The Nigeria Extractive Industries Transparency Initiative, NEITI, has raised concerns over rising illicit financial flows in Nigeria’s solid minerals sector, warning that illegal mining, weak regulation, and opaque ownership structures are undermining the industry’s economic potential. The agency said the growing activities threaten revenue generation, weaken transparency, and fuel criminal operations within mining communities.
In a policy brief released in Abuja titled “Stemming the Scourge of Illicit Financial Flows in Nigeria’s Mining Sector,” NEITI identified several structural challenges affecting the sector. These include weak institutional coordination, fragmented regulatory systems, foreign buyers’ dominance, informal artisanal mining activities, and criminal infiltration of mining areas.
According to NEITI, despite Nigeria’s large deposits of gold, lithium, limestone, and gemstones, the solid minerals sector generated only N401 billion in revenue and contributed 0.72 percent to the country’s Gross Domestic Product, GDP, in 2023. The agency stated that persistent illicit financial flows continue to limit the sector’s ability to support economic diversification and national development goals.
The report explained that revenue leakages occur through illegal mining, tax evasion, smuggling, under-reporting of mineral exports, corruption, and money laundering linked to organised criminal networks. NEITI described the challenges as “systemic rather than incidental,” noting that regulatory weaknesses remain deeply embedded within institutional structures.
NEITI also highlighted severe fragmentation among oversight institutions, including the Ministry of Solid Minerals Development, Mining Cadastre Office, Nigeria Customs Service, Nigeria Financial Intelligence Unit, and relevant state agencies. According to the agency, these institutions operate separate data systems with limited interoperability and no integrated monitoring framework.
The report further identified weak beneficial ownership disclosure as a major factor enabling illicit financial flows within the sector. NEITI stated that mining licences are frequently registered through shell companies, layered corporate arrangements, and special purpose vehicles that conceal the real owners of mining assets.
According to the agency, the lack of transparency allows politically exposed persons, criminal groups, and undisclosed foreign interests to hide control over mining operations. The report warned that such opacity creates opportunities for corruption, money laundering, trade misrepresentation, and regulatory manipulation.
NEITI disclosed that more than 70 percent of mining activities in Nigeria are dominated by artisanal and small-scale miners operating largely outside formal regulatory frameworks. The report added that approximately 80 percent of mining activities in some North-West states, including Zamfara, Katsina, and Kaduna, are conducted illegally.
The agency explained that minerals extracted from illegal mining sites are often mixed with legally sourced minerals, making traceability difficult and enabling illegal exports to enter formal supply chains. NEITI warned that until artisanal mining is properly formalised through licensing reforms, financing support, cooperative structures, and traceability systems, the sector will remain vulnerable to illicit financial flows.
The report recommended stronger inter-agency coordination, improved digital monitoring systems, stricter beneficial ownership enforcement, anti-money laundering integration, and enhanced community engagement to address the problem.
Industry analysts say the warning highlights growing concerns about governance and transparency within Nigeria’s mining sector as authorities seek to expand non-oil revenue sources. Increased oversight and formalisation efforts are expected to remain central to future reforms within the extractive industry.
