Adopting and Enforcing Transfer Pricing in Nigeria: A Mixed-Methods Analysis of the Petroleum Sector

Abstract

Transfer pricing (TP) is pivotal to revenue mobilisation in resource-dependent economies. Focusing on Nigeria’s petroleum sector, this study examines the adoption and implementation of TP regulations introduced in 2012 and updated in 2018. Guided by institutional theory and the resource-based view (RBV), it employs a mixed-methods design: a survey of 140 stakeholders across government, multinational oil companies, advisers, civil society, and donors, complemented by 16 semi-structured interviews with senior practitioners and officials. Results show a clear preference for a hybrid framework that blends OECD and UN guidance with local adaptations: only 32 per cent of respondent’s view wholesale OECD adoption as fully appropriate, 48 per cent favour a hybrid model, and 20 per cent prefer the UN manual alone. Motives for adoption are led by revenue protection (76 per cent), alongside legitimacy-seeking alignment with global practice. Implementation capacity remains constrained: while basic administrative structures exist, technical expertise and access to reliable comparables are insufficient, and political-economy frictions impede consistent enforcement. Key barriers include skills gaps, data limitations, weak political will, and resistance from powerful actors. The study contributes empirical evidence from a lower-capacity, extractives context and advances a dual theoretical account: institutional pressures explain adoption, whereas RBV-type capabilities determine effectiveness. Policy recommendations prioritise a tailored hybrid rule set, sustained capacity building (including data infrastructure), targeted but domestically embedded international support, and stronger governance to move Nigeria from formal compliance to credible, revenue-secure TP administration.