Oil Wealth and Illicit Financial Flows in Nigeria’s Petroleum Sector

Abstract

It is quite phenomenon that natural resources of most developing nations today have become a driving force for sustained poverty, armed conflict, and illicit financial flows (IFFs). Against this background, this paper presents a detailed analysis of this phenomenon and seeks to assess the intersection between natural resources and illicit capital outflows with Nigeria’s oil economy acting as a dominant theme of discussion. Despite being the richest oil-producing country, with other abundant natural resources in Africa, the paradox remains that Nigeria operates a weak mono-economy with many of its citizens living in abject poverty. This paper reveals that Nigeria’s oil and gas sector is a landmark for money laundering, corruption, tax evasion, and oil spills which prevents the nation from achieving the 2030 sustainable development goals. This problem is due to enthroned corruption by Nigerian public officials, weak institutions, non-policy implementation, corrupt tax agencies, and noncompliance with petroleum laws. The study recommends that the international communities should achieve a collective reform on transfer pricing policies, while the Nigerian government should achieve a transparent mechanism for disclosing beneficial ownership and as well digitalized anti-money laundering activity.