Osinbajo condemns imposition of illegal taxes on mining companies by state governments

Vice President Yemi Osinbajo has expressed concerns over the imposition of illegal fees, taxes and levies on licensed mining companies by state governments.

Condemning the action of the state governments, the vice president warned that it was a disincentive to prospective investors in the sector. He also described the development as a major setback to the Nigerian government’s efforts to diversify the economy riding on the mining sector.

Osinbajo spoke on Thursday at the maiden edition of the strategic engagement on sustainable mining with the theme, ‘Resurrecting our buried property’.

In an address he presented virtually at the event, Osinbajo said, “Some state governments in a bid to shore up their revenue, impose illegal fees, taxes, and levies on foreign and local licences mining companies and operators.

“Enforcement of these taxes often lead to the frequent arrests and harassment of licensed miners and their workers, and closure of mining sites. This happens frequently.

“Regrettably, such actions by state governments constitute a major disincentive to prospective investors in the sector and invariable jeopardize the efforts of the government to deepen the mining industry in Nigeria. There is no way this will ever benefit the majority of our people.”

Speaking further, the vice president expressed concern over the high level of insecurity in resource-rich communities.

“There are huge security concerns that always develop the struggle for the control of mineral resources in poorly regulated, unregulated or ungoverned spaces.

“Almost invariably, these situations lead to criminal activities and particularly the proliferation of weapons and armed groups. This is true historically and more evident now,” he said.

The need to address the problem necessitated the strategic cooperation between the Nigerian government, states and resources-rich communities, according to Osinbajo.

“It is for these reasons that the strategic engagement with the leadership of the 774 local governments is critical,” he noted.

Nigeria’s solid mineral sector is still largely being operated at the informal level, leading to the excavation of the minerals and non-remittance to federal coffers.

For instance, a highlight of the 2017  NEITI audit report revealed that the sector’s contribution to GDP was an abysmal 0.11 per cent which showed a decline of 0.01 percentage points and 0.02 percentage points from the data of 0.12 per cent in 2015, and 0.13 per cent in 2016.

The NEITI report further explained that out of 1,072 entities covered by the exercise in 2017, only transactions by 59 companies were ‘reconciled.’

The 2018 earnings from the solid mineral sector waa the highest in 12 years. The solid minerals sector contributed about N69.5 billion to federation revenue in 2018, the highest so far since NEITI commenced reconciliation of payments in the sector. However, the report explained that out of 720 entities covered by the exercise, only payments by 69 companies were reconciled.

Unauthorised operations were also identified in the 2018 audit report. Three hundred and two companies (42 per cent) paid royalty to the government in 2018 but their names/titles were not found on the MCO register, in spite of the fact they paid  royalties during the year.

    NEITI also noted an emerging unethical trend of issuance of treasury receipts in advance of payment, an act that it said might lead to huge revenue loss to the government if it remained unchecked. Misstatement of government revenue/ receipts was also identified in the 2018 report.

    A total of 1,801 holders of valid titles did not make any royalty payment in 2018. It was also noted that out of the 291 titles held by the 69 reporting companies, 143 or 49 per cent  were inactive during the reporting period.

    All these issues, as identified by NEITI since 2007 till date, have not only led to huge revenue loss for the government, but also deprived other prospective investors of the opportunity to gainfully participate in the sector, leading to even more loss of revenue for the government.

    It also resulted in the loss of employment opportunities as well as the dismal contribution of the mining sector to the economy.



    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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