.

Bank accounts are no longer merely financial tools; they are becoming gateways to tax visibility.

This shift fundamentally alters the risk profile of the banking business. Banks are now exposed not only to credit, market, and operational risks, but also to heightened social backlash, reputational damage, and political sensitivity, arising from their expanded enforcement role.

Account Friction and Slower Customer Onboarding

One of the earliest and most visible consequences of NIN-based tax identification is increased friction in account opening and maintenance.

Consequently, in a real sense, millions of Nigerians will continue to face challenges with the NIN system, including delays in enrolment and correction, biometric mismatches as well as  inconsistencies between NIN, BVN, and bank records.

For banks, this translates into slower onboarding processes, higher rates of account restriction or rejection, and increased congestion across branches and digital platforms.

What should be a growth engine for deposit mobilisation instead becomes a bottleneck, resulting in lost customers, fewer transactions, and weakened scale advantages in an increasingly competitive banking environment.

Banks as the Face of an Unpopular Tax Regime

Perhaps the most underappreciated consequence of the new tax regime is the escalation of customer hostility toward banks.

When accounts are flagged, restricted, or subjected to enhanced scrutiny, customers rarely direct their frustration at tax authorities or policymakers. Instead, they confront the most visible institution in the chain, their bank.

Banks are increasingly blamed for account freezes, accused of colluding with government, and perceived as punitive rather than service-oriented institutions. This hostility is particularly pronounced among informal sector operators, small traders, artisans, and self-employed professionals with irregular income streams.

In a low-trust economy such as Nigeria’s, perception often outweighs regulation. Banks risk becoming the public face of coercive taxation, absorbing reputational damage for policies they neither designed nor control.

Erosion of Trust in the Banking Relationship

Banking fundamentally depends on trust that deposits are safe, transactions are private, and institutions act in customers’ best interests.

When NIN becomes a tax enforcement gateway, that trust begins to fray. Banks are no longer seen primarily as custodians of savings, enablers of enterprise, or neutral financial intermediaries. Instead, they are increasingly perceived as extensions of tax authorities, surveillance nodes, and compliance police.

Once trust erodes, customer behaviour adjust often in ways that undermine the formal financial system itself.

The Hidden Impact of the N50 Stamp Duty

The introduction of a N50 stamp duty on electronic transfers of N10,000 and above may appear trivial. In practice, it carries outsized implications.

For many Nigerians, especially low- and middle-income earners, electronic transfers are not discretionary transactions. They are salary payments, family support remittances, SME operating expenses, and routine commercial settlements.

Customers rarely distinguish between government levies and bank charges. The stamp duty will therefore be perceived as yet another bank fee, deepening resentment toward institutions already accused of excessive charges.

Behaviourally, customers may respond by breaking transactions into smaller amounts, increasing cash usage, or migrating to informal transfer channels, distorting transaction patterns and weakening the efficiency of the digital payments ecosystem.

Although banks merely collect the duty on behalf of the government, they will once again bear the reputational cost.

Threat to Deposit Mobilisation and Liquidity

Fear of tax exposure is a powerful behavioural driver. As NIN becomes closely associated with tax scrutiny and transaction charges mount, many customers are likely to reduce account balances, avoid lump-sum deposits, split transactions to stay below thresholds, or move funds outside the banking system entirely.

For banks, the consequences are clear, as these will result in slower deposit growth, volatile liquidity positions, and reduced capacity to fund loans.

Deposit mobilisation is the lifeblood of banking. Any policy that discourages formal savings weakens banks’ intermediation role and, by extension, the broader economy.

Reversal of Financial Inclusion Gains

Nigeria has invested more than a decade in expanding financial inclusion through agent banking, digital wallets, and tiered KYC frameworks. The use of NIN as a tax trigger threatens to reverse these gains.

Many newly banked individuals, particularly those at the base of the economic pyramid, may abandon formal accounts, revert to cash-based transactions, or rely on informal savings mechanisms.

The irony is stark as an identifier designed to formalise the economy may inadvertently push activity back into informality.

Rising Compliance, Legal, and Technology Costs

Operationally, integrating NIN as a tax identifier significantly increases banks’ compliance burden. However, institutions are expected to synchronise multiple databases, resolve inconsistencies at scale, implement continuous monitoring systems while also managing customer disputes arising from mismatches or wrongful flags.

The challenges inherent in these demands require heavy investment in IT infrastructure, expanded compliance teams and enhanced cybersecurity. The costs either erode profitability or are passed on to customers, further fuelling public resentment.

Credit Creation and Economic Growth at Risk

Reduced deposits, higher compliance costs, reputational strain, and customer attrition converge on a single outcome that mainly constrained lending capacity.

There is no two ways about this, banks under sustained pressure will tighten credit standards, reduce SME and consumer lending, and favour low-risk government securities. The ripple effects include slower job creation, constrained entrepreneurship, and, on a dangerous level, it leads to weaker economic growth, ultimately undermining the very revenue base the tax reform seeks to expand.

Revenue Without Ruin

No doubt, linking NIN to tax identification and expanding transaction-based levies may enhance government visibility over economic activity, but in reality they carry significant unintended consequences for banking business.

They risk weakening customer trust, undermining deposit mobilisation, reversing financial inclusion gains, increasing operational and reputational risks, and constraining credit growth.

Banks do not oppose taxation. What they caution against is turning financial inclusion infrastructure into a blunt instrument of tax enforcement without adequate safeguards.

For the policy to succeed without damaging the banking system, regulators must ensure clear thresholds and exemptions, strong data protection guarantees, phased implementation and ensure sustained public education to redirect hostility away from banks.

Ultimately, the critical question is not legislative readiness but execution, especially coordination across institutions, technological preparedness and the capacity to prevent unintended disruption to businesses and citizens alike. The authorities must understand that when revenue meets risk, wisdom lies in balance.

Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]

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