The Nigeria Extractive Industries Transparency Initiative (NEITI) has highlighted weak regulatory capacity, fragmented institutional coordination, opaque ownership structures, informal artisanal mining, foreign buyers’ dominance and criminal infiltration of mining zones as key factors enabling Illicit Financial Flows (IFFs) in Nigeria’s solid minerals sector.
In a Policy Brief released on Thursday in Abuja, NEITI noted that Nigeria’s mining sector was widely regarded as a cornerstone for economic diversification.
According to the agency, with commercially viable deposits such as gold, lithium, limestone, and gemstones, the sector should be a major revenue driver.
But despite this endowment, the NEITI 2023 industry audit report disclosed that the sector contributed only N401 billion in revenue and accounted for 0.72% of GDP.
According to the Director, Comms & Stakeholders Management NEITI, Obiageli Onuorah, the Policy Brief explained that the stark underperformance is driven by illicit financial flows (IFFs) that continue to erode the sector’s potential by facilitating: Revenue leakages and tax evasion, Illegal mining and smuggling activities, corruption and weak institutional oversight, and money laundering linked to organised criminal networks.
The study’s findings establish that IFF enablers in Nigeria’s mining sector are systemic rather than incidental, embedded across institutional arrangements, market structures, data systems, and security environments.
The brief emphasised: “Severe fragmentation of regulatory oversight across institutions, including the Ministry of Solid Minerals Development (MSMD), the Mining Cadastre Office (MCO), NEITI, Nigeria Customs Service, Nigeria Financial Intelligence Unit (NFIU), and relevant state agencies. Each institution collects sector-relevant data in siloes, with limited interoperability and no integrated sector-wide digital monitoring system.”
Furthermore, the Publication also identified weak data governance and insufficient enforcement of beneficial ownership (BO) disclosure as a structural enabler of IFFs; one that makes most other illicit pathways possible and, critically, undetectable. Persistent reliance on manual record-keeping, non-verifiable production reporting, and incomplete export documentation significantly reduces transparency across the mining value chain.
According to the Policy Brief: “Mining licenses are frequently held through special purpose vehicles, shell companies, and layered corporate structures that obscure the natural persons who ultimately own or control extractive assets.
“Verification of beneficial ownership information across the MSMD, MCO, and the Corporate Affairs Commission (CAC) remains limited, fragmented, and largely reliant on self-declaration.
“This opacity allows Politically Exposed Persons (PEPs), undisclosed foreign interests, and criminal actors to conceal control over mining operations, thereby facilitating corruption, money laundering, trade misrepresentation, and regulatory capture. Until beneficial ownership transparency is enforced and data systems are reconciled across agencies, accountability in the sector will remain structurally compromised”.
The brief further disclosed that over 70% of mining activity in Nigeria was dominated by artisanal and small-scale mining (ASM); however, many artisanal miners and cooperatives operate without licenses, receipts, digital records, or traceability documentation. An estimated 80% of mining in North-West Nigeria, particularly in Zamfara, Katsina, and Kaduna States, was carried out illegally.
The brief pointed out that those minerals extracted from illegal or informal pits were routinely blended with legally sourced minerals, making verification extremely difficult and creating a direct channel for laundering illicit mineral flows into formal supply chains and export markets.
In a bid to address the challenges, the Policy Brief proffered seven actionable reform recommendations, spanning inter-agency coordination, Anti Money Laundering/Counter Terrorism Financing integration into mining governance, formalisation of ASM activities to enhance traceability, mandatory beneficial ownership disclosure, legal and institutional reforms, enhanced community engagement, and sustained civil society and development partner involvement.
These recommendations were explicitly aligned with Nigeria’s existing policy frameworks, including FATF standards, AML/CFT obligations under the Proceeds of Crime Act (POCA), Beneficial Ownership reforms under the Companies and Allied Matters Act (CAMA), Open Government Partnership commitments, and the Medium-Term National Development Plan (MTNDP).
NEITI reiterates that tackling illicit financial flows was central to Nigeria’s economic stability and long-term development. Therefore, stemming the scourge of IFFs in Nigeria’s mining sector requires coordinated institutional reform, better data systems, stronger transparency mechanisms and inclusive engagement of the ASM communities.
NEITI called on government institutions, industry stakeholders, and civil society to prioritise the implementation of the recommendations outlined in the brief.
“By addressing governance failures and closing systemic loopholes, Nigeria can reposition its mining sector as a credible, transparent, and revenue-generating pillar of the economy,” the brief added.
