The Nigeria Extractive Industries Transparency Initiative has warned that illegal mining, weak regulation and criminal activities are draining Nigeria’s mineral wealth and frustrating efforts to diversify the economy.
NEITI raised the alarm in a statement issued on Thursday by its Director of Communications and Stakeholders Management, Obiageli Onuorah, following the release of a policy brief titled, “Stemming the Scourge of Illicit Financial Flows in Nigeria’s Mining Sector.”
The agency said illicit financial flows continue to weaken the mining sector through illegal mining, smuggling, tax evasion, corruption and money laundering despite Nigeria’s vast deposits of gold, lithium, limestone and gemstones.
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.”
NEITI disclosed that the mining sector contributed only N401bn and accounted for 0.72 per cent of Nigeria’s Gross Domestic Product in 2023.
The organisation blamed poor coordination among regulatory institutions for worsening the situation.
It stated: “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 agency also warned that shell companies and hidden ownership structures are enabling politically exposed persons and criminal networks to conceal their involvement in mining activities.
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.”
NEITI said beneficial ownership verification remains weak and largely dependent on self-declaration, creating loopholes for corruption and money laundering.
The agency further disclosed that more than 70 per cent of mining activities in Nigeria are carried out by artisanal and small-scale miners operating outside legal and regulatory systems.
It added that about 80 per cent of mining operations in Zamfara, Katsina and Kaduna states are illegal.
The organisation warned that minerals extracted illegally are often mixed with legally sourced products, making verification difficult and allowing illicit minerals to enter formal export markets.
NEITI described the situation as the emergence of “parallel mineral economies” operating outside government control.
To address the crisis, the agency proposed stronger collaboration among government institutions, anti-money laundering measures in mining governance, formalisation of artisanal mining, mandatory beneficial ownership disclosure, legal reforms and improved community engagement.
The organisation stated: “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.
