ABUJA, Nigeria (VOICE OF NAIJA) – A new report by the Nigeria Extractive Industries Transparency Initiative has revealed that weak governance structures, illegal mining, and poor transparency are fuelling illicit financial flows in Nigeria’s mining sector, resulting in significant revenue losses.
According to the report Nigeria’s mining ecosystem is burdened by entrenched governance, transparency, and enforcement gaps that continue to enable widespread financial leakages.
The report, titled “Stemming the Scourge of Illicit Financial Flows in Nigeria’s Mining Sector,” identified major drivers of illicit financial flows to include illegal extraction, under-reporting of production, trade mispricing, smuggling, and laundering of proceeds.
“IFF enablers in Nigeria’s mining sector are systemic rather than incidental,” the report stated, adding that the issue is deeply embedded across institutions, markets, and security systems.
READ ALSO: NEITI Urges Five-Year Review Of Nigeria Tax Act
It linked the persistence of the problem to weak regulatory capacity, political interference, and poor coordination among government agencies, which it said have created loopholes for exploitation.
The report also highlighted the dominance of foreign buyers in the mineral market, warning that this encourages under-valuation of minerals, capital flight, and concealment of actual transaction values.
Findings showed that gaps in data and transparency remain a major concern, with inconsistencies across agency datasets, incomplete production reporting, and weak verification of beneficial ownership limiting effective tracking of revenues and ownership structures.
It further noted that the high level of informality in artisanal and small-scale mining complicates monitoring, taxation, and enforcement, as many operators function outside regulatory frameworks.
The report added that corruption and criminal activities are widespread in mining communities, with illegal levies, extortion, and the involvement of armed groups facilitating smuggling and weakening state authority.
It warned that these challenges are fuelling organised crime, undermining legitimate operators, and depriving the country of critical revenue needed for development.
The report also pointed to institutional capacity constraints and fragmented governance as major barriers to effective regulation, noting that agencies such as the Ministry of Solid Minerals Development, Mining Cadastre Office, NEITI, Customs, and relevant state bodies face inadequate staffing, limited expertise, and weak digital infrastructure.
READ ALSO: NEITI Backs NNPC Leadership To Drive Reforms, Corporate Governance
“These weaknesses are compounded by poor coordination and the absence of an integrated monitoring system, resulting in inconsistent data and limited oversight across the sector,” the report stated.
It further stressed that weak data governance, limited transparency, and inadequate enforcement of beneficial ownership disclosure are enabling corruption and regulatory capture.
According to the report, reliance on manual record-keeping, unverifiable production data, and incomplete export documentation has reduced transparency across the mining value chain, creating opportunities for misreporting and concealment of mineral flows.
It added that the lack of strong beneficial ownership frameworks allows the use of shell companies and enables politically exposed persons to obscure ownership and control of mining assets.
The report also raised concerns over market risks, noting that the dominance of foreign buyers encourages trade-based money laundering, especially amid widespread cash transactions.
It emphasised that weak regulation of artisanal mining has led to value chain leakages, as illegally mined minerals are often mixed with legitimate ones and exported without traceability.
The report further warned that insecurity is worsening the situation, with bandits and criminal groups reportedly controlling mining sites, imposing illegal levies, and financing their operations through proceeds from mineral resources.