Dare Babalola
Nigeria Extractive Industries Transparency Initiative (NEITI) has expressed concern over the growing impact of illegal mining, regulatory lapses and criminal activities within mining communities.
NEITI warned that the trend is stripping Nigeria of valuable mineral resources and slowing plans to grow the non-oil economy.
The agency disclosed this in a statement issued on Thursday by its Director of Communications and Stakeholder Management, Obiageli Onuorah, following the publication of a new policy document titled Stemming the Scourge of Illicit Financial Flows in Nigeria’s Mining Sector.
According to NEITI, Nigeria possesses enormous reserves of gold, lithium, limestone, gemstones and other solid minerals, but illegal extraction, smuggling, tax avoidance, corruption and money laundering continue to prevent the sector from reaching its full economic potential.
The agency noted that illicit financial flows have significantly weakened revenue generation and created opportunities for organised criminal groups to profit from the country’s natural resources.
“The poor performance of the sector is linked to illicit financial flows that continue to undermine its prospects through revenue losses, tax evasion, illegal mining, smuggling, corruption and weak institutional controls,” the statement said.
Despite the abundance of mineral deposits, NEITI said the mining industry generated only N401 billion and contributed 0.72 per cent to Nigeria’s Gross Domestic Product, according to findings from its 2023 industry audit report.
It added that one of the major obstacles confronting the sector is poor coordination among regulatory institutions.
NEITI identified several agencies involved in oversight, including the Federal Ministry of Solid Minerals Development, Mining Cadastre Office, Nigeria Customs Service, Nigeria Financial Intelligence Unit and relevant state bodies.
According to the agency, these institutions often operate separate data systems with limited information sharing and no unified digital framework for tracking mining activities nationwide.
The report also raised concerns about the use of shell companies and hidden ownership structures to secure mining licences.
NEITI warned that politically exposed persons, criminal networks and undisclosed foreign interests may be using complex company arrangements to conceal their participation in extractive operations.
“Mining titles are often controlled through shell entities and layered corporate arrangements that make it difficult to identify the true owners of mining assets,” it stated.
The organisation said current systems for verifying beneficial ownership remain weak and depend largely on self-reporting, leaving room for corruption, trade manipulation and money laundering.
NEITI further estimated that more than 70 per cent of mining operations in Nigeria are carried out by artisanal and small-scale miners, many of whom function outside formal regulations without licences, receipts or traceable records.
It added that illegal mining is particularly widespread in parts of the North-West, especially Zamfara State, Katsina State and Kaduna State, where a large share of activities reportedly take place outside government control.
The agency warned that minerals sourced illegally are frequently blended with legitimately mined products, making it difficult to verify origin and creating a pathway for illicit minerals to enter formal export channels.
NEITI said the weak regulation of artisanal mining has made monitoring, taxation and enforcement more difficult, leading to the growth of what it described as parallel mining economies.
To address the problem, the organisation recommended stronger cooperation among agencies, compulsory disclosure of beneficial ownership, formalisation of artisanal mining, tighter legal measures, incorporation of anti-money laundering safeguards into mining governance and increased engagement with host communities.
It said the proposals are consistent with existing laws and global transparency standards, including the Financial Action Task Force framework, the Companies and Allied Matters Act, the Proceeds of Crime Act and Nigeria’s Open Government Partnership commitments.
“Ending illicit financial flows in the mining sector will require coordinated reforms, stronger transparency systems, improved data management and inclusive participation of artisanal mining communities,” NEITI added.
The policy brief was prepared by NEITI in partnership 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.
