The Nigeria Extractive Industries Transparency Initiative has raised concerns over the growing impact of illicit mining on Nigeria’s solid minerals sector, warning that illegal activities, weak regulation, and criminal networks are eroding the country’s vast mineral potential.
Director of Communications and Stakeholders Management, Obiageli Onuorah, the agency said illicit financial flows remain a major obstacle to the sector’s growth and its ability to support economic diversification.
The warning followed the release of NEITI’s policy brief titled “Stemming the Scourge of Illicit Financial Flows in Nigeria’s Mining Sector.”
According to the agency, Nigeria’s abundant deposits of gold, lithium, limestone, and gemstones have not translated into expected economic gains due to widespread illegal mining, smuggling, tax evasion, corruption, and money laundering.
NEITI noted that despite these resources, the mining sector contributed only ₦401 billion and accounted for just 0.72 per cent of the country’s Gross Domestic Product, based on its 2023 industry audit report.
The organisation attributed the sector’s underperformance to weak institutional coordination among key regulatory bodies, including the Ministry of Solid Minerals Development, the Mining Cadastre Office, the Nigeria Customs Service, and the Nigeria Financial Intelligence Unit. It said these agencies operate in silos, with limited data sharing and no integrated monitoring system.
The agency also expressed concern over the use of shell companies and complex ownership structures that conceal the true beneficiaries of mining licences. It warned that such opacity allows politically exposed persons, criminal elements, and undisclosed foreign interests to operate within the sector without accountability.
NEITI further revealed that more than 70 per cent of mining activities in Nigeria are carried out by artisanal and small-scale miners, many of whom operate outside regulatory frameworks. In the North-West, particularly in states such as Zamfara, Katsina, and Kaduna, illegal mining is estimated to account for about 80 per cent of activities.
It added that minerals sourced from illegal operations are often mixed with legally mined resources, making traceability difficult and enabling illicit flows to enter formal export markets.
Describing the situation as the emergence of “parallel mineral economies,” NEITI said the lack of regulation has weakened monitoring, taxation, and enforcement mechanisms.
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To tackle the problem, the agency proposed a series of reforms, including stronger inter-agency collaboration, integration of anti-money laundering measures into mining governance, formalisation of artisanal mining, mandatory disclosure of beneficial ownership, and improved community engagement.
NEITI said the recommendations align with existing legal frameworks such as the Companies and Allied Matters Act, the Proceeds of Crime Act, and international standards set by the Financial Action Task Force, as well as Nigeria’s commitments under the Open Government Partnership.
The agency stressed that addressing illicit financial flows in the mining sector would require coordinated reforms, improved transparency, and stronger institutional capacity to unlock the sector’s full economic potential.
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