Nigeria

Nigeria Corruption Report

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Snapshot

MM29O32yd7b8H7eex7znRoCYAAAAAElFTkSuQmCC.pngCorruption is a significant obstacle to business in Nigeria: companies are very likely to encounter bribery and other corrupt practices. Corruption risks are pervasive throughout all institutions but are most prevalent in the police. Corruption is criminalised primarily by the Criminal Code and the Corrupt Practices and Other Related Offences Act. Accepting or giving gifts('gratifications') as well as facilitation payments are illegal, and individuals can be penalised with up to 7 years' imprisonment. Despite a strong legal framework, Nigeria is unable to prevent corruption: in practice, gifts, bribery and facilitation payments are the norm.

Last updated: July 2015
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Judicial System

Nigeria's judiciary is characterised by a high degree of corruption and political interference, despite its independence being guaranteed under the constitution (FitW 2015). Most Nigerians feel the judicial system is corrupt (GCB 2013), and judicial officials frequently request bribes for favourable rulings or faster transactions (HRR 2013). Nigeria's legal framework to settle disputes or to challenge regulations is weak and inefficient (GCR 2014-2015). Enforcing a contract can be costly and takes, on average, 509 days, with considerable variations between municipalities: this is considerably shorter than the Sub-Saharan Africa regional average (DB 2015). Despite all this, the vast majority of companies do not see the courts as a constraint to business (ES 2014). In 2015, Nigeria is to setup special courts to expedite trials and to relieve regular courts; the courts will focus on corruption and tax-evasion offences by companies, individuals or public officials (National Mirror, May 2015).

Police

Almost all Nigerians believe the police is corrupt, making it the most corrupt institution in Nigeria (GCB 2013). A strong impediment to business in Nigeria is local police, which are considered very unreliable in enforcing the law (GCR 2014-2015). As a result, businesses in Nigeria face extra costs to ensure protection from terrorism, general crime and violence (GCR 2014-2015). In June 2015, the Nigeran Inspector General of Police announced efforts to eliminate corruption and to improve perceptions of police corruption (Vanguardngr, June 2015).

Public Services

Nigeria's public service suffers from widespread corruption. Government regulations are burdensome for businesses, and bribes and irregular payments are often paid (GCR 2014-2015). There is a high risk of encountering corruption when trying to obtain operating licences, electrical connections or water connections (ES 2014). Construction permits can be obtained faster than elsewhere in the region, but starting a business takes slightly longer (31 days on average); dealing with the Commission for Corporate Affairs (CAC) is the most time-consuming part of the procedure (DB 2015).

Land Administration

Property rights in Nigeria are regulated but not sufficiently protected (GCR 2014-2015), and registering property is a lengthy and costly process (DB 2015), creating ample opportunity for corruption. A significant number of businesses report being expected to give gifts or facilitation payments to obtain a construction permit (ES 2014). Land is granted to businesses as a hereditary lease from the Nigerian government, can be contingent on corruption and favouritism, and is frequently expropriated through compensation when natural resources are discovered on the land (BTI 2014).

The Federal Capital Development Authority (FCTA) in Abuja allegedly evicts residents and businesses that do not comply with the Abuja city plan, even if permits are in place and acquired through the FCTA. Corruption and favouritism among land officials are reported reasons behind certain cases of property demolition (HRR 2013).

Tax Administration

Collusion with public authorities is common and enables corruption within Nigeria's tax administration. There is a significant risk of being asked for a bribe, gift or facilitation payment when interacting with tax officials (ES 2014). Tax rates and regulations can be very challenging for businesses (GCR 2014-2015), tax collection processes are non-transparent and tax evasion among businesses is widespread due to corrupt authorities (ICS 2015). Companies may face multiple taxes within concurrent state and local jurisdictions (ICS 2015).

Customs Administration

Bribery is common among Nigeria's customs and port authorities, and smuggled goods regularly enter seaports and cross borders (ICS 2015). A significant number of firms expect to give gifts or payments to obtain an import licence (ES 2014), and onerous import procedures and corruption at the border are the most problematic factors for imports (GETR 2014). Customs processes are handled exclusively by the Nigerian Customs Service (NCS) and the Nigerian Ports Authority (NPA), and the procedures are burdensome (GCR 2014-2015). In May 2015, 29 port officials were suspended for corruption-related offences (This Day Live, May 2015).

Public Procurement

Corruption is common in Nigeria's public procurement sector, with up to one-third of companies expecting to give gifts or payments to secure a government contract (ES 2014). Regulation has improved in recent years, but large-scale corruption and political favouritism continues to affect the sector (ICS 2015). The diversion of public funds to well-connected firms and individuals is widespread (GCR 2014-2015).

Nigeria has undertaken various efforts to reform public procurement policies, the most notable of which is the Public Procurement Act, which regulates public procurement in Nigeria and aims to minimise the abuse of rules, processes and standards in the award and execution of public-sector contracts. Companies can find information on legislation, complaints procedures and contracts at the Bureau of Public Procurement. Businesses are recommended to implement special due diligence procedures to assess the risk of encountering corruption in Nigeria's procurement process.

Natural Resources

Nigeria's natural resources sector is affected by corruption. In June 2015, Nigeria's Extractive Industries Transparency Initiative called upon the government to recover USD several billion from oil and gas firms in Nigeria and to investigate non-transparent contracts and transactions of the Nigeria National Petroleum Corporation (NNPC) (NEITI, June 2015). As of June 2015, Nigeria's anti-corruption agency and intelligence service are investigating offshore processing agreements between Pipelines and Product Marketing Co (PPMC), a subsidiary of the NNPC, and three oil trading companies: Sahara Group, Aiteo and Duke Oil (the trading subsidiary of NNPC). Contracts have reportedly allowed for crude oil to be swapped for refined products, resulting in revenue loss of around USD 600 million (Reuters, June 2015). Expired contracts with Trafigura, Taleveras and Ontario Oil and Gas will also be examined (Reuters, June 2015). The NNPC has frequently been implicated in corruption, fraud and tax evasion scandals.

The Nigerian Extractive Industry Transparency Initiative Act establishes the Nigerian Extractive Industry Transparency Initiative, which ensures, monitors and reviews transparency and accountability in the reporting and financial disclosure of extractive companies. Offences against the Act can be penalised by two or more years' imprisonment and/or a fine of up to USD 151,000.

Legislation

Nigeria's legislation on anti-corruption is well-developed, but enforcement is very weak. The Criminal Code criminalises corruption and the abuse of power of public officials, and the Corrupt Practices and Other Related Offences Act criminalises active and passive bribery, as well as attempted corruption, abuse of office, fraud, extortion and money laundering. Penalties apply to individuals and companies and include fines and/or up to seven years' imprisonment. Accepting or giving gifts ('gratifications') or facilitation payments is illegal. Nigeria's Constitution specifies requirements for asset disclosure and regulations governing the offering and receiving of gifts for members of the executive, parliament and legislature.

The Advance Fee Fraud and other Fraud Related Offences Act combats the persistently large body of fraudulent activities in Nigeria with up to 15 years in prison. The Money Laundering (Prohibition) Act regulates making and accepting cash payments. Whistleblowers have little legal protection (CatC 2012). The institutions established to combat corruption, namely the Independent Corrupt Practices Commission (ICPC) and Economic and Financial Crimes Commission (EFCC), have proved ineffective in curbing corruption. Nigeria has ratified the Convention on Mutual Administrative Assistance in Tax Matters, the United Nations Convention against Corruption (UNCAC) and the African Union Convention on Preventing and Combating Corruption.

Civil Society

Civil society in Nigeria is weak, fragmented and lacks resources (BTI 2014). Freedom of expression is protected by theConstitution but is not always respected in practice. Journalists and reporters have continuously suffered from intimidation and violence (CPJ, Mar. 2015). Small-scale bribes and gifts to journalists are so common that they are de facto deemed ineffectual (FotP 2014). Nevertheless, the media landscape is described as one of the most vibrant and diverse on the African continent, and the press is considered 'party free' (FotP 2014). Trade and labour unions lack political and societal support, limiting their influence (BTI 2014). Society organises mostly at local level and through religious platforms (BTI 2014).

Sources

Topics: Sub-Saharan Africa