By Obiabin Onukwugha
A new report by the Nigeria Extractive Industries Transparency Initiative (NEITI), has revealed deep-rooted corruption in Nigeria’s Solid Minerals sector, propelled by illicit financial flows (IFF).
The report is contained in a Policy Brief released on Thursday by the NEITI House titled “Stemming the Scourge of Illicit Financial Flows in Nigeria’s Mining Sector.”
In the report, NEITI highighted weak regulatory capacity, fragmented institutional coordination, opaque ownership structures, informal artisanal mining, foreign buyers’dominance and criminal infiltration of mining zones, as key factors enabling Illicit Financial Flows (IFFs) in Nigeria solid minerals sector.
It noted that Nigeria’s mining sector is widely regarded as a cornerstone for economic diversification. With commercially viable deposits such as gold, lithium, limestone, and gemstones, NEITI noted that the sector should be a major revenue driver.
“Despite this endowment, the NEITI 2023 industry audit report disclosed that the sector contributed only N401 billion in revenue and accounted for 0.72% of GDP,” the report read.
The Policy Brief, which is published by NEITI in collaboration with the Federal Ministry of Solid Minerals Development (MSMD) and Africa Network for Environment and Economic Justice (ANEEJ), with support from the Foreign, Commonwealth and Development Office (FCDO), is part of the agency’s policy and advocacy instruments used to raise awareness and educate the public on extractive issues requiring urgent attention in pursuant of its mandate of promoting transparency, accountability, and good governance in the management of Nigeria’s natural resources.
The Policy Brief explained that the stark underperformance is driven by illicit financial flows (IFFs) that continue to erode the sector’s potential by facilitating Revenue leakages and tax evasion Illegal mining and smuggling activities, corruption and weak institutional oversight, and money laundering linked to organized criminal networks.
“The study’s findings establish that IFF enablers in Nigeria’s mining sector are systemic, rather than incidental, embedded across institutional arrangements, market structures, data systems, and security environments,” the report read.
In a bid to address the challenges, the Policy Brief proffered seven actionable reform recommendations, spanning inter-agency coordination, Anti Money Laundering/Counter Terrorism Financing integration into mining governance formalisation of ASM activities to enhance traceability, mandatory beneficial ownership disclosure, legal and institutional reforms, enhanced community engagement, and sustained civil society and development partner involvement.
These recommendations, according to NRITI, are explicitly aligned with Nigeria’s existing policy frameworks, including FATF standards, AML/CFT obligations under the Proceeds of Crime Act (POCA), Beneficial Ownership reforms under the Companies and Allied Matters Act (CAMA), Open Government Partnership commitments, and the Medium-Term National Development Plan (MTNDP).
NEITI reiterated that tackling illicit financial flows is central to Nigeria’s economic stability and long-term development. “Therefore, stemming the scourge of IFFs in Nigeria’s mining sector requires coordinated institutional reform, better data systems, stronger transparency mechanisms and inclusive engagement of the ASM communities,” the body stated.
NEITI called on government institutions, industry stakeholders, and civil societies to prioritize implementation of the recommendations outlined in the brief,.adding that “By addressing governance failures and closing systemic loopholes, Nigeria can reposition its mining sector as a credible, transparent, and revenue-generating pillar of the economy.”
