The Nigeria Extractive Industries Transparency Initiative has warned that illicit mining activities, weak regulatory oversight, and criminal infiltration of mining communities are draining Nigeria’s mineral wealth and undermining efforts to diversify the economy.
The warning was contained in a press statement issued on Thursday by the Director of Communications and Stakeholders Management of NEITI, Mrs Obiageli Onuorah, following the release of a policy brief titled “Stemming the Scourge of Illicit Financial Flows in Nigeria’s Mining Sector.”
NEITI stated that despite Nigeria’s vast deposits of gold, lithium, limestone, and gemstones, illicit financial flows continue to weaken the solid minerals sector through illegal mining, smuggling, tax evasion, corruption, and money laundering.
According to the statement, “The stark underperformance is driven by illicit financial flows 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 agency noted that the mining sector contributed only N401bn in revenue and accounted for 0.72 per cent of Nigeria’s Gross Domestic Product, according to NEITI’s 2023 industry audit report, despite the country’s enormous mineral resources.
NEITI explained that weak institutional coordination among regulatory agencies had further worsened the situation.
It said, “Severe fragmentation of regulatory oversight across institutions, including the Ministry of Solid Minerals Development, the Mining Cadastre Office, NEITI, Nigeria Customs Service, Nigeria Financial Intelligence Unit, and relevant state agencies. Each institution collects sector-relevant data in siloes, with limited interoperability and no integrated sector-wide digital monitoring system.”
The organisation also expressed concern over the use of shell companies and opaque ownership structures within the mining sector, warning that such arrangements enable politically exposed persons, criminal actors, and undisclosed foreign interests to conceal their involvement in mining operations.
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.”
The statement added that verification of beneficial ownership information across government institutions remained weak and heavily dependent on self-declaration, thereby creating loopholes for corruption, trade misrepresentation, and money laundering.
NEITI further disclosed that more than 70 per cent of mining activities in Nigeria are dominated by artisanal and small-scale miners, many of whom operate outside regulatory frameworks without licences, receipts, or traceability documentation.
It added that about 80 per cent of mining activities in the North-West, particularly in Zamfara, Katsina, and Kaduna states, are carried out illegally.
The agency warned that minerals extracted from illegal mining sites are often mixed with legally sourced minerals, making verification difficult and creating channels for laundering illicit mineral flows into formal export markets.
It stated that the absence of proper regulation in artisanal mining had complicated monitoring, taxation, and enforcement, thereby entrenching what it described as “parallel mineral economies” operating outside state control.
To address the challenges, NEITI proposed seven reform measures, including stronger inter-agency collaboration, integration of anti-money laundering measures into mining governance, formalisation of artisanal mining activities, mandatory beneficial ownership disclosure, legal reforms, and increased community engagement.
The organisation stressed that the recommendations align with existing national and international frameworks, including the Companies and Allied Matters Act, the Proceeds of Crime Act, Financial Action Task Force standards, and Nigeria’s Open Government Partnership commitments.
NEITI said, “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.”
The policy brief was produced by NEITI in collaboration with the Federal Ministry of Solid Minerals Development and the Africa Network for Environment and Economic Justice, with support from the UK Foreign, Commonwealth and Development Office.
