NEITI warns of illicit financial flows in the solid minerals sector

By Obas Esiedesa

The Nigeria Extractive Industries Transparency Initiative (NEITI) has expressed concerns about the growing illicit financial flows in the country’s solid minerals sector, arguing that weak regulation, illegal mining activities and opaque ownership structures are eroding the industry’s economic contribution.

In a policy brief released on Thursday in Abuja, titled “Stemming the Scourge of Illicit Financial Flows in Nigeria’s Mining Sector,” NEITI identified several key drivers: limited regulatory capacity, fragmented institutional coordination, dominance of foreign buyers, informal artisanal mining, and criminal infiltration of mining communities.

The agency noted that, despite Nigeria’s substantial deposits of gold, lithium, limestone and gemstones, the mining sector generated only N401 billion in revenue and accounted for 0.72 percent of the country’s Gross Domestic Product in 2023.

According to NEITI, illicit financial flows continue to fuel revenue leakages, tax evasion, illegal mining, smuggling, corruption and money laundering that are linked to organised criminal networks.

The policy brief described these challenges as “systemic rather than incidental,” stressing that regulatory oversight remains severely fragmented among agencies such as the Ministry of Solid Minerals Development, the Mining Cadastre Office, NEITI itself, 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.

NEITI also highlighted weak beneficial ownership disclosure as a major loophole that facilitates illicit activity.

According to the report, “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.”

The agency warned that this opacity allows politically exposed persons, undisclosed foreign interests and criminal actors to conceal control over mining operations, thereby enabling corruption, money laundering and trade misrepresentation.

The brief further revealed that over 70 percent of mining activities in Nigeria are dominated by artisanal and small‑scale miners, many of whom operate outside formal regulatory frameworks.

It added that an estimated 80 percent of mining activities in North‑West states such as Zamfara, Katsina and Kaduna are carried out illegally.

According to the policy brief, minerals extracted from illegal pits are often mixed with legally sourced minerals, making traceability difficult and creating channels for laundering illicit mineral exports into formal supply chains.

The agency stressed that until artisanal mining is formalised through simplified licensing, cooperative structures, financing support and traceability systems, the sub‑sector will remain highly vulnerable to illicit financial flows.

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