From Femi Oyelola, Kaduna
Nigeria loses billions of naira annually to illicit financial flows in its mining sector, undermining efforts to diversify the economy and increase revenue, a new policy brief has warned.
Released in March 2026 by the Nigeria Extractive Industries Transparency Initiative (NEITI), in partnership with the Africa Network for Environment and Economic Justice (ANEEJ), and the Federal Ministry of Solid Minerals Development, the report was supported by the UK Foreign, Commonwealth & Development Office (FCDO).
Despite having at least 44 commercially viable minerals, including lithium, gold, and limestone, the mining sector contributed only N401 billion in 2023, which is less than 1% of GDP. In comparison, oil and gas contributed 6% of GDP, 29% of revenue, and 82% of exports.
The study found that more than 70% of mining activity is artisanal and small-scale, operating largely outside formal regulation. This informality, along with weak governance, fragmented oversight, and poor data systems, provides multiple opportunities for illicit financial flows. These include trade misinvoicing, underpricing, smuggling, bribery in licensing, and illegal extraction connected to criminal networks.
The report identified foreign buyer dominance—especially by Chinese actors—and widespread cash transactions as major risks that facilitate price manipulation and hide financial trails. It also noted that mining licenses are often held through shell companies, making beneficial ownership difficult to verify and increasing the risks of corruption and money laundering.
Security issues exacerbate the problem. An estimated 80% of mining in North-West states such as Zamfara, Katsina, and Kaduna is illegal, with bandits collecting levies and controlling sites. The Nigerian Financial Intelligence Unit has flagged illegal mining as an emerging threat to national security.
To address these losses, the brief recommended stronger inter-agency coordination, the integration of anti-money laundering controls across the mining value chain, faster formalization of artisanal and small-scale mining (ASM), and enforcement of beneficial ownership disclosure. It also called for legal reforms, better community engagement, and improved data sharing among agencies.
The report concluded that with urgent reforms, Nigeria can reduce illicit flows, enhance transparency, and turn mining into a key driver of economic growth.
