KEY POINTS

• NEITI flagged weak regulation, illegal mining and opaque ownership as drivers of illicit financial flows in Nigeria’s mining sector.
• The sector contributed just N401 billion or 0.72 percent of GDP in 2023 despite gold, lithium, limestone and gemstone deposits.
• More than 70 percent of mining is artisanal and small-scale, with 80 percent of activity in Zamfara, Katsina and Kaduna operating illegally.

The Nigeria Extractive Industries Transparency Initiative on Thursday warned that weak regulation, illegal mining and opaque ownership structures are driving rising illicit financial flows through Nigeria’s solid minerals sector, undermining the industry’s contribution to the economy.

NEITI laid out the case in a Thursday policy brief carrying the title “Stemming the Scourge of Illicit Financial Flows in Nigeria’s Mining Sector,” which the agency unveiled in Abuja. The report identified weak regulatory capacity, fragmented institutional coordination, foreign-buyer dominance, informal artisanal mining and criminal infiltration of mining communities as the main drivers of the leakage.

Now the warning lands as the Tinubu administration pitches solid minerals as a future export earner second only to oil, with the policy brief framing the current architecture as structurally vulnerable to revenue theft and money laundering.

The economic gap

Specifically, NEITI noted that Nigeria’s mining sector generated only N401 billion in revenue and contributed just 0.72 percent of Gross Domestic Product in 2023, a yield well below the country’s geological endowment in gold, lithium, limestone and gemstones.

Indeed, the agency said illicit financial flows continue to fuel revenue leakages, tax evasion, illegal mining, smuggling, corruption and money laundering, with organized criminal networks behind much of the activity. The brief described the challenges as “systemic rather than incidental.”

Moreover, regulatory oversight sits fragmented across the Ministry of Solid Minerals Development, the Mining Cadastre Office, NEITI, the Nigeria Customs Service and the Nigeria Financial Intelligence Unit. “Each institution collects sector-relevant data in silos, with limited interoperability and no integrated sector-wide digital monitoring system,” the report said.

Ownership opacity

Furthermore, NEITI flagged weak beneficial ownership disclosure as a major loophole. The agency said license holders often hide behind special purpose vehicles, shell companies and layered corporate structures that obscure the natural persons who ultimately own or control extractive assets.

The opacity, NEITI warned, lets politically exposed persons, undisclosed foreign interests and criminal actors conceal control over mining operations, opening the door to corruption, money laundering and trade misrepresentation.

Additionally, the brief implied that any meaningful reform must marry tighter licensing rules with beneficial-ownership transparency, otherwise paper-only fixes will leave the sector exposed to the same hidden actors that have profited so far.

Artisanal mining at the heart

Meanwhile, NEITI said more than 70 percent of mining activities in Nigeria involve artisanal and small-scale miners, many of whom operate outside formal regulatory frameworks. An estimated 80 percent of mining in northwest states such as Zamfara, Katsina and Kaduna runs illegally, the agency added.

However, the laundering mechanics make traceability especially hard. Minerals from illegal pits often blend with legally sourced output, opening channels for illicit exports to enter formal supply chains and evade customs scrutiny.

Together, these conditions explain why the sector’s contribution to government revenue and GDP remains stubbornly small relative to the geological wealth on Nigerian soil. NEITI argued that until Nigeria formalizes artisanal mining through simplified licensing, cooperative structures, financing support and traceability systems, the sub-sector will remain highly vulnerable to illicit flows.

Whether the government can pivot from rhetoric to operational reform will determine if solid minerals graduate into a genuine fiscal contributor or remain a leakage line item. Yet for now, NEITI’s policy brief has laid out the diagnosis, with the next move resting on a federal government that has talked up the sector more than it has cleaned it up.