Two different instruments get lumped together in the host-community debate. One governs mining and the other governs oil and gas.
Community Development Agreements (mining). Section 116 of the Nigerian Minerals and Mining Act 2007 requires holders of mining, small-scale mining and quarry leases to conclude an agreement with the host community before development begins. It must set out the social and economic contributions the project will make, and the Mines Environmental Compliance Department approves it. Guidelines launched in November 2023 by Dele Alake, Minister of Solid Minerals Development at the time, add programmes, monitoring, environmental protection, compensation and conflict resolution. Agreements are subject to review every five years. Eche Asuzu, National Coordinator of the Nigeria Labour Congress’s Climate Change, Green Jobs and Just Transition Programme, cited lithium operations at a recent Abuja dialogue. Lithium is a solid mineral, so this regime covers operations of that kind.
Host communities development trusts (oil and gas). The 2021 Petroleum Industry Act (PIA) replaced the informal memoranda of understanding and corporate social responsibility arrangements that came before. Every licence or lease holder, called a “settlor”, must incorporate a trust and run a needs assessment that becomes a community development plan. It must also pay 3% of its actual operating expenditure from the preceding year into the trust fund every year. The fund can be used only for that plan.
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This is a percentage, not a fixed sum, so the payout rises and falls with the operator’s spending. Failure to comply can be grounds for losing the licence. Separately, settlors pay an environmental remediation fund upfront into accounts managed by the NUPRC.
What it has delivered. The BudgIT Foundation’s five-year review found more than 160 trusts incorporated. No settlor met the nine-month deadline, and about 30% of licence holders still have no trust. As of mid-2024, roughly 97 incorporated trusts were unfunded. Communities often cannot check payments against actual spending, and trusts answer largely to settlors and regulators rather than to communities. Women, youth and persons with disabilities remain largely excluded. TotalEnergies was the first settlor to operationalise a trust. No aggregate figure for payouts was available in the sources reviewed.
