CHAPTER FOUR

(IN)FORMALITY IN ARTISANAL MINING AND NIGERIA'S SOLID MINERALS

EXPORT-IMPORT DEFICIT

The central objective of this chapter is to interrogate the informality in artisanal mining and its
impact on Nigeria’s solid minerals export-import deficit. minerals export-import deficit.
Artisanal mining refers to small-scale, informal mining operations, often carried out by
individuals or small groups without official permission or regulatory oversight. This type of
mining is prevalent in many resource-rich developing countries, including Nigeria, where it
significantly impacts the solid minerals sector. Nigeria is endowed with vast reserves of solid
minerals, including gold, tin, coal, limestone, and uranium, among others. Despite this wealth,
the country faces a substantial export-import deficit in its solid minerals sector. This deficit can
be attributed to several factors, including the predominance of informal artisanal mining
activities. These activities often lead to inefficient exploitation of resources, environmental
degradation, and loss of government revenue due to minimal regulation and oversight. The
informal nature of artisanal mining in Nigeria presents both challenges and opportunities. On the
one hand, it poses challenges related to environmental management, miners' safety, and revenue
collection. On the other hand, it provides livelihoods for thousands of people and has the
potential to contribute significantly to local economies if properly managed and integrated into
formal economic frameworks.

This chapter demonstrates using tables, figures and logical action/deduction, that the
informalization of artisanal mining affected Nigeria’s import-export deficit. Addressing the
export-import deficit in Nigeria's solid minerals sector requires a multifaceted approach. This
approach includes formalizing artisanal mining activities, enhancing regulatory frameworks,
investing in infrastructure and technological advancements, and promoting sustainable mining
practices. By doing so, Nigeria can unlock the full potential of its solid minerals sector, improve
environmental and social outcomes, and contribute to economic growth and diversification.
What follows is a detailed analysis of the means the informalization of artisanal mining in
Nigeria has triggered import-export deficit in the state.
4.1 Official Recognition/Regulation of ASM and Nigeria’s Solid Minerals Deficit

Mineral resources hold significant global importance, serving as essential components in various
industries and technologies that drive economic growth and development worldwide (Carrión,
2015). With the increasing demand for minerals due to population growth and technological
advancements, there has been a notable rise in artisanal mining practices. Artisanal mining,
characterized by small-scale and often informal operations, plays a crucial role in providing
livelihoods for communities in developing countries and supporting local economies (Yaaba
Baah-Ennumh & Forson, 2017). It has the potential to contribute to poverty alleviation, stimulate
economic growth at the grassroots level, and preserve cultural traditions tied to mining activities.
However, artisanal mining also presents challenges, including environmental degradation, health
and safety risks for miners, and social issues like child labor and lack of formal regulation.
Balancing the potential contributions of artisanal mining with the need for sustainable practices
and responsible resource management is essential to ensure the long-term viability of mineral
extraction and the well-being of mining communities (Sun et al., 2024). Across sub-Saharan
Africa, the unorganized sector is dominant. Numerous analyses have surfaced since Hart (1973)
first coined the term in the early 1970s, providing a thorough picture of the region's dispersed
labor markets and institutions. Most people agree that around 75% of sub-Saharan Africa's
working population is employed in the informal sector (ILO, 2009). The Nigerian government
and pertinent stakeholders have recently focused on the necessity of using sustainable value
chain strategies to best harness Nigeria's vast mineral resource endowments. This development
has become necessary due to a number of factors, including the decrease in Nigeria's earnings
and exports of crude oil and the government's increased effort and commitment to diversify the
economy away from agriculture and the oil and gas sector (Aigbedion, 2007).

The government's attempts to encourage the exploration of the solid mineral industry and take
use of its prospects to draw investors and advance sustainable economic growth have been
focused by this problem or gap. Over time, the Nigerian government has established a
framework that secures and encourages investors to investigate the economic opportunities
present in the solid mineral sector. This has been made possible by the various legal tools at its
disposal and the institutionalized reforms (such as development of the Nigerian Minerals and
Mining Act, 2007: Development of National Meal Policy, 2008: Development of the Nigerian
Minerals and Mining Regulaions, 2011; Establishment of the Nigerian institute of Mining and
Geoscience (NIMG); Enhanced geoscience data collection across Nigeria; Establishment of
control departments for Mines Environmental Compliance and Artisanal and Small Scale
Mining), and strategically tailored to stimulate best practices, as well as avoid the pitfalls that
marred exploitation of mineral deposits in the past; nonetheless, the validity of this legal
framework within the Nigerian context is yet to produce a concrete result within the scope of
sustainable economic development.

Nigeria's solid minerals deficit poses a severe challenge to the country's economy and
infrastructure development. Despite being rich in various mineral resources, Nigeria has
struggled to fully harness and utilize these resources effectively (Matthew, 2013). The
underutilization of solid minerals deprives the economy of significant revenue streams and
hampers infrastructure development projects crucial for the country's growth (Ojonimi et al.,
2018). The consequences of this deficit are far-reaching, leading to missed opportunities for
economic diversification, job creation, and foreign investment. Additionally, the lack of proper
exploitation of solid minerals contributes to a reliance on oil revenue, making the economy
vulnerable to fluctuations in global oil prices. Addressing Nigeria's solid minerals deficit is
essential for unlocking the potential of the mining sector, boosting economic growth, and
enhancing infrastructure development to drive sustainable progress and prosperity for the nation
(Matthew, 2013).

Artisanal and Small-Scale Mining (ASM) encompasses informal mining activities conducted on
a small scale with limited capital investment and mechanization, often in remote or rural areas.
The scale of ASM operations varies from individual miners to small groups or cooperatives,
distinguishing it from large-scale industrial mining (Hilson et al., 2017). ASM typically employs
rudimentary tools and techniques for mineral extraction, relying on manual labor and basic
equipment. The technology used in ASM is often simple and traditional, with minimal
mechanization compared to larger mining operations. This reliance on manual labor and basic
tools reflects the resource-constrained nature of ASM activities, which may involve hand tools,
panning, and basic processing methods (Arthur-Holmes et al., 2023).
The organization of ASM is characterized by its informal and decentralized structure, operating
outside formal regulatory frameworks. ASM miners often work independently or in small
groups, lacking formal management hierarchies common in industrial mining operations
(Mertzanis, 2020) (Zaczyk, 2023). This informal organization can lead to challenges in
governance, safety, and environmental management. ASM activities can have significant
environmental impacts due to the use of rudimentary techniques, leading to habitat destruction,
soil erosion, and water pollution. The lack of formal oversight and regulation in ASM can
contribute to environmental degradation and social conflicts over resource access and land rights
(Hubert, 2021)

Despite its informal nature, ASM plays a vital role in providing livelihoods for many individuals
in resource-rich but economically marginalized regions. ASM communities face challenges such
as poor working conditions, limited access to healthcare and education, and uncertain market
opportunities. Efforts to formalize and regulate ASM aim to address these challenges by
improving working conditions, promoting environmental sustainability, and enhancing the socio-
economic well-being of ASM communities. Formalization initiatives seek to integrate ASM into
legal and regulatory frameworks, ensuring responsible mining practices, and fostering
sustainable development in ASM regions (Nyamekye et al., 2021). The table below will seek to
provide a report of the Vision 2020 National Technical Group on Minerals and Metals
Development.
Figure 1: Report of the Vision 2020 National Technical Group on Minerals and Metals
Development.

Source: Google Image (2024).

The figure above shows the report of the Vision 2020 National Technical Group on Minerals and
Metals Development Artisanal and Small-Scale Mining (ASM) activities in Nigeria are
widespread, with a significant presence across various regions of the country. The geographic
distribution of ASM in Nigeria includes areas such as Plateau State, Zamfara State, Niger State,
and Kaduna State, among others. These regions are known for their rich mineral deposits and
have attracted ASM activities due to the presence of minerals such as gold, tin, lead, coal, and
gemstones (Sodango et al., 2021). The diversity of mineral resources in Nigeria contributes to
the widespread nature of ASM operations in the country (Musbau, 2014). In terms of the types of
minerals mined through ASM in Nigeria, gold mining is particularly prominent, with artisanal
miners extracting gold from alluvial deposits and primary ore bodies. Additionally, tin mining
has a long history in Nigeria, especially in areas like Jos, where artisanal miners engage in tin
mining activities. Other minerals commonly mined through ASM in Nigeria include lead, coal,
gemstones, and industrial minerals (Odiase-Alegimenlen, 2001). The variety of minerals
exploited through ASM reflects the mineral-rich nature of Nigeria and the economic
opportunities presented by these resources.

Estimating the exact number of people involved in ASM in Nigeria can be challenging due to the
informal and decentralized nature of these mining activities. However, it is estimated that
hundreds of thousands of individuals are engaged in ASM across the country, contributing
significantly to the local economy and livelihoods of communities (Krzak, 2012). The ASM
sector in Nigeria plays a crucial role in providing employment opportunities, particularly in rural
and resource-rich areas, where formal employment options may be limited. Efforts to formalize
and regulate ASM in Nigeria aim to enhance the sustainability and socio-economic impact of
these mining activities while addressing environmental and social challenges associated with
informal mining practices

Artisanal and Small-Scale Mining (ASM) in Nigeria has both positive and negative socio-
economic impacts on the country. On the positive side, ASM activities contribute to job creation
and income generation, particularly in rural and resource-rich areas where formal employment
opportunities may be limited. ASM provides livelihoods for a significant number of individuals
and supports local economies by creating employment opportunities for miners, traders, and
service providers. This economic activity helps alleviate poverty by providing income for miners
and their families, thereby improving living standards and contributing to local economic
development (Arzoo & Satapathy, 2016).

However, Omotehinsa and Tomi (2021) revealed that ASM in Nigeria also has negative socio-
economic impacts, including environmental degradation and social conflicts. The rudimentary
mining techniques used in ASM can lead to environmental degradation, such as deforestation,
soil erosion, and water pollution, which can have long-term consequences for ecosystems and
local communities. Additionally, ASM activities may result in social conflicts over land rights,
resource access, and revenue sharing among different stakeholders, including miners,
communities, and government authorities. These conflicts can disrupt social cohesion, lead to
tensions, and hinder sustainable development in affected areas (Omotehinse & Tomi, 2021).

Efforts to address the socio-economic impacts of ASM in Nigeria require a balanced approach
that maximizes the positive aspects while mitigating the negative consequences. Strategies such
as formalization, regulation, and capacity building can help enhance the positive socio-economic
impacts of ASM by promoting responsible mining practices, improving environmental
management, and fostering community engagement (Arzoo & Satapathy, 2016). By addressing
environmental challenges, promoting social dialogue, and ensuring equitable distribution of
benefits, ASM in Nigeria has the potential to contribute positively to sustainable development,
poverty reduction, and inclusive growth in the country.

The Artisanal and Small-Scale Mining (ASM) sector in Nigeria faces several significant
challenges that hinder its sustainable development and socio-economic impact. One major
challenge is the lack of formalization and regulation, leading to informal and unstructured
mining practices that often result in environmental degradation, safety risks, and limited access
to formal markets (Liman et al., 2021). Additionally, ASM operations in Nigeria often rely on
rudimentary and outdated technologies, which not only limit efficiency and productivity but also
contribute to environmental damage. Limited access to finance is another critical constraint faced
by ASM miners, as they often struggle to secure capital for equipment, infrastructure, and
operational costs, hindering their ability to scale up operations and improve working conditions.
Environmental concerns, such as deforestation, soil erosion, and water pollution, are pervasive in
ASM activities due to the use of mercury, inadequate waste management practices, and lack of
environmental safeguards, posing risks to ecosystems and human health (Zvarivadza & Nhleko,
2018). Addressing these challenges requires comprehensive strategies that promote
formalization, technology adoption, access to finance, and sustainable environmental practices to
enhance the resilience and viability of the ASM sector in Nigeria.
Official recognition of Artisanal and Small-Scale Mining (ASM) is crucial for several reasons,
with potential benefits that can positively impact the sector, governance, and responsible
sourcing practices as discussed by (Salas-Urviola et al., 2021; Ledwaba, 2017’ and Hilson,
2002). Firstly, Official recognition of ASM allows for better data collection and monitoring of
the sector. By acknowledging and documenting ASM activities, governments and stakeholders
can gather accurate information on production levels, workforce demographics, environmental
impacts, and contribution to local economies. This data is essential for informed decision-
making, policy formulation, and sustainable development initiatives within the mining sector.

Secondly, recognizing ASM formalizes the sector and brings it under regulatory frameworks,
enabling governments to establish clear guidelines, standards, and legal protections for artisanal
miners. This formalization can help combat illegal mining practices, promote transparency, and
ensure compliance with environmental and social regulations. By integrating ASM into
governance structures, authorities can better manage land use, resource allocation, and revenue
distribution, leading to more sustainable and equitable mining practices. Finally, official
recognition of ASM encourages responsible sourcing practices within the supply chain. By
legitimizing artisanal mining operations, stakeholders can trace the origin of minerals, verify
their ethical production, and promote fair trade practices (McQuilken & Hilsons, 2016). This
recognition can help combat issues such as conflict minerals, child labor, environmental
degradation, and human rights abuses often associated with informal mining activities. By
promoting responsible ASM practices, companies and consumers can support ethical sourcing
and contribute to sustainable development goals.

Hence, the official recognition of ASM is essential for promoting transparency, accountability,
and sustainability within the mining sector. By acknowledging the role of artisanal and small-
scale miners, governments, industry players, and civil society can work together to improve data
collection, enhance governance structures, and foster responsible sourcing practices, ultimately
benefiting local communities, the environment, and the global mineral supply chain.
Recognizing Artisanal and Small-Scale Mining (ASM) in Nigeria can bring about numerous
benefits tailored to the country's context. Here are specific advantages of recognizing ASM in
Nigeria as discussed by Matthew (2013).
1. Addressing the Solid Minerals Deficit:
Nigeria is rich in solid mineral resources, yet the sector has not reached its full potential due to
challenges such as illegal mining and lack of formalization. Recognizing ASM can help address
the solid minerals deficit by formalizing informal mining activities, increasing production levels,
and tapping into the country's mineral wealth more effectively. This formalization can lead to
better resource management, improved exploration, and increased contribution to the national
economy.

2. Enhancing Transparency and Accountability:

Official recognition of ASM in Nigeria can enhance transparency and accountability within the
mining sector. By bringing artisanal miners into the formal economy, the government can
establish clear regulations, monitor mining activities, and combat illegal practices. Transparent
governance structures can help prevent resource exploitation, promote ethical mining practices,
and ensure that revenues generated from the sector are properly accounted for and reinvested in
sustainable development initiatives.

3. Promoting Sustainable Mining Practices:

Recognizing ASM in Nigeria can promote sustainable mining practices that prioritize
environmental protection, community engagement, and social responsibility. Formalization of
artisanal mining operations can lead to the adoption of best practices, such as proper waste
management, land reclamation, and occupational health and safety standards. By encouraging
responsible mining practices, Nigeria can mitigate environmental degradation, minimize social
conflicts, and foster long-term sustainability in the mining sector.

4. Improving Revenue Generation from the Sector:

Official recognition of ASM can boost revenue generation from the mining sector in Nigeria. By
formalizing artisanal mining activities, the government can collect taxes, royalties, and fees from
miners, contributing to increased fiscal revenues. This additional income can be invested in
infrastructure development, social programs, and capacity-building initiatives to support the
growth of the mining industry and benefit local communities.
Therefore, recognizing Artisanal and Small-Scale Mining in Nigeria holds the potential to
address the solid minerals deficit, enhance transparency and accountability, promote sustainable
mining practices, and improve revenue generation from the sector. By formalizing ASM
operations and implementing supportive policies, Nigeria can harness the benefits of its mineral
resources while ensuring responsible and inclusive development in the mining sector.

4.1.2 Regulatory Framework for ASM

The New ASM and ASM Micro Series Interfaces with JN1003 (2000) discussed an effective
regulatory framework for Artisanal and Small-Scale Mining (ASM) in Nigeria playing a crucial
role in ensuring sustainable and responsible mining practices. The key objectives of such a
framework encompass various aspects to promote environmental protection, social safeguards,
health and safety standards, responsible sourcing of minerals, and fiscal and tax policies. Firstly,
environmental protection is a fundamental objective of the regulatory framework, aiming to
minimize the negative impacts of ASM activities on the environment. This includes measures to
prevent deforestation, soil erosion, water pollution, and promote reclamation of mined-out areas
to restore ecosystems and biodiversity (Shen et al., 2009). Secondly, we can see from Yuliandra
et al., (2018) social safeguards are essential to protect the rights and well-being of local
communities affected by ASM operations. The framework should ensure meaningful community
participation in decision-making processes, address land rights issues, and provide access to
basic services for communities in mining areas (Yuliandra et al., 2018).

Thirdly, health and safety standards are critical objectives to safeguard miners from occupational
hazards and work-related injuries (Makokha, 2022). The regulatory framework should enforce
regulations on safe mining practices, provide training on health and safety measures, and monitor
the health impacts of mining activities on miners and surrounding communities. Moreover,
responsible sourcing of minerals is a key objective to promote ethical and sustainable practices in
mineral extraction. The framework should encourage responsible mineral sourcing to prevent the
trade of conflict minerals and ensure compliance with international standards on responsible
mineral supply chains.
Lastly, fiscal and tax policies are essential components of the regulatory framework to ensure
that ASM contributes to national revenue while supporting the sustainable development of the
sector. Clear fiscal policies, transparent royalty rates, and fair taxes should be established to
prevent tax evasion, promote compliance, and allocate mining revenues for community
development projects and environmental conservation efforts in mining areas.
Therefore, an effective regulatory framework for ASM in Nigeria should prioritize
environmental protection, social safeguards, health and safety standards, responsible mineral
sourcing, and fiscal and tax policies to promote sustainable and responsible mining practices that
benefit both the mining sector and local communities.

A comprehensive regulatory framework for Artisanal and Small-Scale Mining (ASM) in Nigeria
should encompass essential components to ensure sustainable and responsible mining practices.
These components include licensing and permitting systems, environmental impact assessments
and monitoring, technical assistance and capacity building, conflict resolution mechanisms, and
grievance redressal procedures (Mutemeri et al., 2016). Furthermore, licensing and permitting
systems are crucial components of the regulatory framework, as they establish the legal basis for
ASM operations. Clear and transparent procedures for obtaining licenses and permits help
regulate mining activities, ensure compliance with environmental and social standards, and
prevent illegal mining practices. By implementing a robust licensing system, authorities can
monitor and control ASM operations effectively (Hassen, 2022).

Environmental impact assessments (EIAs) and monitoring play a vital role in evaluating the
potential environmental consequences of mining activities. Conducting thorough EIAs before
granting permits helps identify and mitigate environmental risks associated with ASM
operations. Regular monitoring of environmental indicators ensures compliance with regulations
and enables timely interventions to prevent or address environmental degradation (Afolayan et
al., 2021). More so, Technical assistance and capacity building are essential components to
enhance the skills and knowledge of ASM operators. Providing training on sustainable mining
practices, health and safety measures, and environmental conservation techniques improves the
overall efficiency and safety of ASM operations. Capacity building initiatives empower miners
to adopt best practices and comply with regulatory requirements (Hassen, 2022).
Conflict resolution mechanisms are necessary to address disputes and conflicts that may arise
among stakeholders in the mining sector. Establishing formal mechanisms for resolving
conflicts, such as mediation or arbitration processes, helps prevent escalation of tensions and
promotes peaceful coexistence between miners, communities, and other stakeholders. Effective
conflict resolution mechanisms contribute to stability and social cohesion in mining areas
(Mutemeri et al., 2016).

Grievance redressal procedures are essential for addressing complaints and grievances from
affected communities, workers, or other stakeholders in the ASM sector. Establishing accessible
and transparent grievance mechanisms allows individuals to report concerns related to mining
activities, seek redress for grievances, and receive fair resolutions. Timely and effective
grievance redressal procedures enhance accountability and trust between mining operators and
affected parties (Mutemeri et al., 2016). More so, therefore, a comprehensive regulatory
framework for ASM in Nigeria should incorporate licensing and permitting systems,
environmental impact assessments and monitoring, technical assistance and capacity building,
conflict resolution mechanisms, and grievance redressal procedures. By integrating these
essential components, authorities can promote sustainable and responsible ASM practices,
protect the environment and communities, and ensure the long-term viability of the mining sector
(Hassen, 2022).

International best practices in Artisanal and Small-Scale Mining (ASM) regulation emphasize
the importance of participatory approaches involving stakeholders to ensure inclusive decision-
making processes and sustainable mining practices (Laing & Pinto, 2023). Countries like Ghana
and Peru have implemented successful models of stakeholder engagement, where local
communities, miners, government agencies, and civil society organizations collaborate in policy
development and implementation (Wen & Zhang, 2022). By involving diverse stakeholders in
ASM regulation, these countries promote transparency, accountability, and social responsibility
within the mining sector.

Flexible and adaptable regulations are key aspects of international best practices in ASM
regulation, as they allow for responsive and context-specific approaches to address the dynamic
nature of ASM activities (Adogla-Bessa, 2017a). Countries such as Colombia and Tanzania have
adopted regulatory frameworks that can accommodate the diverse needs and challenges of ASM
operations, enabling regulatory authorities to adjust policies based on evolving circumstances
and emerging issues. This flexibility ensures that regulations remain relevant and effective in
regulating ASM aNigerctivities (Carstens, J. and Hilson, G. 2009).

Gender-inclusive policies are another critical aspect of international best practices in ASM
regulation, recognizing the importance of gender equality and women's empowerment in the
mining sector (Aizawa, 2016). Countries like Rwanda and the Philippines have implemented
gender-responsive policies that promote the participation of women in ASM, address gender-
based discrimination and violence, and provide support for women miners to access resources
and opportunities. By integrating gender considerations into regulatory frameworks, these
countries promote social equity and diversity in the ASM sector (Alliance for Responsible
Mining. 2014).
Effective enforcement mechanisms are essential for ensuring compliance with ASM regulations
and addressing non-compliance and illegal mining activities. Countries such as Indonesia and the
Democratic Republic of Congo have established robust enforcement mechanisms, including
monitoring systems, inspections, sanctions, and law enforcement agencies dedicated to
regulating ASM operations. By enforcing regulations consistently and effectively, these
countries deter illegal practices, protect the environment, and uphold the rule of law in the ASM
sector (AMDC, 2015).

International best practices in ASM regulation emphasize participatory approaches involving

stakeholders, flexible and adaptable regulations, gender-inclusive policies, and effective
enforcement mechanisms. Drawing upon examples from countries like Ghana, Peru, Colombia,
Tanzania, Rwanda, the Philippines, Indonesia, and the Democratic Republic of Congo, these
aspects highlight the importance of collaborative governance, regulatory flexibility, gender
mainstreaming, and strong enforcement in promoting sustainable and responsible ASM practices
globally (Rodríguez-Novoa & Holley, 2023).

4.1.3 Challenges and Considerations for Implementing Regulation, and Its benefits
Implementing effective regulation in the Artisanal and Small-Scale Mining (ASM) sector
presents various challenges and considerations that need to be addressed to ensure successful
compliance and sustainable practices (Mutemeri et al., 2016). One key challenge is institutional
capacity, which involves strengthening regulatory bodies and enforcement mechanisms to
effectively implement regulations. This includes providing training and necessary equipment to
enforcement personnel, building expertise in environmental and social safeguards, and fostering
inter-agency coordination to streamline regulatory processes and enhance oversight. By investing
in institutional capacity, regulatory authorities can improve their ability to monitor and enforce
compliance within the ASM sector, ultimately promoting responsible mining practices and
mitigating negative impacts on the environment and local communities.

Balancing the interests of various stakeholders is another critical consideration in ASM

regulation. Finding a harmonious equilibrium between the interests of ASM miners, local
communities, environmental sustainability, and economic development is essential for creating a
regulatory framework that is fair, inclusive, and effective (African Union 2009). ASM miners
rely on mining activities for their livelihoods, while local communities seek protection from
environmental harm and social disruptions. Balancing these interests requires engaging
stakeholders in decision-making processes, incorporating their perspectives into regulatory
frameworks, and fostering dialogue to address conflicting priorities. By considering the diverse
needs and concerns of all stakeholders, regulations can be designed to promote sustainable
development and minimize conflicts in the ASM sector (Hassen, 2022).

Addressing compliance costs is a significant challenge for ASM operators, particularly small-
scale miners who may struggle to meet regulatory requirements due to limited resources and
technical capacity. Concerns about the financial burden of compliance can hinder the
implementation of regulations and lead to non-compliance or informal mining practices (Shen et
al., 2009). To mitigate these challenges, regulatory authorities can consider implementing
simplified procedures for obtaining permits and licenses, allowing for gradual implementation of
regulatory measures to ease the transition for ASM operators, and providing financial and
technical assistance to support compliance efforts. By reducing the barriers to compliance and
offering support to ASM operators, regulators can encourage adherence to regulations and
promote sustainable mining practices in the sector (Shen et al., 2009).
This is why, implementing regulation in the ASM sector requires addressing challenges related
to institutional capacity, balancing stakeholder interests, and mitigating compliance costs.
Strengthening institutional capacity through training, expertise building, and coordination is
essential for effective regulation and enforcement. Balancing the interests of ASM miners, local
communities, environmental sustainability, and economic development is crucial for creating a
regulatory framework that is equitable and sustainable (Mutemeri et al., 2016). Addressing
concerns about compliance costs by simplifying procedures, offering assistance, and phasing in
regulatory requirements can help facilitate compliance and promote responsible mining practices
in the ASM sector. By considering these challenges and considerations, regulatory authorities
can work towards creating a regulatory environment that supports the long-term sustainability
and development of the ASM sector (Mutemeri et al., 2016).

A well-regulated Artisanal and Small-Scale Mining (ASM) sector in Nigeria has the potential to
bring about significant benefits, particularly in addressing the country's solid minerals deficit.
Official recognition and regulation of ASM operations can contribute to mitigating this deficit by
promoting responsible and sustainable mining practices. Through regulation, environmental and
social safeguards can be enforced, reducing the negative impacts of mining activities on the
environment and local communities (Mutemeri et al., 2016; Abbey, et al., 2014). Additionally,
formalizing ASM operations can attract investment and technology into the sector, leading to
increased efficiency, productivity, and mineral output. By formalizing and regulating ASM
activities, Nigeria can harness the full potential of its mineral resources while ensuring long-term
sustainability and resource management (Villena, 2018).

The establishment of a well-regulated ASM sector can also drive economic growth and job
creation in Nigeria. Regulation can lead to increased government revenue through taxation and
royalties on mineral production, providing a vital source of income for public services and
infrastructure development (Villena, 2018). Furthermore, a regulated ASM sector can create
employment opportunities for local communities, contributing to poverty alleviation and social
development. The growth of the ASM sector can also have a positive impact on Nigeria's Gross
Domestic Product (GDP), diversifying the economy and reducing dependence on oil revenue. By
fostering a conducive regulatory environment, Nigeria can unlock the economic potential of
ASM and stimulate broader economic growth (Villena, 2018).
Environmental sustainability is another key benefit of a well-regulated ASM sector in Nigeria.
Proper regulation can help mitigate environmental degradation caused by mining activities,
ensuring that natural resources are managed responsibly and ecosystems are protected.
Regulations can also encourage responsible waste disposal practices, reducing pollution and
preserving water quality in mining areas. Furthermore, regulatory frameworks can promote land
reclamation and rehabilitation efforts, restoring mined-out areas to their natural state and
minimizing the long-term environmental impact of mining operations. By prioritizing
environmental sustainability through effective regulation, Nigeria can safeguard its natural
resources for future generations and promote sustainable development in the ASM sector
(Sodango et al., 2021).

A well-regulated ASM sector in Nigeria holds immense potential for addressing the country's
solid minerals deficit, driving economic growth, creating employment opportunities, and
promoting environmental sustainability. By implementing comprehensive regulatory frameworks
that prioritize responsible mining practices, Nigeria can harness the economic and social benefits
of the ASM sector while safeguarding the environment and ensuring long-term resource
sustainability. Through effective regulation, Nigeria can unlock the full potential of its mineral
resources and pave the way for a sustainable and inclusive mining industry that contributes to the
country's overall development and prosperity (Sodango et al., 2021).

However, the official recognition and regulation of Artisanal and Small-Scale Mining (ASM) in
Nigeria hold immense potential for addressing the country's solid minerals deficit, driving
economic growth, creating employment opportunities, and promoting environmental
sustainability (Abbey, 2014). Throughout this document, we have explored the various benefits
and challenges associated with ASM in Nigeria, highlighting the critical need for formalization
and responsible regulation to unlock the full potential of the mining sector (Adogla, 2017b). One
of the key arguments presented in this paper is the significant role that ASM can play in
addressing Nigeria's solid minerals deficit. Despite being rich in solid mineral resources, Nigeria
has not fully capitalized on this potential due to informal and unstructured mining practices. By
recognizing and formalizing ASM operations, the country can increase production levels,
improve resource management, and enhance the contribution of the mining sector to the national
economy (Aizawa, 2016).
Furthermore, the formal recognition of ASM in Nigeria can enhance transparency and
accountability within the mining sector. By bringing artisanal miners into the formal economy,
the government can establish clear regulations, monitor mining activities, and combat illegal
practices. Transparent governance structures can help prevent resource exploitation, promote
ethical mining practices, and ensure that revenues generated from the sector are properly
accounted for and reinvested in sustainable development initiatives (Alliance for Responsible
Mining, 2014).

Moreover, promoting sustainable mining practices through the recognition of ASM is crucial for
environmental protection, community engagement, and social responsibility. Formalization of
artisanal mining operations can lead to the adoption of best practices such as proper waste
management, land reclamation, and occupational health and safety standards. By encouraging
responsible mining practices, Nigeria can mitigate environmental degradation, minimize social
conflicts, and foster long-term sustainability in the mining sector (Earley III & Staub, 2006).

Improving revenue generation from the mining sector is another significant benefit of
recognizing ASM in Nigeria. By formalizing artisanal mining activities, the government can
collect taxes, royalties, and fees from miners, contributing to increased fiscal revenues. This
additional income can be invested in infrastructure development, social programs, and capacity-
building initiatives to support the growth of the mining industry and benefit local communities
(Osawa & Hatsukawa, 2015). Thus, the formal recognition and regulation of ASM in Nigeria are
essential steps towards addressing the solid minerals deficit, promoting sustainable mining
practices, and ensuring responsible resource management (Yaaba Baah-Ennumh & Forson,
2017). By implementing comprehensive regulatory frameworks that prioritize transparency,
accountability, and environmental sustainability, Nigeria can harness the economic and social
benefits of the ASM sector while safeguarding its natural resources for future generations
(Matthew, 2013).

Overall, the official recognition and regulation of ASM in Nigeria are crucial for unlocking the
country's mineral potential, diversifying the economy, and promoting sustainable development.
By prioritizing responsible mining practices, enhancing governance structures, and fostering
stakeholder engagement, Nigeria can pave the way for a thriving and inclusive mining industry
that contributes to the country's overall development and prosperity.

4.2 Operations of Unregistered Artisanal Miners and Total Value of Solid Mineral Imports

Unregistered Artisanal and Small-Scale Mining (ASM) activities in Nigeria are widespread,
particularly in rural areas where access to formal mining regulations and oversight is limited.
These unregistered miners operate across various regions of the country, with notable
concentrations in states like Niger, Plateau, Ebonyi, Imo, Zamfara, and Enugu (Tunji, 2023).
They typically mine minerals such as gold, mercury, lead, zinc, and other earth-based minerals.

The estimated number of individuals engaged in unregistered ASM in Nigeria is significant, with
a diverse socio-economic background. These miners often come from marginalized communities
and may include both men and women of varying ages. The reasons for remaining unregistered
are multifaceted and may include a lack of awareness about formal registration processes, fear of
regulatory authorities, and the perceived complexities of compliance with mining laws (Tunji,
2023).

Unregistered ASM miners in Nigeria rely on rudimentary tools and basic equipment for their
operations. Extraction methods involve manual labor using tools such as shovels, spades,
diggers, axes, hoes, machetes, and metal containers. In some cases, modern equipment like rock
blasters and petrol-pumping machines are also utilized to aid in mining activities (Amadou,
2016). However, the lack of mechanization and safety measures poses significant risks to both
miners and the environment. Processing techniques employed by unregistered ASM miners are
often rudimentary and potentially harmful. These miners may use hazardous chemicals and
substances without proper safety protocols, leading to environmental contamination and health
risks. The absence of environmental controls exacerbates the negative impacts of their activities
on local ecosystems (Siegel & Veiga, 2009).
Figure 1: Shakwata Open Pit Gold Mine

Figure 2: Gold Panning of River Sediments

Figure 3. Gold Ore Processing Workflow

Figure 4: Gold Amalgam

Figure 5: Bottle for Measuring Mercury for Sale

Unregistered ASM activities in Nigeria have both positive and negative impacts on local
communities. On the positive side, these activities can create employment opportunities, generate
income for individuals and households, and contribute to poverty alleviation in resource-
constrained areas (Osawa & Hatsukawa, 2015). Artisanal mining has been a source of livelihood
for many in these communities. However, the negative impacts of unregistered ASM are
significant. Environmental degradation is a major concern, with land, water, and air pollution
resulting from unregulated mining practices. The use of hazardous chemicals and improper waste
disposal methods further exacerbate these environmental challenges. Social conflicts may arise
within communities due to disputes over mining rights, land use, and resource allocation.
Additionally, health risks associated with exposure to toxic substances and unsafe working
conditions pose a threat to the well-being of miners and local residents (Amankwah, et al. 2010).

Therefore, addressing the prevalence of unregistered ASM in Nigeria requires a multi-faceted

approach that considers the socio-economic dynamics, operational techniques, and impacts on
local communities. Efforts to formalize and regulate artisanal mining activities are essential to
mitigate the negative consequences while harnessing the potential benefits of this sector for
sustainable development.
4.2.1. Economic Considerations of Unregistered ASM

Unregistered Artisanal and Small-Scale Mining (ASM) activities in Nigeria are deeply
entrenched in informal networks that facilitate the trade of minerals. These networks often
involve local buyers and middlemen who serve as crucial intermediaries between the miners and
the broader market. Local buyers and middlemen play a pivotal role in connecting artisanal
miners with potential buyers, processing facilities, and export channels. They act as conduits for
the flow of minerals from the mining sites to various points of sale, both domestically and
internationally (Hassen, 2022). The lack of transparency and traceability in these informal
networks poses significant challenges for the monitoring and regulation of mineral trade. Due to
the informal nature of these transactions, there is a lack of proper documentation, record-
keeping, and adherence to formal regulations. This opacity in the value chains of unregistered
ASM activities makes it difficult to track the origin of minerals, verify their legality, and ensure
compliance with environmental and social standards. The absence of transparency also creates
opportunities for illicit activities, such as smuggling, tax evasion, and exploitation, further
complicating efforts to formalize and regulate the artisanal mining sector (Amnesty International,
2015).

The informal markets and value chains associated with unregistered ASM in Nigeria highlight
the complexities and challenges inherent in regulating artisanal mining activities. Addressing the
lack of transparency and traceability in these networks is essential for promoting sustainable and
responsible mineral sourcing practices, enhancing revenue generation, and mitigating the
negative economic impacts of informal mining operations. By promoting transparency,
strengthening regulatory frameworks, and fostering collaboration between stakeholders, Nigeria
can work towards formalizing the ASM sector and harnessing its Impact on Total Value of Solid
Mineral
economic potential for the benefit of local communities and the country as a whole (Appel & Na-
Oy 2012).
Unregistered Artisanal and Small-Scale Mining (ASM) activities in Nigeria have a nuanced
impact on the total value of solid mineral imports. On one hand, unregistered ASM operations
may contribute to a potential decrease in imports for certain minerals by meeting some domestic
demand. Artisanal miners, operating informally, can supply local markets with minerals,
reducing the need for official imports in those specific sectors. This localized production can
lead to cost savings and increased self-sufficiency in mineral supply chains, potentially lowering
the overall value of imports for those particular minerals (Rodríguez-Novoa & Holley, 2023).

Conversely, unregistered ASM activities may also contribute to a potential increase in imports
for certain minerals in Nigeria. The informal nature of artisanal mining operations can result in
challenges related to the quantity and quality of minerals produced. Inadequate extraction
techniques, limited access to technology, and lack of quality control measures in unregistered
ASM activities may lead to suboptimal mineral outputs that do not meet industry standards or
market demands. As a result, the country may continue to rely on imports to fulfill its mineral
requirements, sustaining a dependence on external sources for specific minerals (Macháček et
al., 2022).

The accurate assessment of the impact of unregistered ASM on the total value of solid mineral
imports in Nigeria presents a significant challenge. The informal and often clandestine nature of
artisanal mining makes it difficult to obtain precise data on production volumes, market
dynamics, and the extent of mineral exports from unregistered ASM activities. The lack of
formal reporting mechanisms, standardized data collection processes, and regulatory oversight
further complicate efforts to quantify the influence of unregistered ASM on import trends
accurately. This dearth of reliable information hinders policymakers' ability to make informed
decisions regarding mineral trade policies and import-export dynamics (Banchirigah, 2008).

The interplay between unregistered ASM activities and the total value of solid mineral imports in
Nigeria underscores the complex dynamics within the country's mining sector. While informal
mining operations may alleviate some domestic demand and potentially reduce the need for
imports in specific mineral categories, they also pose challenges in terms of quantity, quality,
and data transparency (Appel, & Na-Oy, 2012). Addressing these issues requires a
comprehensive approach that includes formalizing ASM activities, enhancing monitoring
mechanisms, and promoting sustainable mining practices to optimize the economic contributions
of the mining sector while minimizing reliance on imports.

1. Economic Losses for Government: Unregistered Artisanal and Small-Scale Mining (ASM)
activities in Nigeria pose significant economic challenges for the government, leading to
potential losses in revenue and control over the mineral sector. One of the primary sources of
economic losses stems from uncollected taxes and royalties on minerals extracted through
informal mining operations. Without proper registration and oversight, artisanal miners often
evade tax obligations and royalty payments, depriving the government of crucial revenue streams
that could be allocated towards national development projects, infrastructure improvements, and
social welfare programs.

Furthermore, the lack of monitoring and control over the export of strategic minerals extracted
through unregistered ASM activities exacerbates economic losses for the government. Strategic
minerals play a vital role in various industries, including manufacturing, construction, and
technology, and their unregulated exportation can lead to depletion of national resources, loss of
value-added opportunities, and reduced competitiveness in the global market. The absence of
effective mechanisms to track and manage the export of strategic minerals hampers the
government's ability to optimize the economic benefits derived from these valuable resources
(ArcGIS, 2014).
In addition to direct financial losses, unregistered ASM activities can have a detrimental impact
on Nigeria's reputation in the global mineral trade arena. The lack of transparency, adherence to
environmental standards, and compliance with international best practices in artisanal mining
operations tarnishes the country's image as a reliable and responsible mineral supplier. Negative
perceptions of Nigeria's mining sector due to unregulated ASM practices can deter foreign
investors, limit market access, and impede the country's participation in lucrative international
trade agreements and partnerships, resulting in missed economic opportunities and reduced
competitiveness on the global stage (Armah et al., 2016).
The economic losses incurred by the government as a result of unregistered ASM activities in
Nigeria underscore the urgent need for comprehensive regulatory reforms and enforcement
measures within the artisanal mining sector. Addressing issues related to tax evasion, royalty
non-compliance, export control, and reputation management is essential for maximizing revenue
generation, safeguarding national resources, and enhancing Nigeria's standing in the global
mineral trade landscape. By promoting formalization, transparency, and sustainable practices in
ASM operations, the government can mitigate economic losses, foster responsible (Artisanal and
Small-scale Mining Knowledge Sharing Archive. 2017)
Environmental and Social Issues Associated with Unregistered ASM in Nigeria

Unregistered Artisanal and Small-Scale Mining (ASM) activities in Nigeria have profound
environmental consequences, contributing to widespread land degradation, water pollution, and
air pollution. Land degradation is a significant issue resulting from deforestation, improper
mining practices, and uncontrolled excavation activities by artisanal miners. The indiscriminate
clearing of vegetation for mining operations leads to soil erosion, loss of biodiversity, and
disruption of ecosystems, exacerbating desertification and land degradation in affected areas.
Additionally, the use of rudimentary mining techniques such as open-pit mining and unregulated
waste disposal practices further degrade the land, leaving behind scars of environmental
destruction (Hilson, 2020).

Water pollution is another critical environmental impact of unregistered ASM in Nigeria,

stemming from mining waste discharge, chemical spills, and inadequate wastewater management
practices. The release of toxic substances such as mercury, cyanide, and heavy metals into water
bodies contaminates freshwater sources, disrupts aquatic ecosystems, and poses risks to human
health and biodiversity. The lack of proper containment measures and treatment facilities for
mining effluents exacerbates water pollution, leading to long-term environmental damage and
compromising the availability of clean water for local communities and wildlife (Adekeye &
Akintola, 2007).

Air pollution is a significant environmental concern associated with unregistered ASM activities,
primarily driven by dust emissions and airborne pollutants generated during mining operations
and mineral processing. The use of rudimentary processing techniques, such as crushing,
grinding, and smelting, releases particulate matter, heavy metals, and harmful gases into the
atmosphere, contributing to air quality degradation and respiratory health hazards for nearby
populations (AGC., 2017a). The accumulation of airborne pollutants from ASM activities not
only affects the immediate vicinity of mining sites but also has broader implications for regional
air quality and public health (AGC., 2017a).

Figure 4: Dry Milling of gold ore resulting to emission of heavy metals laden dust.

Figure 5: An electric powered milling machine in Nasarawa Kainji, Niger State.

Unregistered ASM in Nigeria is intertwined with a range of social problems that impact miners,
communities, and society at large. Child labor is a prevalent issue in informal mining operations,
with children often engaged in hazardous working conditions, including underground mining,
handling toxic substances, and operating heavy machinery without proper safety measures
(“Mercury Exposure Among Artisanal and Small-Scale Gold Miners in Four Gold Mining
Districts in the East Region of Cameroon,” 2023). The exploitation of child labor in ASM not
only deprives children of their right to education and a safe childhood but also exposes them to
physical injuries, health risks, and long-term developmental challenges (AGC., 2017b).
Health risks for miners and communities associated with unregistered ASM activities are
significant, stemming from exposure to toxins, unsafe practices, and inadequate health and safety
standards in mining operations. Miners working in hazardous conditions without proper
protective gear are vulnerable to respiratory diseases, skin ailments, musculoskeletal injuries, and
occupational hazards related to mining accidents and collapses. Moreover, the discharge of toxic
chemicals into the environment from ASM activities poses health risks to local populations
through contaminated water sources, food chain contamination, and indirect exposure pathways,
leading to long-term health implications for communities living near mining sites (Landrigan et
al., 2022).

The potential for conflict over resources and land use is a social issue exacerbated by
unregistered ASM in Nigeria, as competition for mineral-rich territories, access to mining sites,
and control over natural resources can escalate tensions among different stakeholder groups.
Disputes over land ownership, resource extraction rights, and environmental impacts of ASM
activities can lead to social unrest, community divisions, and conflicts over compensation,
benefit-sharing, and sustainable land use practices. The lack of formalized governance structures,
community engagement mechanisms, and conflict resolution mechanisms in unregistered ASM
exacerbates social tensions and undermines social cohesion in affected areas (Bartrem et al.,
2022).

Hence, the environmental and social issues associated with unregistered ASM in Nigeria
underscore the urgent need for regulatory reforms, enforcement measures, and sustainable
mining practices to mitigate the adverse impacts on the environment, public health, and social
well-being. Addressing land degradation, water pollution, air pollution, health risks, and conflict
over resources requires a holistic approach that promotes formalization, compliance with
environmental regulations, community empowerment, and responsible mineral extraction
practices. By prioritizing environmental sustainability, social equity, and stakeholder
engagement in ASM operations, Nigeria can foster a more inclusive, resilient, and
environmentally conscious mining sector that benefits both the economy and society.
4.2.2. Towards Sustainable and Formalized ASM in Nigeria
Formalizing unregistered Artisanal and Small-Scale Mining (ASM) operations in Nigeria
presents a complex set of challenges that hinder the transition towards sustainable and
responsible mining practices. One of the primary obstacles to formalization is the resistance from
miners as have been studied by Hilson et al., (2022) in Ghana, who perceive formalization as a
costly and burdensome process that may impede their livelihoods and autonomy. Artisanal
miners, accustomed to informal and unregulated practices, may resist formalization due to fears
of increased compliance requirements, licensing fees, and administrative burdens that could
affect their profitability and operational flexibility. Overcoming this resistance requires targeted
outreach, stakeholder engagement, and incentives to demonstrate the tangible benefits of
formalization for miners, communities, and the environment (Hilson et al., 2022).

Limited institutional capacity poses another significant challenge to the formalization of

unregistered ASM operations in Nigeria. The effective management and support of formalization
processes require robust institutional frameworks, regulatory mechanisms, and governance
structures to oversee compliance, monitor environmental impacts, and provide technical
assistance to artisanal miners (Aryee, 2003). However, the capacity of government agencies,
regulatory bodies, and local authorities to implement and enforce formalization initiatives is
often constrained by resource limitations, technical expertise gaps, and bureaucratic
inefficiencies. Strengthening institutional capacity through capacity-building programs, training
initiatives, and partnerships with civil society organizations is essential to facilitate the
successful formalization of ASM activities.

A critical barrier to formalization is the lack of awareness and education among artisanal miners
about the benefits and opportunities associated with formalizing their operations (Asamoah, L.
(2017). Many miners operating informally may be unaware of the legal requirements,
environmental standards, and social responsibilities that come with formalization, leading to a
lack of motivation or understanding of the potential advantages of transitioning to formal status.
Enhancing miners' awareness through targeted education campaigns, training workshops, and
information dissemination about the economic, social, and environmental benefits of
formalization is essential to foster a culture of compliance, responsible mining practices, and
sustainable resource management among ASM communities (Hilson et al., 2022).
Thus, addressing the challenges of formalizing unregistered ASM operations in Nigeria requires
a multi-faceted approach that combines regulatory reforms, capacity-building initiatives, and
community engagement strategies to promote sustainable and formalized mining practices. By
addressing miners' resistance through incentives, streamlining administrative processes, and
reducing compliance burdens, formalization can become a viable pathway towards enhancing
environmental stewardship, improving social conditions, and fostering economic development in
ASM communities. Strengthening institutional capacity, enhancing awareness among miners,
and fostering partnerships between government agencies, industry stakeholders, and local
communities are essential steps towards achieving a more sustainable and formalized ASM
sector that contributes to Nigeria's long-term development goals and environmental sustainability
(Banchirigah, 2008).

Formalization also offers the potential to increase government revenue through the collection of
taxes, royalties, and other fiscal contributions from registered ASM operators. By formalizing
their operations, artisanal miners become part of the formal economy, enabling the government
to capture a greater share of the economic value generated by the mining sector. Taxes and
royalties collected from formalized ASM activities can be channeled towards public services,
infrastructure development, and community projects, contributing to local and national economic
growth. This increased revenue stream can support government efforts to invest in social
programs, environmental conservation, and sustainable development initiatives that benefit ASM
communities and the broader society (Salo et al., 2016).

Enhanced access to markets and fairer prices for miners is another significant benefit of
formalizing unregistered ASM operations in Nigeria. Formalization can provide artisanal miners
with legal recognition, market access, and opportunities to engage with certified buyers, traders,
and stakeholders in the mineral supply chain. By operating within a formalized framework,
miners can access better market information, negotiate fair prices for their minerals, and
establish transparent trading relationships that promote equity and sustainability (Banchirigah,
2008). Formalization can help reduce the prevalence of exploitative middlemen, smuggling
networks, and illicit trade practices, ensuring that miners receive a fair share of the value
generated by their labor and resources.
Furthermore, formalization can lead to improved safety and working conditions for miners by
establishing clear standards, guidelines, and regulations to protect the health and well-being of
workers in the ASM sector. Formalized operations are more likely to adhere to occupational
health and safety protocols, provide adequate training on workplace hazards, and implement
measures to prevent accidents, injuries, and health risks associated with mining activities. By
formalizing their operations, artisanal miners can benefit from improved working conditions,
access to personal protective equipment, and support services that promote a culture of safety,
well-being, and dignity in the workplace (Banchirigah, S. M and Hilson, G. 2010; Banchirigah,
S. M 2008).

Therefore, the formalization of unregistered ASM operations in Nigeria offers a pathway

towards realizing a range of benefits that encompass environmental sustainability, economic
prosperity, social equity, and occupational safety. By embracing formalization, artisanal miners
can contribute to responsible resource management, revenue generation for government coffers,
market integration, and improved working conditions. Leveraging the potential benefits of
formalization requires a concerted effort from government agencies, industry stakeholders, civil
society organizations, and ASM communities to create an enabling environment that supports
compliance, transparency, and accountability in the mining sector. Through collaborative
partnerships, capacity-building initiatives, and community engagement strategies, Nigeria can
harness the transformative power of formalization to build a more sustainable and inclusive
ASM sector that drives positive change and prosperity for all stakeholders involved.

Promoting the formalization of unregistered Artisanal and Small-Scale Mining (ASM) operations
in Nigeria requires a comprehensive approach that combines government initiatives, stakeholder
engagement, and public awareness campaigns to create an enabling environment for sustainable
and responsible mining practices (Oramah et al., 2015). Government initiatives play a crucial
role in facilitating the formalization process by providing capacity building, technical assistance,
and financial support to artisanal miners seeking to transition to formal status. Capacity building
programs can enhance the skills, knowledge, and capabilities of miners in areas such as mining
techniques, environmental management, and regulatory compliance, empowering them to
operate within legal frameworks and adopt best practices. Technical assistance from government
agencies can offer guidance on licensing procedures, safety standards, and environmental
regulations, helping miners navigate the complexities of formalization and meet compliance
requirements effectively (Oramah et al., 2015).

Hilson, (2020) highlighted that Stakeholder engagement is essential for promoting the
formalization of unregistered ASM operations in Nigeria, involving miners, communities, civil
society organizations, industry stakeholders, and government agencies in collaborative efforts to
support and facilitate the formalization process. Engaging with miners and communities to
understand their needs, challenges, and aspirations is key to developing tailored formalization
strategies that address their specific circumstances and priorities. Building partnerships with civil
society organizations, industry associations, and local authorities can provide valuable support,
resources, and expertise to assist artisanal miners in formalizing their operations, accessing
markets, and complying with regulatory requirements. By fostering dialogue, cooperation, and
mutual trust among stakeholders, formalization efforts can be more inclusive, participatory, and
sustainable, leading to positive outcomes for all involved (Hilson, 2020).

Public awareness campaigns play a vital role in promoting the benefits of formalization and
raising awareness among artisanal miners, communities, and the general public about the
importance of transitioning towards formal and sustainable mining practices. By disseminating
information about the economic, social, and environmental advantages of formalization through
various communication channels, such as media, workshops, community meetings, and
educational materials, public awareness campaigns can help dispel misconceptions, build
support, and mobilize stakeholders towards embracing formalization as a pathway to improved
livelihoods, environmental protection, and social development. Empowering miners with
knowledge about their rights, responsibilities, and opportunities under formalization can inspire
confidence, compliance, and engagement in the formalization process, fostering a culture of
transparency, accountability, and shared benefits within the ASM sector (Buxton, 2013).

Hence, promoting the formalization of unregistered ASM operations in Nigeria requires a

coordinated and participatory approach that leverages government initiatives, stakeholder
engagement, and public awareness campaigns to drive sustainable and formalized mining
practices (Hilson, 2002). By investing in capacity building, technical assistance, and financial
support, the government can empower artisanal miners to formalize their operations, comply
with regulations, and improve their economic prospects. Engaging with stakeholders through
inclusive dialogue, partnerships, and collaboration can build trust, foster cooperation, and
enhance the effectiveness of formalization efforts. Public awareness campaigns can educate,
inform, and mobilize stakeholders towards embracing formalization as a means to achieve shared
goals of environmental sustainability, social responsibility, and economic development in the
ASM sector. Through concerted efforts and collective action, Nigeria can pave the way towards
a more sustainable, inclusive, and formalized ASM sector that benefits miners, communities, and
the nation as a whole.
The intricate web of unregistered Artisanal and Small-Scale Mining (ASM) operations in Nigeria
intertwines with the total value of solid mineral imports, reflecting a complex relationship that
underscores both challenges and opportunities within the mining sector. Despite the significant
mineral wealth embedded in the country's lands, the prevalence of unregistered ASM activities
poses a dual challenge of informal practices and revenue loss. The informal nature of ASM
operations not only hampers regulatory oversight and environmental sustainability but also
contributes to the undervaluation of Nigeria's mineral resources in the global market. This
interplay between unregistered ASM and the total value of solid mineral imports underscores the
urgent need for strategic interventions to formalize ASM activities, enhance governance
mechanisms, and unlock the sector's full potential for sustainable development (McQuilken &
Hilsonm, 2016).
To address the multifaceted issues surrounding unregistered ASM operations and solid mineral
imports in Nigeria, tailored recommendations are essential for policymakers, stakeholders, and
development agencies to navigate the complexities of the sector and drive positive change.
Firstly, policymakers should prioritize the implementation of strategies for formalizing ASM
activities, including streamlining licensing procedures, providing technical assistance, and
offering financial support to artisanal miners. By creating an enabling environment that supports
formalization, policymakers can enhance regulatory compliance, promote responsible mining
practices, and maximize the economic benefits derived from the sector (Siegel & Veiga, 2009).
Secondly, stakeholders across the ASM value chain, including miners, communities, civil society
organizations, and industry associations, should engage in collaborative efforts to support the
formalization process and foster sustainable mining practices. Building partnerships, sharing best
practices, and promoting dialogue among stakeholders can enhance transparency, accountability,
and social responsibility within the ASM sector, leading to improved livelihoods, environmental
protection, and community development. By working together towards common goals,
stakeholders can leverage their collective expertise and resources to drive positive change and
create a more inclusive and equitable mining sector in Nigeria (Banchirigah, 2008).
Thirdly, development agencies and international partners play a crucial role in supporting
Nigeria's efforts to formalize ASM operations and enhance the governance of the mining sector.
By providing technical assistance, capacity building programs, and financial resources,
development agencies can strengthen the institutional capacity of government agencies,
empower artisanal miners with knowledge and skills, and promote sustainable mining practices.
Collaboration between development agencies, local authorities, and stakeholders can facilitate
knowledge exchange, promote innovation, and drive sustainable development outcomes in the
ASM sector.

In conclusion, the complex relationship between unregistered ASM operations and the total
value of solid mineral imports in Nigeria underscores the need for concerted efforts to formalize
ASM activities, enhance governance mechanisms, and unlock the sector's full potential for
sustainable development. By implementing tailored recommendations that focus on strategies for
formalization, stakeholder engagement, and collaboration with development agencies, Nigeria
can pave the way towards a more transparent, responsible, and inclusive ASM sector that
benefits miners, communities, and the nation as a whole. Through collective action and shared
commitment, Nigeria can harness the wealth of its mineral resources to drive economic growth,
environmental sustainability, and social progress in the mining sector.

4.3 Black Market Transactions of Solid Minerals and Total Value of Solid Mineral Exports
4.3.1. Understanding Informality in Nigerian ASM
Informality is a multifaceted concept that encompasses various dimensions of economic
activities, labor relations, and regulatory compliance. Several definitions shed light on the
diverse aspects of informality. Economic informality refers to economic activities that operate
outside formal regulatory frameworks, often characterized by a lack of registration, informal
employment arrangements, and limited access to social protection mechanisms. Labor
informality describes employment relationships that lack formal contracts, social security
coverage, and legal protections, leading to precarious working conditions and vulnerability for
workers. Regulatory informality denotes non-compliance with legal regulations, licensing
requirements, and tax obligations, resulting in informal practices that evade formal oversight and
accountability. Market informality indicates limited participation in formal markets, informal
trading arrangements, and lack of access to formal financial services, hindering economic
integration and growth opportunities (DW4SD, 2024).

Informal Artisanal and Small-Scale Mining (ASM) in Nigeria encompasses a range of

characteristics that distinguish it from formal mining operations. It is marked by a lack of
registration with relevant authorities, non-compliance with regulatory frameworks, and limited
market participation. Artisanal and Small-Scale Miners (ASM) engaged in informal mining
activities operate outside the formal regulatory structures established by the government, often
due to barriers such as complex licensing procedures, high costs of compliance, and limited
access to information and support services. Key aspects of informal ASM in Nigeria include a
lack of registration, non-compliance with regulations, and limited market participation. Informal
ASM operations are typically unregistered with government agencies responsible for overseeing
mining activities. This lack of formal registration deprives miners of legal recognition, access to
support services, and protection under labor and environmental regulations.

Informal ASM activities often involve non-compliance with mining laws, environmental
regulations, and safety standards. Miners may operate without the necessary permits, fail to
adhere to environmental protection measures, and overlook safety protocols, posing risks to
themselves and the surrounding communities. Additionally, informal ASM miners face
challenges in accessing formal markets, engaging with established supply chains, and securing
fair prices for their mineral products. The lack of market integration restricts their economic
opportunities, bargaining power, and ability to benefit from value-added activities in the mining
sector. Informal ASM operations may also rely on informal labor arrangements, such as casual
labor, child labor, and unregulated working conditions. Miners often lack formal employment
contracts, social security coverage, and occupational health and safety protections, exposing
them to exploitation and vulnerabilities. Understanding the dimensions of informality in ASM is
essential for developing targeted interventions, policies, and programs that promote
formalization, enhance regulatory compliance, and improve the livelihoods of artisanal miners.
By addressing the root causes of informality and creating an enabling environment for formal
ASM operations, Nigeria can unlock the sector's potential for sustainable development,
environmental protection, and inclusive growth (La Hovary, 2014).

Informal Artisanal and Small-Scale Mining (ASM) in Nigeria represents a significant sector with
a notable scale and distinct characteristics. The scale of informal ASM in Nigeria is substantial,
with a diverse range of minerals being extracted across various regions of the country. The types
of minerals commonly mined informally include gold, lead, zinc, tantalite, coal, and gemstones,
among others. These minerals are found in different geological formations and mining sites,
contributing to the economic activities of numerous artisanal miners operating informally.
Geographically, informal ASM activities are dispersed throughout Nigeria, with notable
concentrations in states such as Zamfara, Niger, Plateau, and Kaduna. These regions are known
for their rich mineral deposits and historical mining activities, attracting artisanal miners seeking
opportunities for livelihood and income generation. The geographic distribution of informal
ASM reflects the diverse mineral resources present in different parts of the country, shaping the
dynamics of mining operations and community engagement.
The number of artisanal miners engaged in informal ASM in Nigeria is estimated to be in the
hundreds of thousands, comprising a significant portion of the country's mining workforce.
These miners operate at various scales, from individuals working independently to small groups
or cooperatives collaborating on mining activities. The informal nature of ASM in Nigeria often
leads to challenges in accurately quantifying the exact number of miners involved, as many
operate outside formal registration systems and regulatory frameworks.
Key operational characteristics of informal ASM in Nigeria include the use of rudimentary tools
and techniques for mineral extraction, such as shovels, picks, hammers, and manual labor.
Artisanal miners rely on traditional methods of mining, often lacking access to modern
equipment, machinery, and safety gear. This reliance on basic tools and manual labor contributes
to the labor-intensive nature of informal ASM operations, with miners working in harsh
conditions and often facing health and safety risks. Moreover, informal ASM in Nigeria is
characterized by a lack of formalization, non-compliance with regulatory requirements, and
limited access to support services and market opportunities. Many artisanal miners operate
without proper mining licenses, environmental permits, or safety certifications, leading to
environmental degradation, safety hazards, and legal uncertainties. The informal nature of ASM
also hinders miners' ability to access formal markets, secure fair prices for their minerals, and
benefit from value-added activities in the mining value chain (McQuilken & Hilson, 2016).
The scale of informal ASM in Nigeria is significant, with a wide variety of minerals being mined
across different regions of the country. The sector comprises a large number of artisanal miners
operating informally, using basic tools and techniques for mineral extraction. The geographic
distribution of informal ASM reflects the diverse mineral resources present in Nigeria, while key
operational characteristics include informal practices, non-compliance with regulations, and
limited market participation. Understanding the scale and characteristics of informal ASM is
crucial for developing targeted interventions, policies, and support mechanisms to promote
formalization, enhance regulatory compliance, and improve the livelihoods of artisanal miners in
Nigeria (Siegel & Veiga, 2009). Informality in Artisanal and Small-Scale Mining (ASM) in
Nigeria is influenced by a myriad of factors that contribute to the persistence of informal
practices within the sector. Several key drivers of informality can be identified, including
complex regulatory frameworks, limited access to finance and technology, inadequate market
awareness, and historical distrust of authorities. These factors interact and reinforce each other,
shaping the operating environment for artisanal miners and influencing their decision to engage
in informal mining activities.

Complex regulatory frameworks play a significant role in driving informality in ASM in Nigeria.
The formalization process for obtaining mining licenses, permits, and compliance certifications
is often cumbersome, time-consuming, and costly for artisanal miners. The bureaucratic hurdles
and administrative requirements involved in navigating the regulatory system create barriers to
entry for small-scale miners, leading many to operate informally to avoid the complexities and
uncertainties associated with formalization. The lack of clarity in governing laws, conflicting
regulations at different levels of government, and inconsistent enforcement mechanisms further
exacerbate the challenges faced by artisanal miners, pushing them towards informal practices as
a means of survival.
Limited access to finance and technology is another critical factor driving informality in ASM in
Nigeria. Artisanal miners often struggle to access credit, investment capital, and modern mining
equipment due to financial constraints, lack of collateral, and limited financial literacy. Without
adequate resources to invest in mechanized tools, safety gear, and sustainable mining practices,
miners’ resort to traditional methods that are labor-intensive, inefficient, and environmentally
damaging. The absence of financial support mechanisms and technology transfer initiatives
hinders the formalization process for artisanal miners, perpetuating their reliance on informal
mining practices to sustain their livelihoods.

Inadequate market awareness and limited market linkages also contribute to the prevalence of
informality in ASM in Nigeria. Many artisanal miners operate in remote or marginalized areas
with limited access to formal markets, pricing information, and market intelligence. The lack of
market integration, market transparency, and market-oriented training programs restrict miners'
ability to engage with established supply chains, negotiate fair prices for their minerals, and
capture value-added opportunities in the mining sector. As a result, miners may opt for informal
trading arrangements, middlemen transactions, and off-the-books sales to generate income,
bypassing formal market channels and regulatory oversight.

Historical distrust of authorities and government institutions represents a significant barrier to

formalization in ASM in Nigeria. Artisanal miners may have experienced past instances of
corruption, exploitation, and regulatory harassment by government officials, leading to a deep-
seated mistrust of regulatory bodies and law enforcement agencies. The lack of transparency,
accountability, and responsiveness in government interactions with miners erodes trust in formal
institutions and reinforces a culture of informality as a means of self-protection and risk
avoidance. The perception of regulatory authorities as predatory, corrupt, or ineffective further
deters miners from seeking formal recognition and compliance, perpetuating a cycle of
informality and regulatory evasion.
Factors driving informality in Artisanal and Small-Scale Mining (ASM) in Nigeria are
multifaceted and interconnected, encompassing complex regulatory frameworks, limited access
to finance and technology, inadequate market awareness, and historical distrust of authorities.
Addressing these underlying drivers of informality requires a holistic approach that combines
regulatory reforms, financial inclusion strategies, market development initiatives, and
governance reforms to create an enabling environment for formalization, compliance, and
sustainable development in the ASM sector. By understanding the root causes of informality and
implementing targeted interventions to address these challenges, Nigeria can promote
responsible mining practices, enhance the livelihoods of artisanal miners, and unlock the
economic potential of the mining sector for inclusive growth and sustainable development.
4.3.2. Lack of Formal Market Transactions
In Nigeria, unregistered Artisanal and Small-Scale Mining (ASM) miners often engage in
informal market transactions due to limited access to formal markets and regulatory constraints.
The predominant ways in which unregistered ASM miners sell their minerals typically involve
informal channels, local buyers, and middlemen. These miners may bypass formal market
structures and opt for direct sales to local buyers or middlemen who operate outside the formal
regulatory framework. Informal channels play a significant role in facilitating transactions
between unregistered ASM miners and buyers. Miners may sell their minerals directly to local
traders, brokers, or individuals without proper licensing or certification. These informal
transactions often take place in remote mining areas, makeshift markets, or informal trading hubs
where pricing mechanisms are opaque, and regulatory oversight is minimal. By operating
through informal channels, unregistered ASM miners can quickly offload their minerals without
the burden of compliance with formal market requirements.
Local buyers, including small-scale processors, traders, and collectors, are key players in the
informal mineral trade with unregistered ASM miners. These buyers may purchase minerals
from miners at below-market prices, taking advantage of the miners' lack of access to formal
market information, negotiation skills, and market leverage. Local buyers often act as
intermediaries between unregistered miners and downstream market players, consolidating
mineral supply, and distributing it to larger markets or export destinations through informal
networks.

Middlemen also play a prominent role in the trading practices of unregistered ASM miners,
acting as intermediaries who facilitate transactions, provide financing, and coordinate logistics
for mineral sales. Middlemen may offer cash advances, equipment loans, or other forms of
support to miners in exchange for preferential access to mineral supply. By working with
middlemen, unregistered ASM miners can access liquidity, market connections, and operational
support, albeit at the cost of reduced bargaining power and market transparency. Overall, the
lack of formal market transactions among unregistered ASM miners in Nigeria underscores the
challenges faced by miners in accessing formal markets, complying with regulatory
requirements, and securing fair prices for their minerals. By relying on informal channels, local
buyers, and middlemen, unregistered miners navigate the complexities of the informal mineral
trade, seeking to sustain their livelihoods, mitigate risks, and overcome barriers to market entry
in the absence of formal market structures and regulatory support.
Informal market transactions in the Artisanal and Small-Scale Mining (ASM) sector in Nigeria
disrupt the formal mineral value chain, leading to significant challenges in price discovery, fair
value distribution, and revenue collection. These disruptions stem from the lack of transparency,
accountability, and regulatory oversight in informal market practices, which undermine the
integrity and efficiency of the mineral value chain. One of the key ways in which informal
market transactions disrupt the formal mineral value chain is through opaque pricing
mechanisms and price manipulation. In informal markets, unregistered ASM miners often lack
access to real-time market information, standardized pricing mechanisms, and fair negotiation
practices. As a result, prices for minerals may be arbitrarily set by local buyers, middlemen, or
traders, leading to undervaluation of mineral assets and exploitation of miners who are unable to
demand fair prices for their products. This lack of price discovery hampers the efficiency of the
value chain and distorts market signals, affecting the overall competitiveness and sustainability
of the mining sector.
Furthermore, informal market transactions hinder fair value distribution along the mineral value
chain, as profits tend to be concentrated in the hands of intermediaries rather than being
equitably shared among all stakeholders. Middlemen and local buyers often extract significant
margins from mineral transactions, leaving miners with limited returns on their labor and
investment. The lack of transparency in pricing, contracting, and revenue sharing arrangements
exacerbates income inequality, economic disparities, and social tensions within mining
communities, perpetuating a cycle of poverty and exploitation among unregistered ASM miners.
Moreover, revenue collection and taxation in the formal mineral value chain are undermined by
informal market transactions, as unregistered miners may evade tax obligations, royalty
payments, and regulatory fees by operating outside the formal regulatory framework. The lack of
documentation, traceability, and accountability in informal transactions makes it challenging for
government authorities to track mineral flows, assess revenue generation, and enforce
compliance with fiscal regulations. This loss of potential government revenue deprives the state
of vital resources for public services, infrastructure development, and social welfare programs,
further exacerbating governance challenges and economic inequalities in the mining sector.
Hence, the disruptions caused by informal market transactions in the ASM sector in Nigeria have
far-reaching implications for the formal mineral value chain, affecting price discovery, fair value
distribution, and revenue collection. Addressing these challenges requires concerted efforts to
enhance market transparency, strengthen regulatory enforcement, promote formalization
initiatives, and empower miners to engage in transparent, accountable, and sustainable trading
practices that contribute to the long-term viability and inclusivity of the mining sector.

The lack of formal market transactions in the Artisanal and Small-Scale Mining (ASM) sector in
Nigeria contributes to the loss of traceability in the mineral supply chain, making it challenging
to track the origin of minerals and verify their responsible sourcing practices. Limited
participation in formal markets hinders the establishment of robust traceability mechanisms,
documentation processes, and due diligence procedures that are essential for ensuring
transparency, accountability, and ethical sourcing in the mining sector. The absence of
traceability in informal market transactions creates opportunities for mineral leakage, smuggling,
and illicit trade, as unregistered ASM miners may sell their minerals to unlicensed buyers,
middlemen, or traders who operate outside the formal regulatory framework. Without proper
documentation, certification, or verification of the mineral origin, it becomes difficult to
ascertain whether minerals have been sourced ethically, legally, and sustainably, raising concerns
about the potential involvement of conflict minerals in the mineral supply chain.

The lack of traceability in informal market transactions also poses reputational risks for Nigeria
as a responsible exporter of minerals, particularly in the context of global supply chains and
international trade agreements that prioritize ethical sourcing, human rights, and environmental
sustainability (Matthew, 2013). The inability to trace the origin of minerals back to their
extraction sites, processing facilities, and export destinations undermines Nigeria's credibility as
a reliable supplier of minerals and raises doubts about the country's commitment to responsible
mining practices. Furthermore, the absence of traceability in the mineral value chain can fuel
conflict minerals issues, as minerals sourced from regions affected by armed conflict, human
rights abuses, or environmental degradation may enter the market through informal channels,
bypassing due diligence requirements and responsible sourcing standards. The lack of
transparency in mineral transactions increases the risk of inadvertently supporting conflict
financing, illicit activities, and social unrest, tarnishing Nigeria's reputation and undermining
efforts to promote sustainable development, peace, and security in mineral-rich regions (Bansah,
Yalley, & Dumakor-Dupey 2016).

To address the challenges associated with the loss of traceability due to limited participation in
formal markets, stakeholders in the ASM sector need to prioritize formalization initiatives,
regulatory compliance, and capacity-building efforts that promote transparency, accountability,
and responsible sourcing practices. By enhancing traceability mechanisms, strengthening due
diligence processes, and fostering collaboration between government agencies, industry
stakeholders, and civil society organizations, Nigeria can mitigate the risks of conflict minerals,
safeguard its reputation as a responsible exporter, and contribute to the sustainable development
of its mining sector (Barry, 1996). The lack of formal market transactions in the Artisanal and
Small-Scale Mining (ASM) sector in Nigeria presents significant obstacles for informal miners
seeking to access formal markets. These barriers stem from a combination of factors, including
limited technical capacity, inadequate market information, and unequal negotiation power, which
collectively impede the integration of informal miners into the formal mineral value chain and
hinder their ability to realize the full economic potential of their mining activities (Barry, 1996).

One of the primary obstacles faced by informal miners in accessing formal markets is the lack of
technical capacity and expertise required to meet the quality, quantity, and compliance standards
set by formal buyers, processors, and exporters. Many informal miners operate with rudimentary
tools, basic mining techniques, and minimal training in mineral processing, which can result in
inconsistent product quality, low productivity, and non-compliance with industry regulations.
The absence of modern equipment, advanced technologies, and best practices in mining
operations limits the competitiveness and marketability of minerals produced by informal
miners, making it challenging for them to meet the stringent requirements of formal market
participants (Yaaba Baah-Ennumh & Forson, 2017).
Additionally, informal miners often struggle to access timely and accurate market information,
including pricing trends, demand forecasts, and supply chain dynamics, which are essential for
making informed business decisions, negotiating fair prices, and identifying profitable market
opportunities. The lack of market intelligence and transparency in informal transactions leaves
miners vulnerable to exploitation, price manipulation, and unfair trading practices by middlemen,
brokers, and intermediaries who control access to formal markets and dictate terms of
engagement (Sun et al., 2024).

Moreover, informal miners face unequal negotiation power in their interactions with formal
market actors, as they typically lack bargaining leverage, legal recognition, and collective
representation to advocate for their interests, protect their rights, and secure favorable trading
terms. The asymmetry of power dynamics between informal miners and formal buyers can result
in exploitative relationships, coercive practices, and value capture by intermediaries, leading to
inequitable distribution of benefits along the mineral value chain and perpetuating the
marginalization of small-scale miners in the broader mining economy (Carrión, 2015).

To overcome the obstacles to market access faced by informal miners as we have discussed,
concerted efforts are needed to enhance technical capacity through training programs, technology
transfer initiatives, and skill development opportunities that empower miners to improve their
mining practices, enhance product quality, and comply with industry standards. Providing access
to market information, financial literacy training, and business support services can help informal
miners navigate formal markets, negotiate fair prices, and make informed decisions that
maximize their economic returns and sustainable livelihoods. Strengthening collective
organization, cooperative structures, and industry associations among informal miners can also
amplify their voice, increase their bargaining power, and facilitate their integration into formal
market channels, fostering a more inclusive, transparent, and resilient mining sector in Nigeria.

4.2.3. Impact on Solid Mineral Exports

The prevalence of informal Artisanal and Small-Scale Mining (ASM) activities in Nigeria has a
significant impact on the country's solid mineral exports by limiting the quantity of minerals
available for formal export. A considerable portion of the mineral production from informal
ASM operations either remains within the informal domestic market or is smuggled out of the
country through illicit channels, reducing the volume of minerals that can be officially
documented, processed, and exported through formal trade channels (Yaaba Baah-Ennumh &
Forson, 2017). The lack of formalization, regulatory oversight, and compliance mechanisms in
the ASM sector contributes to the diversion of mineral resources away from formal export
channels, leading to underreporting of production figures, loss of government revenue, and
distortion of trade statistics. The informal nature of ASM operations, characterized by
unregistered miners, unlicensed buyers, and unregulated trading practices, creates opportunities
for mineral leakage, tax evasion, and circumvention of export controls, undermining the
transparency, accountability, and traceability of Nigeria's mineral exports. As a result, the
reduced availability of exportable quantities of minerals from informal ASM activities not only
hampers the country's ability to capitalize on its mineral resources for economic growth and
foreign exchange earnings but also compromises the integrity of the formal export sector, erodes
investor confidence, and hinders the sustainable development of the mining industry. Addressing
the challenges associated with informal ASM and enhancing the formalization of small-scale
mining operations are essential steps to unlock the full export potential of Nigeria's solid
minerals, promote responsible sourcing practices, and strengthen the country's position as a
reliable and compliant exporter in the global mineral market (Grotewold, 1967).

The impact of informal mining practices on solid mineral exports in Nigeria extends beyond
quantity concerns to quality issues that can compromise the competitiveness of minerals in
international markets. Informal Artisanal and Small-Scale Mining (ASM) operations often lack
the necessary infrastructure, technology, and expertise for proper mineral processing, leading to
substandard product quality, inconsistent specifications, and impurities that do not meet the
stringent standards required by international buyers and end-users (Yaaba Baah-Ennumh &
Forson, 2017). Improper handling, inadequate beneficiation techniques, and rudimentary
processing methods employed in informal mining activities can result in mineral contamination,
mineralogical inconsistencies, and chemical impurities that diminish the overall value, market
appeal, and usability of the minerals for downstream applications. The lack of quality control
measures, quality assurance protocols, and adherence to industry best practices in informal
mining operations can compromise the integrity, reliability, and reputation of Nigerian mineral
exports, making them less desirable, less competitive, and less marketable in the global
marketplace. Inaccurate grading, poor beneficiation practices, and non-compliance with quality
specifications can lead to rejection of mineral shipments, loss of market share, and reputational
damage for Nigerian mineral products, undermining the country's export potential, revenue
generation, and trade relationships with international partners. Addressing the quality concerns
associated with informal mining practices through capacity-building initiatives, technology
transfer programs, and regulatory enforcement measures is essential to enhance the market
acceptance, value proposition, and sustainability of Nigeria's solid mineral exports, ensuring
compliance with international quality standards, meeting customer expectations, and fostering
long-term competitiveness in the global mineral trade (Sun et al., 2024).

The informal nature of Nigeria's Artisanal and Small-Scale Mining (ASM) sector has a
detrimental impact on the country's solid mineral exports, resulting in significant revenue losses
and reputational damage. The lack of formalization, regulation, and oversight in the ASM sector
hinders the accurate quantification and documentation of mineral production, leading to
underreporting of export volumes and revenue leakage. As a result, Nigeria may be missing out
on substantial export earnings that could contribute to the country's economic growth,
infrastructure development, and social welfare programs (Sun et al., 2024). The informal ASM
sector's reliance on unregistered miners, unlicensed buyers, and informal trading networks
creates opportunities for revenue diversion, tax evasion, and illicit mineral flows that undermine
the transparency, accountability, and traceability of Nigeria's mineral export value chain. By
operating outside the formal regulatory framework, informal miners often bypass export duties,
royalties, and other fiscal obligations, depriving the government of much-needed revenue that
could be invested in public services, industry development, and community empowerment
initiatives (Matthew, 2013).

Furthermore, the prevalence of informal ASM activities, which are often associated with
environmental degradation, social conflicts, and human rights abuses, can tarnish Nigeria's
reputation as a reliable and responsible exporter of solid minerals. Environmental concerns such
as land degradation, deforestation, water pollution, and biodiversity loss resulting from
unregulated mining practices in the ASM sector can raise red flags among international
stakeholders, investors, and consumers who prioritize sustainable sourcing, ethical supply chains,
and environmental stewardship. Social issues such as child labor, unsafe working conditions, and
community displacement linked to informal mining operations can trigger ethical concerns,
human rights violations, and reputational risks for Nigeria as a mineral-exporting country
(Ojonimi et al., 2018). The negative publicity surrounding informal ASM activities can erode
trust, credibility, and market confidence in Nigerian mineral products, leading to market access
restrictions, trade barriers, and reputational fallout that impede the country's ability to compete in
the global mineral market and attract responsible investment in its mining sector. Addressing the
negative impact of informal ASM on export revenue and reputation requires concerted efforts to
formalize the sector, strengthen regulatory enforcement, promote sustainable mining practices,
and enhance stakeholder engagement to build a more transparent, accountable, and sustainable
mineral value chain in Nigeria.

The environmental and socio-economic consequences of informal Artisanal and Small-Scale

Mining (ASM) in Nigeria are profound, encompassing severe environmental degradation, health
and safety risks, and social disruptions that impact both miners and surrounding communities.

Environmental Degradation: Unregulated ASM activities contribute significantly to

environmental degradation in Nigeria, leading to deforestation, pollution, land degradation, and
biodiversity loss. The indiscriminate clearing of vegetation for mining operations results in
deforestation, disrupting ecosystems, reducing biodiversity, and contributing to habitat loss for
wildlife. Pollution from ASM activities, including the improper disposal of mining waste,
chemicals, and tailings, contaminates soil, water sources, and air quality, posing risks to human
health and ecosystem integrity. Land degradation caused by uncontrolled excavation, soil
erosion, and sedimentation affects agricultural productivity, water quality, and landscape
aesthetics, exacerbating environmental vulnerabilities and undermining sustainable land use
practices (Liman et al., 2021).

Health and Safety Risks: Informal miners and surrounding communities face significant health
and safety hazards due to unsafe mining practices, exposure to toxic chemicals, and lack of
protective gear. Informal miners often work in hazardous conditions without proper training,
equipment, or safety protocols, increasing the risk of accidents, injuries, and occupational
illnesses. Exposure to mercury, cyanide, lead, and other harmful substances used in mining
operations can result in respiratory problems, neurological disorders, skin conditions, and long-
term health complications for miners and residents living near mining sites. The absence of
adequate health services, emergency response mechanisms, and occupational safety standards
further exacerbates the vulnerability of ASM workers to health risks and workplace injuries,
perpetuating a cycle of poverty, ill health, and social marginalization.

Social Disruptions: The social impacts of informal ASM in Nigeria extend beyond
environmental and health concerns to encompass social disruptions such as child labor, limited
economic opportunities for women, and the potential for resource-related conflicts. Child labor is
prevalent in informal mining communities, where children are often engaged in hazardous work
environments, deprived of education, and exposed to exploitation and abuse. Women in ASM
face barriers to economic empowerment, access to resources, and participation in decision-
making processes, perpetuating gender inequalities and limiting their socio-economic
advancement. Resource-related conflicts, including disputes over land rights, mineral ownership,
and benefit sharing, can arise in ASM areas, leading to social tensions, community divisions, and
violence that undermine social cohesion, stability, and sustainable development efforts (Liman et
al., 2021).

Addressing the environmental and socio-economic consequences of informal ASM in Nigeria

requires a multi-faceted approach that integrates environmental management, occupational health
and safety measures, and social development initiatives to promote responsible mining practices,
protect human well-being, and enhance community resilience. Strengthening regulatory
frameworks, promoting sustainable mining technologies, and fostering stakeholder engagement
are essential steps to mitigate the negative impacts of informal ASM, safeguard environmental
resources, and promote inclusive and sustainable development in Nigeria's mining sector.
Formalizing Artisanal and Small-Scale Mining (ASM) operations in Nigeria requires a strategic
approach that incentivizes informal miners, improves market access, enhances capacity building,
and strengthens regulatory enforcement to promote responsible and sustainable mining practices
(Basu, et al., (2015).

Incentivizing Formalization: To encourage informal miners to formalize their operations, the

government and stakeholders can offer specific incentives such as simplified registration
processes, technical assistance, and access to credit. Streamlining the registration and licensing
procedures for ASM operators can reduce bureaucratic hurdles and administrative burdens,
making it easier for informal miners to transition into the formal sector (Basu, et al., (2015).
Providing technical support in areas like mine planning, environmental management, and
occupational health and safety can help informal miners comply with regulatory requirements
and adopt sustainable mining practices. Access to credit facilities, microfinance schemes, and
investment opportunities can empower formalized ASM operators to invest in equipment,
technology upgrades, and business expansion, fostering economic growth and productivity in the
sector.

Improving Market Access: Facilitating market access for formalized ASM operators is crucial
for their integration into formal supply chains and engagement with responsible buyers.
Strategies to enhance market access include establishing market information platforms that
provide real-time pricing, market trends, and demand forecasts to help ASM operators make
informed business decisions. Promoting cooperative structures and collective marketing
initiatives can strengthen the bargaining power of formalized miners, improve market visibility,
and negotiate fair prices for their mineral products. Facilitating linkages with certified buyers,
exporters, and mineral trading networks can ensure that formalized ASM operators adhere to
ethical standards, traceability requirements, and sustainability criteria, enhancing their market
competitiveness and reputation (Bebbington, Cuba, & Rogan, 2014; Matthew, 2013; (Ojonimi et
al., 2018).

Capacity Building: Capacity-building programs play a vital role in equipping ASM miners with
the knowledge, skills, and resources needed to engage in sustainable mining practices, mineral
processing techniques, business management, and negotiation skills. Training initiatives on
environmental conservation, waste management, and reclamation practices can help formalized
miners minimize their ecological footprint, protect biodiversity, and comply with environmental
regulations. Capacity-building programs in mineral processing technologies, value addition, and
quality control can enhance the market value of ASM products, diversify revenue streams, and
improve profitability for miners. Business skills training, financial literacy programs, and
entrepreneurship development workshops can empower formalized ASM operators to manage
their operations efficiently, access new markets, and negotiate fair prices for their minerals,
fostering economic resilience and social empowerment in mining communities (Ojonimi et al.,
2018).

Strengthening Regulation and Enforcement: Balancing regulatory oversight with tailored support
mechanisms is essential to encourage, rather than hinder, the formalization of ASM in Nigeria.
Effective regulation and enforcement measures can create a level playing field for all miners,
ensure compliance with environmental, health, and safety standards, and deter illegal mining
activities. However, regulatory frameworks should be designed in a way that promotes
transparency, accountability, and inclusivity, taking into consideration the unique challenges and
needs of ASM operators. Tailored support mechanisms, such as capacity-building initiatives,
technical assistance programs, and compliance incentives, can help informal miners meet
regulatory requirements, adopt best practices, and transition into the formal sector smoothly.
Collaborative efforts between government agencies, industry associations, civil society
organizations, and local communities are essential to strengthen regulatory enforcement, monitor
compliance, and promote a culture of responsible mining practices in the ASM sector (Ojonimi
et al., 2018).

4.3.6. Multi-Stakeholder Approach

Collaboration among multiple stakeholders is paramount in promoting the formalization and

sustainable market integration of Artisanal and Small-Scale Mining (ASM) in Nigeria. The
government, industry players, civil society organizations, development partners, and
international organizations must work together in a coordinated manner to address the challenges
faced by informal ASM operators and enhance the solid mineral export sector (Ojonimi et al.,
2018). By leveraging the expertise, resources, and networks of diverse stakeholders enumerated
by Hilson et al., (2017), a multi-stakeholder approach can drive positive change, foster
innovation, and create a conducive environment for responsible mining practices and economic
development (Hilson et al., 2017).

The Need for Collaboration: Collaboration among stakeholders is essential to overcome the
complex and interconnected issues surrounding informal ASM, including environmental
degradation, health and safety risks, social disruptions, and regulatory compliance. The
government plays a central role in setting policies, regulations, and enforcement mechanisms to
formalize ASM operations, ensure compliance with legal frameworks, and promote sustainable
mining practices. Industry stakeholders, including mining companies, associations, and
cooperatives, can provide technical expertise, market access, and capacity-building support to
ASM operators, facilitating their transition into the formal sector. Civil society organizations and
community groups play a vital role in advocating for the rights of miners, promoting social
inclusion, and monitoring the impact of mining activities on local communities. Development
partners and international organizations can offer financial assistance, technical assistance, and
knowledge-sharing platforms to strengthen the capacity of ASM operators, improve market
linkages, and enhance the overall sustainability of the mining sector (Ojonimi et al., 2018).

Roles and Responsibilities: Different stakeholders have distinct roles and responsibilities in
addressing the challenges of informal ASM and advancing the solid mineral export sector in
Nigeria. The government is responsible for creating an enabling policy environment, establishing
regulatory frameworks, and enforcing compliance with mining laws to formalize ASM
operations and promote responsible mining practices. Industry stakeholders are tasked with
providing technical assistance, training programs, and market access opportunities to ASM
operators, supporting their capacity-building efforts and enhancing their competitiveness in the
global market. Civil society organizations have a role in advocating for transparency,
accountability, and social responsibility in the mining sector, engaging with local communities,
and promoting dialogue between stakeholders to address social and environmental concerns.
Development partners and international organizations can contribute by providing financial
support, technical expertise, and best practices guidance to strengthen the governance of the
mining sector, promote sustainable development goals, and foster inclusive growth that benefits
all stakeholders involved in the ASM value chain. By aligning their efforts, resources, and
objectives, multi-stakeholder collaboration can drive positive change, promote inclusive growth,
and build a more sustainable and responsible mining sector in Nigeria (Ojonimi et al., 2018).

4.4 Tax Avoidance by Artisanal Miners and Slack National Gold Purchase Programme

In artisanal mining, a sector characterized by small-scale operations and limited technological

resources, tax avoidance practices are prevalent, undermining government revenue collection
efforts. Common techniques used by artisanal miners to avoid paying taxes and royalties include
those discussed by (Ojonimi et al., 2018; Matthew, 2013; Sun et al., 2024; & Arthur-Holmes et
al., 2023).

1. Underreporting Production Volumes: Artisanal miners frequently engage in underreporting

production volumes to reduce their tax liabilities. By misrepresenting the quantity of minerals
extracted, miners aim to pay lower royalties and taxes than mandated by their actual output. This
deceptive practice not only deprives governments of essential revenue but also distorts the true
value of the mineral resources being exploited.

2. Smuggling Minerals Across Borders Another widespread tax avoidance method in artisanal
mining is the smuggling of minerals across borders to evade export duties and taxes. By
circumventing official export channels, miners can sell their minerals in neighboring countries or
on the black market without fulfilling tax obligations to the country of extraction. This illicit
trade not only undermines revenue collection but also contributes to the loss of valuable
resources.

3. Selling Through Informal Channels and Middlemen: Artisanal miners often opt to sell their
minerals through informal channels and middlemen to evade formal tax declarations and
payments. By transacting with intermediaries operating outside regulated markets, miners
obscure the true value of their production and avoid taxation. This practice not only hampers
sector transparency but also diminishes the government's ability to capture the full economic
benefits of mineral extraction.

4. Bartering Instead of Formal Cash Transactions: Some artisanal miners engage in barter trade,
exchanging minerals directly for goods or services without involving cash transactions. By
bypassing monetary exchanges, miners can avoid recording taxable income and circumvent
royalty payments based on mineral market value. Bartering complicates tax assessments and
challenges authorities in tracking and taxing the economic activities of artisanal miners
effectively.
Addressing tax avoidance practices in artisanal mining requires robust regulatory frameworks,
enhanced monitoring, and enforcement mechanisms. Promoting transparency and compliance
among artisanal miners is crucial to ensuring fair contributions to national development and
fiscal stability. By combatting tax evasion and informal practices, governments can maximize
revenue collection from artisanal mining activities and promote sustainable resource
management (Mertzanis, 2020). Tax avoidance in artisanal mining is influenced by a
combination of factors that shape the behavior of miners in relation to tax compliance. One key
factor is the lack of awareness among artisanal miners regarding their tax obligations. Operating
in remote and often marginalized areas, miners may not fully understand the tax laws and
regulations governing their activities, leading to unintentional non-compliance or deliberate
evasion of taxes and royalties. This lack of awareness can result in miners overlooking the
importance of fulfilling their fiscal responsibilities to the government (Hubert, 2021).

Moreover, the complexity and burdensome nature of tax systems play a significant role in
driving tax avoidance practices in artisanal mining. The intricate tax structures, ambiguous
regulations, and high compliance costs can overwhelm small-scale miners with limited financial
and administrative capacities. The complexity of tax calculations and reporting requirements
may discourage miners from engaging with formal tax processes, pushing them towards informal
practices to avoid the perceived complexities of the formal tax system (Nyamekye et al., 2021).

Additionally, the limited government presence and monitoring in mining areas create
opportunities for tax avoidance. Artisanal miners operating in regions with inadequate state
oversight and enforcement mechanisms may exploit this lack of monitoring to underreport
production, evade taxes, or engage in illicit activities such as smuggling. The absence of
effective government authorities in mining areas can embolden miners to circumvent tax
obligations without fear of detection or repercussions (Sodango et al., 2021).

Furthermore, Musbau, (2014) discussed that a prevalent perception of corruption and a lack of
trust in government authorities contribute to tax avoidance practices among artisanal miners.
When miners view tax officials as corrupt or inefficient, they may be less inclined to comply
with tax regulations, perceiving tax payments as futile or vulnerable to embezzlement. This lack
of trust in authorities can diminish miners' willingness to participate in formal tax processes,
prompting them to resort to informal channels and practices to evade taxes and royalties
(Musbau, 2014).

Thus, addressing tax avoidance in artisanal mining necessitates efforts to enhance awareness of
tax obligations, simplify tax systems, strengthen government presence and monitoring in mining
areas, and rebuild trust between authorities and miners. By addressing these underlying factors,
policymakers can work towards fostering a more transparent, compliant, and sustainable tax
regime in the artisanal mining sector.

4.4.2. Impact of Tax Avoidance on Government Revenue

Tax avoidance by artisanal miners in Nigeria poses a significant challenge to government

revenue, leading to potential losses across various tax categories. The estimated revenue losses
for the Nigerian government resulting from tax avoidance practices by artisanal miners are
substantial. Specifically, these losses can be observed in the context of royalties and income tax.
Artisanal miners engaging in tax avoidance strategies, such as underreporting production or
evading tax obligations, directly impact the government's revenue collection from royalties
(Ledwaba, 2017). By failing to accurately declare their mining activities, these miners reduce the
royalties owed to the government, thereby diminishing the funds that could have been generated
from the extraction of mineral resources. Additionally, income tax avoidance by artisanal miners
further exacerbates the revenue shortfall, as these individuals or entities neglect to fulfill their tax
responsibilities based on their mining operations, leading to a decrease in potential income tax
revenue for the government (Kumah, 2022b).

The repercussions of lost revenue due to tax avoidance extend beyond mere financial
implications, significantly affecting the government's ability to invest in critical areas essential
for development. The diminished revenue resulting from tax avoidance practices undermines the
government's capacity to allocate resources towards infrastructure, social services, and programs
that could benefit mining communities and foster overall economic development. With reduced
revenue inflows due to tax avoidance, the government faces constraints in funding crucial
infrastructure projects, such as roads, schools, and healthcare facilities, which are pivotal for
enhancing living standards and driving economic progress in mining regions. Moreover, the
shortfall in revenue limits the government's ability to provide essential social services and
programs that could improve education, healthcare, and livelihood opportunities for communities
reliant on the mining sector. This lack of investment in key sectors not only hampers local
development but also impedes broader economic advancement, hindering the overall prosperity
of the country (Kumah, 2022b).

Furthermore, it is important to acknowledge that tax avoidance can potentially contribute to

funding illicit activities, including the illicit financing of conflicts, through the informal channels
where these transactions occur. While tax avoidance itself may not directly finance illegal
activities, the informal nature of the channels through which these transactions take place can
create opportunities for diverted funds to be used for illicit purposes. In the context of artisanal
mining, where informal and unregulated practices are prevalent, revenue losses stemming from
tax avoidance can inadvertently contribute to financing illegal activities, such as conflicts fueled
by resource exploitation. By evading tax obligations, artisanal miners may participate in shadow
economies that facilitate the flow of funds towards illicit endeavors, posing risks to security and
stability in mining regions and potentially beyond (Kumah, 2022a).

The impact of tax avoidance on government revenue in Nigeria is profound, encompassing lost
revenue across specific tax types, hindrances to development initiatives, and potential links to
illicit activities. Addressing tax avoidance in the artisanal mining sector is imperative for
enhancing revenue generation, promoting sustainable development, strengthening governance,
and mitigating risks associated with illicit financial flows. By combatting tax avoidance
practices, the Nigerian government can bolster its revenue streams, effectively allocate resources
towards development priorities, and mitigate the risks of funding illicit activities through
informal channels within the mining sector.

4.4.3 The National Gold Purchase Program: Aims and Challenges

The National Gold Purchase Program in Nigeria was established with the primary objectives of
increasing government revenue, formalizing gold trading, and bolstering foreign exchange
reserves. The program aims to provide a structured platform for artisanal miners to sell their gold
to the government, ensuring responsible sourcing practices and adherence to international
standards. By integrating artisanal mining activities into the formal economy, the program seeks
to create a more sustainable and regulated gold mining sector (Yuliandra et al., 2018).

However, despite these noble goals, the National Gold Purchase Program has faced challenges
that have hindered its success. One significant issue is the miners' preference for informal
markets that offer immediate cash payments, as opposed to the potentially delayed payments
under the formal scheme. This preference for quick cash transactions can deter miners from
participating in the government program, impacting its effectiveness (Makokha, 2022). Another
critical factor contributing to the limited success of the program is pricing. If the purchase prices
offered by the government are not competitive with those in the informal market, miners may opt
to sell their gold elsewhere, undermining the program's objectives. Pricing plays a crucial role in
incentivizing miners to engage with the formal sector and adhere to responsible sourcing
practices.

Moreover, the lack of awareness and outreach to target artisanal miners has been a significant
challenge. Many miners may not be fully informed about the benefits of participating in the
National Gold Purchase Program or the procedures involved. Improved communication and
education efforts are essential to increase participation and ensure the program's success.
Additionally, from Shen & Gunson (2009) logistical challenges, particularly in accessing remote
mining areas, pose obstacles to the effective implementation of the program. Limited
infrastructure and difficult terrain can impede the government's ability to reach and engage with
artisanal miners in these remote locations, hindering the program's reach and impact (Shen et al.,
2009).

Addressing these challenges through targeted strategies, such as offering competitive prices,
enhancing outreach and education efforts, and improving logistical support, will be crucial in
overcoming barriers to the National Gold Purchase Program's success and realizing its objectives
of formalizing the gold trade, increasing government revenue, and supporting sustainable mining
practices.
4.4.4. Strategies for Improving Tax Compliance

Improving tax compliance among artisanal miners in Nigeria requires a multifaceted approach
that balances simplicity, education, enforcement, and incentives. Presented below as discussed
by Shen et al., (2009) are detailed strategies for enhancing tax compliance within the artisanal
mining sector:

1. Simplified Tax Regime: To promote compliance, the tax regime for artisanal miners should be
simplified and made more transparent. Proposals may include implementing flat fees or
presumptive taxation based on estimated production levels. By providing clear guidelines and
straightforward calculations, miners can better understand their tax obligations and comply more
easily. Simplifying the tax regime can reduce confusion and administrative burdens, making it
more attractive for miners to formalize their operations.
2. Education and Awareness Campaigns: Targeted education and awareness campaigns are
essential to inform artisanal miners about their tax responsibilities and the benefits of
compliance. Workshops, training sessions, and informational materials can help miners
understand the importance of paying taxes, how taxes contribute to community development, and
the potential consequences of non-compliance. Collaborating with local associations, community
leaders, and mining cooperatives can enhance the reach and effectiveness of these campaigns,
ensuring widespread understanding and buy-in from miners.

3. Strengthening Enforcement: Enhancing enforcement capacity is crucial for ensuring tax

compliance without resorting to overly punitive measures that may alienate informal miners.
Strategies to strengthen enforcement include increasing monitoring activities to track production
levels, sales, and tax payments. Collaborating with local communities to gather information and
report non-compliant activities can improve enforcement efforts. Implementing a system of
checks and balances, including regular audits and inspections, can deter tax evasion and promote
compliance among artisanal miners.
4. Incentivizing Compliance: Exploring incentives to encourage tax compliance can be a
proactive approach to formalizing artisanal mining operations. Linking compliance with access
to support services, equipment loans, or designated mining areas can motivate miners to register
their activities and contribute to the formal economy. Providing benefits such as training
programs, technical assistance, or preferential treatment for compliant miners can create a
positive reinforcement loop, where compliance leads to tangible rewards and improved business
opportunities.
By implementing these strategies for improving tax compliance among artisanal miners in
Nigeria, the government can foster a culture of transparency, accountability, and responsible tax
practices within the mining sector. Balancing simplicity, education, enforcement, and incentives
can lead to increased compliance rates, enhanced government revenue, and sustainable
development in artisanal mining communities.

4.4.5. Revamping the National Gold Purchase Programme

Revamping the National Gold Purchase Programme in Nigeria requires a comprehensive
approach to address key issues and enhance the program's effectiveness. Here are detailed
recommendations for each aspect from previous studies and articulation from Buxton, A. (2013):
1. Addressing Pricing and Payment Issues: To make the program more attractive to artisanal
miners, it is crucial to ensure competitive pricing that aligns with market rates. Conducting
regular market assessments and adjusting purchase prices accordingly can help maintain
competitiveness. Additionally, offering incentives such as bonuses for responsible sourcing
practices or higher yields can incentivize miners to participate in the formal sector. To address
payment delays, implementing efficient payment systems, such as mobile money transfers or
direct bank deposits, can ensure timely and reliable payments to miners, enhancing their trust in
the program.

2. Improved Outreach and Accessibility: Increasing awareness of the National Gold Purchase
Programme among artisanal miners is essential for its success. Utilizing mobile purchasing units
that travel to remote mining areas can facilitate access for miners who may face logistical
challenges in reaching designated buying centers. Partnering with local mining associations,
cooperatives, and community leaders to disseminate information about the program can help
reach a wider audience. Conducting targeted awareness campaigns through radio broadcasts,
community meetings, and educational materials in local languages can also enhance outreach
and encourage participation.
3. Transparency and Accountability: Building trust among artisanal miners and stakeholders is
paramount for the program's credibility. Ensuring transparency in the program's operations,
including pricing mechanisms, payment processes, and gold testing procedures, is essential.
Implementing robust monitoring and evaluation mechanisms to track the flow of gold from
mining sites to the central bank can enhance accountability. Regular audits and public reporting
on the program's performance, including revenue generated and impact on local communities,
can demonstrate transparency and foster trust among stakeholders.

4. Collaboration with Stakeholders: Engaging with miners' associations, civil society

organizations, and the private sector is vital for enhancing the program's effectiveness and reach.
Collaborating with miners' associations can provide valuable insights into the needs and
challenges faced by artisanal miners, enabling tailored solutions and better program design.
Partnering with civil society organizations can support community engagement, advocacy for
responsible mining practices, and social impact assessments. Involving the private sector,
including gold refiners, traders, and equipment suppliers, can strengthen the program's value
chain and promote sustainable mining practices through technology transfer and capacity
building initiatives. By implementing these recommendations and fostering a collaborative
approach with stakeholders, the National Gold Purchase Programme can be revamped to achieve
its objectives of formalizing the gold trade, increasing government revenue, and supporting
sustainable artisanal mining practices in Nigeria.
it is expedient, therefore, recap the essence of this chapter, which is to critically examine how the
informalization of artisanal mining has triggered on the import-export deficit in Nigeria. the
chapter on "(in)formality in artisanal mining and Nigeria's solid minerals export-import deficit"
critically examines the role of artisanal and small-scale mining (ASM) within the broader
spectrum of Nigeria's solid minerals sector, highlighting the interplay between informal practices
and the nation's trade imbalance in solid minerals. It delves into how the informality pervasive in
ASM activities contributes to environmental degradation, health hazards, and significant revenue
losses due to unregulated and untaxed mining and exportation processes (Hilson, 2002;
McQuilken and Hilson, 2016). The chapter further discusses the potential of formalizing these
practices as a strategy not only to mitigate these negative impacts but also to leverage ASM as a
means to rectify the export-import deficit. Emphasizing the importance of an integrated
approach, it advocates for policies that encompass legal, financial, and technical support
mechanisms aimed at formalizing the sector (Banchirigah, 2008; Siegel and Veiga, 2009). By
referencing studies that have shown the positive outcomes of such integrative formalization
efforts in other sub-Saharan countries, the chapter posits that adopting similar strategies could
transform Nigeria's ASM sector into a more sustainable and economically viable component of
the national economy, thereby reducing the solid minerals export-import deficit (Buxton, 2013).
 CHAPTER FIVE
ILLEGAL MINING & SMUGGLING OF SOLID MINERALS AND NIGERIA'S
EARNINGS/DEBTS CRISIS

Illegal mining and smuggling of solid minerals have worsened Nigeria's earnings and debts
crisis. The neglect of government activities in the mining sector has allowed illegal miners to
take over, leading to the loss of revenue for the government and promoting insecurity through
banditry and terrorism (Sheelagh, 2020). The presence of radioactive solid minerals in Nigeria,
particularly in the north, has resulted in health hazards for the communities where mining occurs
(Aliyu, et al. 2022). Additionally, the abandoned mine sites have caused environmental hazards
such as erosion, soil degradation, and alteration of fluvial systems (Mallo, 2010). The socio-
economic effects of illegal mining include child and women labor, drug trafficking, crime,
prostitution, and communal clashes, further exacerbating the challenges faced by the country
(Adeniyi, 2013). To address these issues, stiffer penalties should be implemented, the Mining
Act should be amended, and proper regulation should be put in place to eliminate illegal mining
activities (Olumide, 2013). This chapter demonstrates using tables, figures and logical
action/deduction, that indeed, illegal mining and smuggling of solid minerals has impacted on
Nigeria’s earning, nay, exacerbated Nigeria’s debt crisis. What follows is a detailed analysis of
the mean through which this smuggling of solid minerals by people and groups, have impacted
on Nigeria’s earnings overtime.

5.1 Illegal Mining Sites in Selected States and Decrease in Nigeria’s Average Total Earning
5.1.1 Prevalence of Illegal Mining Sites in Selected States
Zamfara and Niger
Illegal mining activities in Nigeria, particularly in states like Zamfara, Plateau, and Niger, are
prevalent due to various factors such as geological composition, historical patterns, and recent
reports. These states are known for their rich mineral deposits, attracting illegal miners seeking
to exploit these resources without proper authorization. The geological diversity of these regions,
coupled with a history of informal mining practices, has contributed to the persistence of illegal
mining activities. Recent reports continue to highlight the challenges posed by unauthorized
mining operations in these areas, underscoring the need for effective regulation and enforcement
measures.
A wide range of minerals is illegally mined in these states, including gold, lead, zinc, and coal,
each with significant economic importance for both the miners and the national economy. Gold,
a highly valued commodity, is sought after for its use in various industries such as jewelry and
electronics, contributing to both local livelihoods and export revenue Camacho et al. (2016).
Lead and zinc are essential for industrial processes, while coal plays a crucial role in power
generation and industrial applications, supporting Nigeria's energy sector (Cartier, 2009). The
illegal extraction of these minerals not only deprives the government of revenue but also poses
environmental and social risks.
The scale of illegal mining activities in these states is substantial, involving a large number of
individuals, often from rural and impoverished backgrounds. These miners operate without legal
mining titles or concession rights, relying on manual labor with basic tools or heavy equipment
like rock blasters and water pumping machines. The unregulated nature of these operations leads
to haphazard mineral extraction, resulting in environmental degradation such as deforestation,
water pollution, and soil erosion. The social impacts of illegal mining include health hazards for
miners, conflicts over land use, and economic instability in affected communities, highlighting
the need for sustainable and responsible mining practices to mitigate these adverse effects
(Cartier, & Bürge, 2011).
Figure 3: Geological map of Niger State [source: Idris-Nda (2018)]
Figure 3:. ASGM Sites in Niger State

Ebonyi
Illegal mining activities in Nigeria are prevalent in various states, with Ebonyi State, particularly
the Ameka illegal mine sites and environs, facing significant challenges. The state's geological
composition, historical patterns, and recent reports contribute to the high prevalence of illegal
mining in this region. Ebonyi State is known for its mineral-rich deposits, attracting illegal
miners who exploit these resources without proper authorization. The historical context of
informal mining practices in the area has also perpetuated the issue, leading to ongoing illegal
mining activities (Nigeria Mines and Steel, 2024).
In the Ameka illegal mine sites and environs in Ebonyi State, a variety of minerals are extracted
illegally, including gold, lead, zinc, and coal. These minerals hold substantial economic
significance for both the miners and the national economy. Gold is highly valued in industries
such as jewelry and electronics, contributing to local livelihoods and export revenue. Lead and
zinc are essential for industrial processes, while coal plays a vital role in power generation and
industrial applications, supporting Nigeria's energy sector. The illegal extraction of these
minerals not only impacts the environment but also poses social and economic risks for the
region.

The scale of illegal mining activities in Ebonyi State, specifically in the Ameka area, is
significant, involving a considerable number of individuals, often from rural and impoverished
backgrounds. These miners operate without legal mining titles or concession rights, using
manual labor with basic tools or heavy equipment like rock blasters and water pumping
machines. The lack of regulation and oversight leads to uncontrolled mineral extraction, resulting
in environmental degradation such as deforestation, water pollution, and soil erosion. Social
impacts include health hazards for miners, land use conflicts, and economic instability in
affected communities, highlighting the urgent need for sustainable mining practices and
regulatory enforcement to address these challenges effectively (Lefteratou, 2019).

Adamawa

Illegal mining activities in Nigeria are not limited to specific states, with Adamawa State being
one of the regions grappling with the challenges posed by unauthorized mining operations. The
prevalence of illegal mining in Adamawa State can be attributed to various factors, including the
state's geological composition, historical patterns of informal mining practices, and recent reports
highlighting ongoing illegal activities. The state's mineral-rich deposits attract illegal miners who
exploit these resources without proper authorization, leading to environmental degradation and
social issues in the region (La Hovary, 2014).

In Adamawa State, a range of minerals is illegally mined, including gold, limestone, gypsum,
and gemstones, each holding economic significance for both the miners and the national
economy. Gold, in particular, is highly valued for its use in various industries and as a store of
value, contributing to local livelihoods and export revenue. Limestone and gypsum are essential
for construction and industrial applications, while gemstones have a market demand in the
jewelry and fashion industries. The illegal extraction of these minerals not only deprives the
government of revenue but also poses environmental risks and social challenges for the affected
communities.
The scale of illegal mining activities in Adamawa State involves a significant number of
individuals, often from rural and marginalized backgrounds, engaging in unauthorized mining
operations. These miners operate without legal permits or mining rights, using rudimentary tools
and equipment to extract minerals from the ground. The lack of regulation and oversight leads to
uncontrolled mining practices, resulting in land degradation, water pollution, and ecosystem
disruption. Social impacts include health hazards for miners, land use conflicts, and economic
instability in the surrounding areas, underscoring the need for effective regulation, enforcement,
and sustainable mining practices to address these issues comprehensively (La Hovary, 2014).

Enugu
Enugu State, located in southeastern Nigeria, has been identified as one of the states with a high
prevalence of illegal mining activities. The state's geological composition, rich in coal deposits
and other solid minerals, has historically attracted miners seeking economic opportunities.
Recent reports indicate a significant presence of illegal mining sites in Enugu State, with miners
exploiting mineral resources without proper authorization or adherence to regulatory
frameworks. The state's mining sector faces challenges related to informal mining practices,
environmental degradation, and social disruptions caused by illegal activities. Illegal miners in
Enugu State extract a variety of minerals, including coal, limestone, iron ore, and lead-zinc ores,
among others. These minerals hold economic significance for both the miners and the national
economy, as they contribute to the production of raw materials for various industries, such as
cement manufacturing, steel production, and energy generation. However, the illegal extraction
of these minerals deprives the government of revenue through uncollected royalties and taxes,
undermines the formal mining sector, and poses environmental risks due to unregulated mining
practices (Owoeye, 2020).

The scale of illegal mining activities in Enugu State is substantial, with a significant number of
people involved in informal mining operations. Miners often use rudimentary tools and
techniques, such as manual labor, pickaxes, and shovels, to extract minerals from underground
mines or open pits. The lack of proper safety measures, environmental safeguards, and social
protections in illegal mining sites poses risks to the health and well-being of miners, as well as
the surrounding communities. Environmental impacts of illegal mining in Enugu State include
land degradation, water pollution, deforestation, and habitat destruction, leading to ecological
imbalances and loss of biodiversity. Social consequences may include conflicts over land rights,
displacement of communities, and exploitation of vulnerable populations, particularly women
and children involved in mining activities. Addressing the prevalence of illegal mining sites in
Enugu State requires a multi-stakeholder approach involving government agencies, industry
players, civil society organizations, and local communities to promote formalization, regulatory
compliance, sustainable practices, and inclusive development in the mining sector.
5.1.2. Environmental and Social Consequences of Illegal Mining
Illegal mining activities have severe environmental and social consequences, with environmental
degradation being a prominent issue associated with such operations. One of the key
environmental problems linked to illegal mining is deforestation and land degradation. Illegal
miners often clear large areas of forest cover to access mineral deposits, leading to the
destruction of valuable ecosystems and habitats. Deforestation not only reduces biodiversity but
also contributes to soil erosion, loss of vegetation cover, and disruption of natural water cycles.
(International Labour Organization ILO., 1999)

The process of deforestation for illegal mining activities involves the removal of trees and
vegetation, which destabilizes the soil structure and increases the risk of landslides and soil
erosion. Without the protective cover of trees, the exposed soil is vulnerable to erosion by wind
and water, leading to the degradation of land quality and fertility. The loss of vegetation also
impacts wildlife habitats, disrupts ecological balance, and reduces the capacity of forests to
sequester carbon dioxide, contributing to climate change (Adekeye & Akintola, 2007).

Furthermore, deforestation and land degradation resulting from illegal mining activities have far-
reaching consequences beyond the immediate mining sites. The clearing of forests can lead to
the loss of biodiversity, including plant and animal species that depend on the forest ecosystem
for survival. Disrupted ecosystems can affect local water sources, alter microclimates, and
reduce the resilience of landscapes to natural disasters such as floods and droughts. The long-
term effects of deforestation and land degradation caused by illegal mining can have lasting
impacts on the environment, affecting ecosystem services, water quality, and overall
environmental health. Addressing the environmental consequences of illegal mining, particularly
deforestation and land degradation, requires concerted efforts from government authorities,
regulatory agencies, local communities, and other stakeholders. Implementing and enforcing
strict environmental regulations, promoting sustainable mining practices, restoring degraded
lands, and raising awareness about the importance of preserving forests and ecosystems are
essential steps to mitigate the environmental impacts of illegal mining activities. By prioritizing
environmental protection and sustainable land management, it is possible to minimize the
adverse effects of illegal mining on ecosystems, biodiversity, and the overall health of the
environment.

Illegal mining activities have significant environmental and social consequences, with water
pollution being a critical issue associated with such operations. Water pollution from mining
waste and chemicals poses serious risks to ecosystems, human health, and aquatic life. Illegal
miners often use hazardous substances and improper disposal methods, leading to the
contamination of water sources and the degradation of water quality. One of the primary
environmental problems linked to illegal mining is water pollution caused by the discharge of
mining waste, chemicals, and toxic substances into rivers, streams, and groundwater sources.
Illegal miners frequently use chemicals such as mercury, cyanide, and other pollutants to extract
and process minerals, particularly gold and other precious metals. Improper handling and
disposal of these chemicals result in their release into water bodies, leading to contamination and
pollution (Dahanayake, 1980).

The presence of mining waste, known as tailings, in water bodies can have detrimental effects on
aquatic ecosystems and biodiversity. The discharge of untreated mine effluents containing heavy
metals, sediments, and other pollutants can disrupt the balance of aquatic environments, harm
aquatic organisms, and degrade water quality (Adekeye & Akintola, 2007). Heavy metals such as
lead, mercury, and arsenic can accumulate in the food chain, posing risks to human health and
wildlife. Water pollution from illegal mining activities also impacts communities that rely on
contaminated water sources for drinking, irrigation, and other domestic purposes. Exposure to
polluted water can lead to health problems, including gastrointestinal illnesses, skin diseases, and
long-term health effects from the ingestion of toxic substances. Additionally, water pollution can
affect agricultural productivity, fisheries, and livelihoods dependent on clean water resources.
Addressing water pollution from illegal mining requires comprehensive strategies to prevent,
monitor, and remediate environmental contamination. Implementing strict regulations, enforcing
compliance with environmental standards, and promoting responsible mining practices are
essential to minimize the discharge of pollutants into water bodies. Remediation efforts, such as
treating contaminated water, restoring affected ecosystems, and rehabilitating degraded lands,
are crucial to mitigate the long-term impacts of water pollution from illegal mining activities.
Collaborative efforts involving government agencies, mining companies, local communities, and
environmental organizations are necessary to safeguard water resources, protect ecosystems, and
ensure the sustainable management of natural resources in areas affected by illegal mining.
Illegal mining activities have significant environmental and social consequences, with air
pollution being a critical issue associated with such operations (Afolayan et al., 2021). Air
pollution from dust and hazardous emissions poses risks to human health, ecosystems, and the
environment. Illegal miners often use rudimentary tools and techniques that generate dust,
fumes, and toxic gases, leading to air pollution in mining areas and surrounding communities
(Liman et al., 2021).

One of the primary environmental problems linked to illegal mining is air pollution caused by
the release of dust particles and hazardous emissions into the atmosphere. Illegal miners typically
operate in open pits, underground mines, and processing sites where activities such as drilling,
blasting, crushing, and transportation of ore generate dust and particulate matter. The lack of
proper ventilation, dust control measures, and emission controls in illegal mining sites results in
the dispersion of pollutants into the air. Dust particles generated during mining operations can
have adverse effects on air quality, visibility, and respiratory health. Inhalation of airborne dust
containing silica, asbestos, and other harmful substances can lead to respiratory diseases, lung
disorders, and other health problems among miners and nearby residents. Additionally, the
deposition of dust on vegetation, water bodies, and infrastructure can impact ecosystems,
agricultural productivity, and aesthetic values of the surrounding areas (Hilson, 2020).

In addition to dust, illegal mining activities may also emit hazardous gases and fumes, such as
sulfur dioxide, nitrogen oxides, carbon monoxide, and volatile organic compounds. These
pollutants can result from the combustion of fuels, use of explosives, and chemical processes
involved in mineral extraction and processing. Exposure to toxic emissions from illegal mining
sites can pose risks to human health, contribute to smog formation, and have detrimental effects
on air quality (Bulmer, 2018).

Addressing air pollution from illegal mining requires implementing measures to control dust
emissions, reduce pollutant releases, and improve air quality in mining areas. Strategies such as
dust suppression techniques, use of enclosed processing facilities, adoption of cleaner
technologies, and regular monitoring of air emissions can help mitigate the impacts of air
pollution from illegal mining activities (Macháček et al., 2022). Collaboration among
government agencies, mining operators, environmental authorities, and local communities is
essential to address air quality concerns, protect public health, and promote sustainable mining
practices that minimize the environmental footprint of mining operations. Illegal mining
activities have severe environmental and social consequences, with the loss of biodiversity due to
habitat destruction being a significant issue associated with such operations. Illegal mining often
involves clearing large areas of land, including forests and other natural habitats, to access
mineral deposits. This habitat destruction leads to the loss of biodiversity, disruption of
ecosystems, and negative impacts on plant and animal species.

One of the primary environmental problems linked to illegal mining is the loss of biodiversity
caused by the destruction of natural habitats. Illegal miners’ clear forests, wetlands, and other
ecosystems to create mining sites, roads, and infrastructure, resulting in the fragmentation and
degradation of habitats that support diverse plant and animal species. The removal of vegetation
and disruption of ecosystems can lead to the displacement, decline, or extinction of wildlife
populations that depend on these habitats for food, shelter, and breeding (Environmental Effects
of Mining, 2024).

Habitat destruction due to illegal mining activities not only affects terrestrial biodiversity but
also impacts aquatic ecosystems, rivers, and water bodies. Mining operations that involve
dredging, excavation, and pollution of water sources can harm aquatic species, disrupt aquatic
habitats, and alter the balance of aquatic ecosystems. The loss of biodiversity in both terrestrial
and aquatic environments can have cascading effects on ecosystem functions, food chains, and
ecological processes. The loss of biodiversity due to habitat destruction from illegal mining
poses challenges for conservation efforts, wildlife protection, and sustainable land management.
Endangered species, rare plants, and unique ecosystems are particularly vulnerable to the impacts
of habitat destruction caused by illegal mining activities. The decline in biodiversity can reduce
ecosystem resilience, diminish ecosystem services, and compromise the overall health and
functioning of natural environments.

Addressing the loss of biodiversity due to habitat destruction from illegal mining requires
conservation measures, habitat restoration efforts, and sustainable land use practices. Protecting
critical habitats, establishing protected areas, implementing reforestation programs, and
promoting biodiversity conservation are essential steps to mitigate the impacts of habitat
destruction on plant and animal species. Collaborative efforts involving government agencies,
conservation organizations, local communities, and stakeholders are necessary to safeguard
biodiversity, restore Illegal mining not only has severe environmental consequences but also
leads to negative social impacts, including health risks for miners and communities due to
exposure to toxins and unsafe practices. The hazardous working conditions, lack of safety
measures, and exposure to toxic substances in illegal mining operations pose significant health
risks to miners and nearby communities, contributing to a range of health problems and safety
concerns (Bulmer, 2018; Landrigan et al., 2022).

Health risks for miners and communities associated with illegal mining activities stem from
various factors, including exposure to toxins, unsafe practices, and inadequate health and safety
standards. Miners working in illegal mines are often exposed to hazardous substances such as
mercury, lead, cyanide, and other chemicals used in mineral extraction and processing. These
toxic substances can have detrimental effects on the respiratory system, nervous system, and
overall health of miners who come into direct contact with them (Tunji, 2023).

In addition to exposure to toxins, unsafe mining practices such as manual drilling, blasting, and
handling of explosives without proper training or protective gear increase the risk of accidents,
injuries, and fatalities among miners. The lack of ventilation, inadequate lighting, and unstable
working conditions in illegal mines contribute to safety hazards and occupational health risks for
miners, leading to incidents such as cave-ins, collapses, and equipment failures. The health risks
associated with illegal mining activities extend beyond miners to nearby communities that may
be exposed to environmental contamination, air and water pollution, and toxic substances
released from mining sites. Contaminated water sources, air pollution from dust and emissions,
and the spread of diseases related to mining activities can affect the health and well-being of
residents living in proximity to illegal mining areas (Earley III & Staub, 2006).
Addressing the health risks for miners and communities due to exposure to toxins and unsafe
practices in illegal mining requires implementing measures to protect workers, promote
occupational health and safety, and mitigate environmental contamination. Providing miners
with proper training, personal protective equipment, and access to healthcare services can help
reduce the risks of occupational illnesses and injuries. Enforcing regulations, monitoring
compliance with health and safety standards, and conducting regular inspections of mining sites
are essential to ensure the well-being of miners and communities affected by illegal mining
activities. Collaborative efforts involving government agencies, health authorities, mining
companies, and local communities are crucial to address the health impacts of illegal mining and
promote safe and sustainable mining practices that prioritize the health and safety of workers and
residents.
Illegal mining operations are associated with a range of negative social impacts, including an
increased risk of accidents and fatalities for miners. The clandestine nature of illegal mining
often means that safety regulations are ignored or inadequately enforced, leading to hazardous
working conditions and a higher likelihood of accidents. The lack of proper training, safety
equipment, and infrastructure in illegal mining sites contributes to a heightened risk of incidents
that can result in injuries or fatalities.
The increased risk of accidents and fatalities in illegal mining is a significant concern due to the
following reasons:

1. Unsafe Working Conditions: Illegal mining operations frequently take place in unsafe
environments such as unstable tunnels, open pits, and poorly constructed structures. Miners are
exposed to risks such as cave-ins, collapses, and equipment failures due to the lack of safety
measures and structural stability in these sites.

2. Lack of Safety Standards: Without adherence to established safety standards and protocols,
miners in illegal operations are more vulnerable to accidents. The absence of regulations on
protective gear, ventilation, and emergency response procedures further heightens the risk of
incidents.

3. Use of Hazardous Substances: Illegal mining often involves the use of toxic chemicals such as
mercury and cyanide in mineral extraction processes. Exposure to these substances without
proper safeguards can lead to health complications and contribute to accidents in the workplace.

4. Limited Emergency Support: In the event of accidents in illegal mining sites, the lack of
formal emergency response systems and medical facilities can exacerbate the consequences of
injuries. Miners may not have access to timely medical assistance, increasing the likelihood of
fatalities.

5. Impact on Communities: Accidents and fatalities in illegal mining not only affect individual
miners but also have broader social implications. Families of victims may face emotional trauma,
loss of income, and long-term economic challenges, disrupting the social fabric of communities.

Table 1: Health issues according to key informants

Population Group Common Health Issues

All ages  Malaria

 Fevers
 Diarrheal diseases, typhoid fever
 Schistosorniasis
 Yellow fever
 Vomiting
 Body pains
 Pneumonia
 Road traffic accidents
 Headaches
 Malnutrition
 Skin rashes
 Appendicitis
Children  Stomach
 Headaches
  Convulsions
 Coughing
 Fevers
 Malaria
 Diarrheal diseases

Table 2: Health issues according to focus group participants

Population Group Common Health Issues

Children  Malaria
 Fever
 Convulsions
 Vomiting
 Conjunctivitis
 Oral health
Women  Abdominal Pain

Elders  General body pain, back pain

 Fatigue
 Reduced eye sight
 Typhoid fever
 Ulcer (Stomach)
 Hot legs
 Reduced sensitivity of skin
Non-miners  Ulcers (stomach, Chest)
 Typhoid
 Malaria
 Back pain, Joint pain, Knee pain
 Hypertension
 Appendicitis
 Hernia
Farmers  Ingestion of insecticides and
organophosphates leading to poisonings

Addressing the increased risk of accidents and fatalities in illegal mining requires concerted
efforts to enforce safety regulations, provide training for miners, and improve working
conditions in the sector. Collaboration between government agencies, law enforcement, mining
companies, and local communities is essential to mitigate the social disruptions caused by unsafe
mining practices and protect the well-being of miners and affected populations. Illegal mining
operations often give rise to social conflict and violence over resources and land use, creating
significant disruptions in affected communities. The competition for valuable mineral resources
can spark conflicts among various stakeholders, including miners, local residents, government
authorities, and legitimate mining companies. This competition for limited resources can escalate
tensions and lead to disputes, confrontations, and even violent clashes as different groups seek to
assert control and reap economic benefits from the mining activities.

Moreover, illegal mining activities frequently encroach on land that may be traditionally owned
or utilized by local communities for agriculture, grazing, or other purposes. This encroachment
can trigger disputes over land rights, property boundaries, and traditional territories, exacerbating
social tensions and fueling conflicts over land use. The resulting disputes often pit miners against
community members who are concerned about the environmental impact of mining on their
livelihoods and natural resources, leading to heightened social conflicts over sustainable land use
practices (Wen & Zhang, 2022).

The environmental degradation caused by illegal mining, such as deforestation, soil erosion, and
water pollution, further compounds social conflicts. Local communities may protest against the
destruction of their environment and the contamination of their water sources, leading to
confrontations with miners and authorities (Afolayan et al., 2021). These environmental concerns
can escalate into social conflicts as communities seek to protect their resources and hold illegal
miners accountable for the damage caused to their lands. In addition, the presence of criminal
elements and armed groups in illegal mining areas can contribute to insecurity and violence.
Illegal mining sites can become breeding grounds for criminal activities, including gang
violence, theft, and intimidation, creating a climate of fear and lawlessness in the surrounding
communities. The involvement of armed groups in illegal mining operations can escalate
conflicts, jeopardize the safety of residents, and undermine social cohesion within affected
communities.

Addressing the negative social impacts of illegal mining, particularly the conflicts and violence
over resources and land use, requires a comprehensive approach that includes conflict resolution
mechanisms, community engagement, regulatory enforcement, and sustainable development
initiatives. By promoting dialogue, transparency, and inclusive decision-making processes,
stakeholders can work towards mitigating social conflicts, fostering peaceful coexistence, and
promoting sustainable resource management in mining-affected areas.
5.1.3. Economic Losses from Illegal Mining

Illegal mining in Nigeria results in significant economic losses for the government, primarily
through uncollected revenue from taxes, royalties, and export duties (Iseghohime, 2024). The
lack of regulation and oversight in illegal mining operations means that a substantial portion of
the revenue that should be generated from the extraction and sale of minerals is not captured by
the government. Estimates suggest that the Nigerian government loses millions of dollars
annually in potential revenue due to illegal mining activities. This includes taxes that should be
paid on profits, royalties on mineral extraction, and export duties on minerals leaving the country
illegally. These uncollected revenues deprive the government of much-needed funds that could
be used for public services, infrastructure development, and social welfare programs (Obeng et
al., 2019).

Furthermore, illegal mining undermines the legitimacy of the formal mining sector in Nigeria by
creating unfair competition and discouraging investment in responsible mining practices. The
lack of adherence to regulations and environmental standards by illegal miners gives them a
competitive advantage over legitimate mining companies that operate within the confines of the
law. This unfair competition not only hampers the growth and sustainability of the formal mining
sector but also deters potential investors from engaging in responsible mining activities in
Nigeria. The presence of illegal mining operations erodes trust in the regulatory framework and
undermines efforts to promote sustainable and ethical mining practices in the country (Obeng et
al., 2019).

The prevalence of illegal mining activities in Nigeria can also have a detrimental impact on the
country's national image as a reliable and responsible supplier of minerals in the international
market. Illegal mining tarnishes Nigeria's reputation by signaling to the global community that
the country lacks effective governance, regulatory oversight, and enforcement mechanisms in its
mining sector. This negative perception can deter foreign investors and trading partners from
engaging with Nigerian mineral suppliers, leading to reduced market opportunities and potential
trade restrictions. The association of Nigeria with illegal mining practices can damage its
credibility as a trustworthy and compliant participant in the global mineral trade, impacting the
country's economic prospects and international standing (Obeng et al., 2019).

The economic losses stemming from illegal mining in Nigeria are substantial and multifaceted,
encompassing uncollected revenue, undermining of the formal mining sector, and damage to the
country's national image. Addressing illegal mining activities requires a concerted effort to
strengthen regulatory enforcement, promote responsible mining practices, and enhance
transparency in the mineral sector. By combatting illegal mining and promoting a culture of
compliance and sustainability, Nigeria can safeguard its economic interests, attract investment,
and uphold its reputation as a reliable and responsible player in the international mineral market.

5.1.4. Case Studies of Specific States

State Specific Challenges Types of Minerals Economic Affected

Mined Significance Communities
Niger State  Weak  Gold  Significant  Local
governance  Mercury, economic indigenous
 Enforcement  Lead impact due communities
of mining  Zinc to the  Small-scale
regulations extraction miners,
 Porous and sale of migrant
borders valuable workers
facilitating minerals
illegal mineral  Contributing
smuggling to local and
regional
economies
Plateau State  Environmental  Tin,  Historical  Indigenous
degradation,  Columbite, significance tribes.
 Land disputes  Iron ore in tin  Artisanal
 Lack of mining. miners,
community  Potential for women.
engagement in economic  Children
mining growth involved in
decisions through mining
 responsible activities.
mining
practices.

5.1.5. Strategies for Combating Illegal Mining

Strengthening law enforcement capacity is a crucial strategy for combating illegal mining
activities in Nigeria. By enhancing the effectiveness of law enforcement agencies, the
government can deter and disrupt illegal mining operations, enforce regulatory compliance, and
uphold the rule of law in the mining sector. Several key measures can be implemented to bolster
law enforcement efforts and address the challenges posed by illegal mining:

1. Increased Patrols and Surveillance in Mining Areas: One of the primary tactics to combat
illegal mining is to increase patrols and surveillance in mining areas. This involves deploying
law enforcement personnel, such as police officers, mining inspectors, and environmental
officials, to monitor and inspect mining sites regularly. By maintaining a visible presence in
these areas, authorities can deter illegal miners from operating and identify illicit activities
promptly. Utilizing technology, such as drones and satellite imagery, can also enhance
surveillance capabilities and provide real-time monitoring of mining activities, enabling swift
responses to illegal operations.

2. Improved Investigation and Prosecution of Illegal Mining Operators: To effectively combat

illegal mining, it is essential to improve the investigation and prosecution of individuals and
entities engaged in illicit mining activities. This requires strengthening the capacity of law
enforcement agencies, such as the police, anti-corruption bodies, and specialized mining task
forces, to conduct thorough investigations, gather evidence, and build cases against illegal
mining operators. By enhancing the legal framework and streamlining judicial processes,
authorities can expedite the prosecution of offenders and ensure that perpetrators face
appropriate penalties for their actions. This serves as a deterrent to others considering engaging
in illegal mining practices.

3. Collaboration with Neighboring Countries to Address Cross-Border Issues: Illegal mining

often transcends national boundaries, with illicitly mined minerals being smuggled across
borders for sale in international markets. To address cross-border challenges associated with
illegal mining, collaboration with neighboring countries is essential. By fostering partnerships
and information-sharing mechanisms with neighboring nations, Nigeria can coordinate efforts to
combat transnational illegal mining networks, disrupt smuggling routes, and prevent the illicit
trade of minerals. Joint operations, intelligence sharing, and mutual legal assistance can
strengthen regional responses to illegal mining activities and promote cross-border law
enforcement cooperation.

Thus, strengthening law enforcement capacity is a fundamental strategy for curbing illegal
mining in Nigeria. By implementing measures such as increased patrols and surveillance in
mining areas, improved investigation and prosecution of offenders, and collaboration with
neighboring countries to address cross-border issues, the government can enhance its ability to
combat illegal mining activities effectively. These efforts are essential for promoting regulatory
compliance, protecting the environment, safeguarding communities, and upholding the integrity
of the mining sector.
Promoting responsible mining practices is a proactive approach to combat illegal mining
activities in Nigeria. By advocating for and supporting responsible mining practices, the
government can create a conducive environment for legal and sustainable mining operations
while discouraging illicit activities. Several key strategies can be employed to promote
responsible mining practices as an alternative to illegal mining:

1. Streamlining and Simplifying Legal Frameworks for Obtaining Mining Licenses: One of the
barriers to legal mining operations is the complexity and bureaucracy surrounding the process of
obtaining mining licenses. To promote responsible mining practices, it is essential to streamline
and simplify the legal frameworks governing mining activities. This includes reducing red tape,
clarifying licensing procedures, and ensuring transparency in the application process. By making
it easier for miners to obtain licenses through clear and efficient mechanisms, the government
can incentivize compliance with regulatory requirements and deter individuals from engaging in
illegal mining.
2. Facilitating Access to Finance and Technology for Small-Scale Miners: Small-scale miners
often lack access to adequate financing and modern technology, which hinders their ability to
engage in responsible mining practices. To promote legal mining activities among small-scale
miners, it is crucial to facilitate access to finance and technology. This can be achieved through
the provision of microfinance schemes, grants, and loans tailored to the needs of small-scale
miners. Additionally, promoting the adoption of environmentally friendly and efficient mining
technologies can enhance productivity, safety, and sustainability in mining operations.

3. Building Awareness about Environmental and Social Safeguards in Mining: Promoting

responsible mining practices also involves raising awareness about the importance of
environmental and social safeguards in mining activities. This includes educating miners,
communities, and stakeholders about the potential impacts of mining on the environment, health,
and livelihoods. By fostering a culture of environmental stewardship and social responsibility
within the mining sector, stakeholders can work together to mitigate negative consequences,
protect natural resources, and promote sustainable development. Training programs, workshops,
and outreach initiatives can help disseminate best practices and encourage compliance with
environmental and social standards in mining operations.

The promotion of responsible mining practices is a constructive strategy for addressing illegal
mining in Nigeria. By streamlining legal frameworks for obtaining mining licenses, facilitating
access to finance and technology for small-scale miners, and building awareness about
environmental and social safeguards in mining, the government can promote a culture of
compliance, sustainability, and responsible resource management in the mining sector. These
efforts not only contribute to curbing illegal mining activities but also foster economic
development, environmental protection, and social well-being in mining communities.

Engaging with local communities affected by illegal mining is a critical strategy in combating
illicit mining activities in Nigeria. By actively involving and addressing the concerns of these
communities, authorities can foster cooperation, build trust, and work towards sustainable
solutions to the challenges posed by illegal mining. It is essential to recognize the importance of
community engagement in creating a conducive environment for legal and responsible mining
practices. Addressing the concerns and needs of local communities is paramount in mitigating
the negative impacts of illegal mining on their livelihoods, health, and environment. By listening
to community grievances, understanding their perspectives, and involving them in decision-
making processes, authorities can tailor interventions to meet the specific needs of affected
populations. Providing platforms for community members to voice their concerns, seek redress
for grievances, and participate in dialogue can help build mutual understanding and collaboration
in addressing the root causes of illegal mining.
Offering alternative livelihoods and support for transitioning out of illegal mining is crucial in
empowering communities to move away from illicit activities towards sustainable and legal
economic opportunities. By providing training, skills development, and access to alternative
income-generating activities, authorities can help individuals and communities affected by illegal
mining to diversify their sources of livelihood and break the cycle of dependency on illicit
mining. Supporting transitions to legal and sustainable livelihood options not only benefits the
affected communities but also contributes to the overall development and stability of the mining
sector.

Building trust and fostering collaboration with local communities are essential elements in
tackling the issue of illegal mining effectively. By engaging in transparent communication,
demonstrating commitment to addressing community concerns, and honoring commitments
made to affected populations, authorities can build trust and credibility among stakeholders.
Collaborating with community leaders, civil society organizations, and local institutions can
strengthen partnerships, leverage local knowledge and resources, and mobilize collective action
against illegal mining. By working together with communities as partners in the fight against
illegal mining, authorities can create a shared sense of responsibility, ownership, and
accountability in addressing the challenges and promoting sustainable mining practices.

5.2 Illicit Trading/smuggling of Precious Metals and Rise in Overall National Debt
5.2.1 Illicit Trading/Smuggling of Precious Metals: Modus Operandi
Illegal mining and trafficking in metals and minerals fall into the conceptual range of crimes that
affect the environment as discussed above. Although there is no universally accepted definition
of illegal mining and the exact extent of the crime is difficult to be estimate, the term according
to United nations (2024) refers to mining activity that is: (a) carried out by a person, natural or
legal, or a group of people without complying with the requirements of applicable laws or
administrative regulations that govern these activities; or (b) carried out in areas where the
exercise of such activities is prohibited or using prohibited equipment, devices or chemicals
(Illegal Mining, 2024). Illegal mining occurs both on the surface and underground, in closed
mines and abandoned mines, and sometimes even at operating mines. It is intertwined with
trespassing on active or decommissioned mining sites, and it can take place in protected areas, in
natural parks, at historical sites and on indigenous lands (Patricia, Quijano, Vallejos, 2020).
In some countries, when trespassing at operational mines, illegal miners are frequently heavily
armed and set up ambushes and traps for employees, security personnel and competing organized
criminal groups of illegal miners. (See minerals council, 2020). Illegal mining causes a range of
harmful impacts on the environment, habitats, human and animal life, indigenous communities
and their livelihoods, public health, economies, development and the rule of law (Heck and
Jaime Tranca, 2014). Illegal miners often use environmentally dangerous equipment, devices and
chemicals, not only putting their own health at risk but also causing severe environmental harm.
In addition to causing irreversible environmental damage, illegal mining has been cited as a
contributing factor that escalates and sustains violent conflict, with the sale of illegally extracted
minerals being an important source of revenue for militias, warlords, (Kimberley, 2016)
organized criminal groups (Uniteed Nations Interregional Crime and Justice Research Institute,
2016) and, in some cases, terrorist organizations (OAS, 2022).
Criminal organizations also reap profits by illegally controlling access to mines, extorting
payments for mining operations or owning beneficial or other interests in upstream companies.
(OAS, 2021) The connection between violent conflict and mineral resources is best illustrated
using the example of conflict minerals, in particular diamonds. (Oxford, 2014) It is widely
known that the civil wars in Africa in the 1990s and early 2000s were largely fought by insurgent
groups that purchased firearms and ammunition with proceeds from the illegal exploitation of
diamond mining fields and from illicit trade in diamonds.20 Conflict minerals have fueled and
continue to perpetuate armed violence. Illegal mining and trafficking in metals and minerals have
emerged as a concern for the international community because of the involvement of organized
criminal groups in those activities. By tapping into illegal mining and trafficking in metals and
minerals, organized criminal groups gain access to hard-to-detect money-laundering techniques
and the legitimate supply chains of mining businesses, which they abuse to their advantage
(UNICJRI, 2022).
In its resolution 2019/23, the Economic and Social Council recalled its resolution 2013/38, in
which it had underlined the need to develop comprehensive, multifaceted and coherent strategies
and measures to counter trafficking in precious metals, and invited Member States to take
appropriate measures to prevent and combat trafficking in precious metals by organized criminal
groups, including through international cooperation provided for in the Organized Crime
Convention and the Convention against Corruption. In 2020, in its resolution 75/196, the General
Assembly underscored the substantial increase in the volume and range of criminal offences
related to trafficking in precious metals and minerals, acknowledging their potential use as a
source of funding for organized crime and terrorism. It called for appropriate and effective
measures to prevent and combat trafficking in precious metals by organized criminal groups,
including by adopting necessary legislation. These and other high-level discussions clearly
underscore the importance of taking appropriate and effective measures to prevent and combat
illegal mining and trafficking in metals and minerals, and that those crimes have made their way
onto the international agenda as an issue that requires the international community’s most urgent
attention.
Smuggling precious metals out of Nigeria involves a variety of sophisticated techniques aimed at
circumventing legal channels and exploiting weaknesses in enforcement measures. One
prevalent method is undervaluing or mis-declaring exports. This tactic involves declaring the
value of exported precious metals lower than their actual worth, thereby reducing the amount of
taxes or duties paid and increasing the profitability of the smuggling operation. This can be
achieved through falsifying documentation or providing inaccurate information to customs
authorities.

Another common method is concealing precious metals in other shipments. Smugglers often
conceal gold, silver, or other valuable metals within legitimate cargo, such as agricultural
products or manufactured goods. By hiding the precious metals within larger shipments,
smugglers aim to evade detection during customs inspections. This technique requires careful
planning and coordination to ensure that the concealed items are not easily detected by
authorities (Olujobi & Irumekhai, 2024). Utilizing porous borders and weak enforcement is
another tactic employed by smugglers to transport precious metals out of Nigeria. Nigeria shares
borders with several neighboring countries, some of which may have less stringent customs
controls or weaker law enforcement capabilities. Smugglers take advantage of these
vulnerabilities to transport precious metals across borders without proper documentation or
inspection. Additionally, corruption among border officials may facilitate the passage of
smuggled goods, further enabling illicit activities.

Furthermore, smugglers often rely on informal trading networks and illicit financial flows to
facilitate the movement of precious metals out of Nigeria. These networks may involve
collaboration between individuals, businesses, and criminal organizations operating both
domestically and internationally. Informal channels provide anonymity and flexibility, making it
difficult for authorities to trace the origins and destinations of smuggled goods. Illicit financial
flows, including money laundering and tax evasion, further obscure the trail of illegally obtained
wealth, allowing smugglers to profit from their activities while avoiding detection.

Smuggled precious metals from Nigeria find their way to various destination countries, both
within the region and internationally. These destinations are chosen based on factors such as
proximity, market demand, regulatory leniency, and the presence of established trading
networks. Additionally, regional or international hubs often serve as crucial intermediary points
for onward trade, facilitating the movement of smuggled goods to final destinations.

One primary destination for smuggled precious metals from Nigeria is neighboring West African
countries, including Ghana, Togo, and Benin. These countries have porous borders and relatively
weaker enforcement measures compared to Nigeria, making them attractive transit points for
smugglers. Once in these countries, the precious metals may be further distributed within the
region or transported to international markets via air or sea routes. Globally, the United Arab
Emirates (UAE) stands out as a significant destination for smuggled precious metals from
Nigeria. The UAE serves as a major trading hub with well-established networks for the buying
and selling of gold and other precious metals. Dubai, in particular, is known for its gold souks
and free trade zones, which offer favorable conditions for conducting business with minimal
regulation and oversight. Smuggled gold from Nigeria often ends up in Dubai before being sold
to international buyers or processed into jewelry and other products for export.
Other international destinations for smuggled precious metals from Nigeria include countries
with large gold markets such as India, Switzerland, and China. These countries have robust gold
industries and demand for raw materials, making them attractive markets for smugglers seeking
to profit from illicit trade. Moreover, the presence of established trading networks and financial
institutions in these countries facilitates the laundering of proceeds from smuggling activities.
Additionally, some smuggled precious metals may find their way to Western markets, including
Europe and the United States, where they are sold through underground channels or integrated
into legitimate supply chains. However, stricter regulations and enforcement measures in these
regions pose greater risks for smugglers, necessitating more sophisticated methods to evade
detection.

5.2.2. Economic Impacts of Illicit Precious Metals Trade

The illicit trade of precious metals in Nigeria poses significant economic repercussions,
profoundly impacting government revenue, formal sector operations, and national debt burdens.

Lost Revenue:
The smuggling of precious metals results in substantial revenue losses for the Nigerian
government. Firstly, uncollected taxes and royalties on exports present a significant drain on
public finances. Smugglers often evade taxation by underreporting the value of exported metals
or bypassing formal channels altogether, depriving the government of crucial revenue streams.
Additionally, the loss of income to legitimate miners and businesses exacerbates the economic
toll. With smuggled metals flooding the market at lower prices, licensed miners and formal
businesses face decreased profitability, reduced market share, and potential closures. This not
only impacts government revenue directly but also stifles economic growth and development by
constraining investment and innovation within the formal mining sector.
Undermining Formal Sector:
Illicit trade undermines the formal precious metals production and trade ecosystem, fostering
unfair competition and disincentivizing investment in sustainable, legal mining practices.
Legitimate players in the formal sector adhere to strict regulations, environmental standards, and
taxation requirements, which increase their operational costs. In contrast, smugglers operating
outside regulatory frameworks evade these obligations, allowing them to undercut legal prices
and flood the market with cheaper, unregulated metals. This creates an uneven playing field,
where formal businesses struggle to compete against illicit goods. Moreover, the lack of
accountability and environmental safeguards in informal mining operations exacerbates
environmental degradation and social unrest, undermining the credibility and viability of the
formal sector.
Negative Implications for National Debt:
The economic ramifications of illicit precious metals trade extend to exacerbating national debt
burdens. Firstly, reduced government income from uncollected taxes and royalties diminishes the
resources available for debt servicing. With vital revenue streams diverted or lost to smuggling
activities, the government may face challenges meeting its debt obligations, leading to increased
borrowing to bridge the gap. Moreover, the weakening of formal sectors due to illicit trade
further compounds debt pressures. Diminished economic productivity and growth resulting from
smuggling activities reduce overall government revenue generation capacity, forcing increased
reliance on borrowing to fund essential services and infrastructure projects. Additionally, illicit
financial activities associated with smuggling, such as money laundering and tax evasion, divert
funds away from productive investments, exacerbating fiscal deficits and debt accumulation.
This creates a detrimental cycle wherein lost revenue, weakened formal sectors, and illicit
financial activities contribute to mounting national debt burdens, hindering economic stability
and development prospects.

The illicit trade of precious metals in Nigeria exacts a heavy toll on government revenue, formal
sector operations, and national debt dynamics. Addressing these challenges requires concerted
efforts to strengthen enforcement measures, enhance regulatory frameworks, promote
transparency and accountability, and incentivize investment in sustainable, legal mining
practices.

5.2.3. Factors Fueling Illicit Precious Metals Trade

The illicit trade of precious metals in Nigeria thrives due to a confluence of factors that exploit
weaknesses in regulatory frameworks, foster corruption and complicity, sustain global demand,
and discourage formalization efforts within the sector.

Weak Regulatory Frameworks:

One of the primary drivers behind the illicit trade of precious metals in Nigeria is the presence of
loopholes and weaknesses in regulatory frameworks governing the sector. Regulatory oversight
is often fragmented, with multiple agencies responsible for different aspects of mining
operations, leading to coordination challenges and enforcement gaps. Additionally, regulatory
requirements may be outdated, inadequate, or inconsistently enforced, allowing smugglers to
exploit ambiguities and evade detection. Furthermore, limited resources and capacity constraints
within regulatory agencies hinder their ability to effectively monitor and control mining
activities, creating opportunities for illicit operators to operate with impunity (Global Financial
Integrity, 2019).

Corruption and Complicity:

Corruption permeates various levels of the precious metals sector in Nigeria, facilitating illicit
trade through complicity among government officials, border control agencies, and organized
criminal networks. Bribery, extortion, and collusion are widespread, enabling smugglers to
bypass regulatory checks and facilitate the movement of illicit goods across borders. Corrupt
practices undermine the effectiveness of regulatory mechanisms, erode public trust in
government institutions, and perpetuate a culture of impunity. Moreover, the involvement of
influential individuals or criminal syndicates in the illicit trade further complicates enforcement
efforts, as they often operate with significant resources and political protection (U.S. Department
of State, 2020).

Demand Drivers:
Sustained global demand for precious metals, particularly from markets with lax traceability
requirements, serves as a powerful driver of illicit trade. The allure of high profits and strong
market demand incentivizes smugglers to exploit loopholes in regulatory frameworks and supply
chains to meet the growing appetite for precious metals. Countries with lenient regulations and
weak enforcement mechanisms provide a fertile ground for the laundering and resale of
smuggled metals, allowing illicit goods to penetrate global markets undetected. Moreover, the
clandestine nature of smuggling operations makes it challenging for authorities to trace the
origins and destinations of illicit goods, further fueling demand for smuggled metals in
international markets.
Limited Incentives for Formalization:

Burdensome regulations, lack of support, and distrust in government institutions create limited
incentives for miners to operate within formal channels, pushing them towards illicit markets.
The formalization process for artisanal and small-scale miners in Nigeria is often fraught with
bureaucratic hurdles, high compliance costs, and limited access to essential resources and
support services. Additionally, the perception of corruption and inefficiency within government
agencies erodes trust and confidence among miners, deterring them from engaging with formal
institutions. As a result, many miners opt for informal and clandestine operations, where they can
avoid regulatory scrutiny, minimize costs, and maximize profits. This informalization of the
mining sector perpetuates a cycle of illegality, undermining efforts to promote sustainable and
responsible mining practices and contributing to the proliferation of illicit trade in precious
metals (IISD, 2024.).

The illicit trade of precious metals in Nigeria is sustained by a complex interplay of factors,
including weak regulatory frameworks, corruption and complicity, global demand dynamics, and
limited incentives for formalization. Addressing these underlying drivers of illicit trade requires
comprehensive reforms to strengthen regulatory oversight, combat corruption, enhance market
transparency, and promote sustainable and inclusive development in the precious metals sector.
Moreover, fostering trust and collaboration between government agencies, mining communities,
and other stakeholders is essential to building a resilient and accountable mining industry that
benefits all Nigerians.

5.2.4. Case Studies: Specific Precious Metals

1. Gold: Gold is one of the most sought-after precious metals associated with illicit trade from
Nigeria due to its high value and global demand. The country boasts significant gold reserves,
particularly in regions such as Zamfara, Kebbi, and Niger, where artisanal and small-scale
mining activities are prevalent (Oladipo, 2023). Smugglers employ various routes and methods
to illicitly transport gold out of Nigeria. One common method involves concealing gold within
other commodities, such as agricultural produce or manufactured goods, to evade detection
during customs inspections. Additionally, gold is often smuggled across porous land borders to
neighboring countries, such as Ghana, Togo, and Benin, before being transported to international
markets via air or sea routes. Informal trading networks and illicit financial flows facilitate the
movement of smuggled gold, enabling its integration into global supply chains (Africa Gold
Advisory - United States Department of State, 2023). The illicit trade of gold has significant
economic implications both domestically and internationally. Domestically, the smuggling of
gold deprives the Nigerian government of vital revenue streams from taxes, royalties, and duties,
undermining efforts to promote sustainable development and economic diversification.
Moreover, the loss of income to legitimate miners and businesses exacerbates poverty and
inequality within mining communities, leading to social unrest and instability. Internationally,
the influx of smuggled gold into global markets distorts prices, undermines fair competition, and
fuels money laundering and illicit financial activities, perpetuating a cycle of economic
exploitation and inequality. The extraction of gold in Nigeria is associated with unique social and
environmental consequences. Artisanal and small-scale gold mining often occurs in remote and
environmentally sensitive areas, leading to deforestation, soil erosion, and water pollution.
Moreover, the use of mercury and other toxic chemicals in gold extraction poses health risks to
miners and nearby communities, contributing to long-term environmental degradation and public
health crises. Additionally, the informal nature of gold mining operations exacerbates social
tensions and conflicts over land rights, resource allocation, and labor conditions, further
undermining the well-being and livelihoods of affected communities.

2. Gemstones
Gemstones, including emeralds, sapphires, and tourmalines, are another category of precious
metals commonly associated with illicit trade from Nigeria. The country is renowned for its rich
and diverse gemstone deposits, particularly in regions such as Jos Plateau, Kaduna, and Bauchi
(Ministry of Mines and Steels, 2024). Gemstones are smuggled out of Nigeria using similar
routes and methods as other precious metals. Smugglers conceal gemstones within legitimate
cargo or exploit porous land borders to transport them to neighboring countries for onward trade.
Additionally, informal trading networks and illicit financial flows facilitate the laundering and
resale of smuggled gemstones in global markets, where they are sold to unsuspecting buyers
(Lefteratou, 2019). The illicit trade of gemstones has significant economic repercussions, both
domestically and internationally. Domestically, the smuggling of gemstones deprives the
Nigerian government of revenue and undermines efforts to promote sustainable development and
economic diversification. Moreover, the loss of income to legitimate miners and businesses
perpetuates poverty and inequality within mining communities, exacerbating social tensions and
instability. Internationally, the influx of smuggled gemstones distorts prices, undermines market
transparency, and fuels illicit financial activities, perpetuating a cycle of economic exploitation
and inequality. The extraction of gemstones in Nigeria is associated with unique social and
environmental consequences. Artisanal and small-scale gemstone mining often occurs in
environmentally sensitive areas, leading to land degradation, deforestation, and habitat
destruction. Moreover, the informal nature of gemstone mining operations exacerbates social
tensions and conflicts over land rights, resource allocation, and labor conditions, further
undermining the well-being and livelihoods of affected communities. Additionally, the use of
child labor and exploitative practices in gemstone mining exacerbates poverty and inequality,
perpetuating cycles of vulnerability and exploitation within mining communities.

3. Tantalum
Tantalum, a rare and valuable metal, is frequently associated with illicit trade from Nigeria. The
country possesses significant tantalum deposits, particularly in regions such as Nasarawa, Kogi,
and Kaduna. Tantalum is often smuggled out of Nigeria through various routes and methods.
Smugglers may conceal tantalum within legitimate shipments or exploit porous borders to
transport it to neighboring countries for onward trade. Additionally, illicit financial networks
facilitate the laundering and resale of smuggled tantalum in global markets, where it is used in
electronics, aerospace, and other high-tech industries.
The illicit trade of tantalum has significant economic ramifications both domestically and
internationally. Domestically, smuggling deprives the Nigerian government of revenue and
undermines efforts to promote economic development and diversification. Moreover, the loss of
income to legitimate miners and businesses exacerbates poverty and inequality within mining
communities, leading to social unrest and instability. Internationally, the influx of smuggled
tantalum distorts prices, undermines market transparency, and fuels illicit financial activities,
perpetuating a cycle of economic exploitation and inequality.
The extraction of tantalum in Nigeria is associated with unique social and environmental
consequences. Artisanal and small-scale tantalum mining often occurs in environmentally
sensitive areas, leading to habitat destruction, land degradation, and water pollution. Moreover,
the informal nature of tantalum mining operations exacerbates social tensions and conflicts over
land rights, resource allocation, and labor conditions, further undermining the well-being and
livelihoods of affected communities. Additionally, the use of child labor and exploitative
practices in tantalum mining exacerbates poverty and inequality, perpetuating cycles of
vulnerability and exploitation within mining communities.
4. Diamond
Diamonds, known for their rarity and high value, are another category of precious metals
associated with illicit trade from Nigeria. The country boasts significant diamond deposits,
particularly in regions such as Plateau, Kaduna, and Kano. Diamonds are smuggled out of
Nigeria through various routes and methods. Smugglers may conceal diamonds within legitimate
shipments or exploit porous borders to transport them to neighboring countries for onward trade.
Additionally, illicit financial networks facilitate the laundering and resale of smuggled diamonds
in global markets, where they are used in jewelry, manufacturing, and investment.
The illicit trade of diamonds has significant economic repercussions both domestically and
internationally. Domestically, smuggling deprives the Nigerian government of revenue and
undermines efforts to promote economic development and diversification. Moreover, the loss of
income to legitimate miners and businesses exacerbates poverty and inequality within mining
communities, leading to social unrest and instability. Internationally, the influx of smuggled
diamonds distorts prices, undermines market transparency, and fuels illicit financial activities,
perpetuating a cycle of economic exploitation and inequality.
The extraction of diamonds in Nigeria is associated with unique social and environmental
consequences. Artisanal and small-scale diamond mining often occurs in environmentally
sensitive areas, leading to habitat destruction, land degradation, and water pollution. Moreover,
the informal nature of diamond mining operations exacerbates social tensions and conflicts over
land rights, resource allocation, and labor conditions, further undermining the well-being and
livelihoods of affected communities. Additionally, the use of child labor and exploitative
practices in diamond mining exacerbates poverty and inequality, perpetuating cycles of
vulnerability and exploitation within mining communities.

5. Coltan
Coltan, a key component in electronic devices, is frequently associated with illicit trade from
Nigeria. The country possesses significant coltan reserves, particularly in regions such as Bauchi,
Kaduna, and Plateau. Coltan is often smuggled out of Nigeria through various routes and
methods. Smugglers may conceal coltan within legitimate shipments or exploit porous borders to
transport it to neighboring countries for onward trade. Additionally, illicit financial networks
facilitate the laundering and resale of smuggled coltan in global markets, where it is used in
electronics, telecommunications, and aerospace industries. The illicit trade of coltan has
significant economic ramifications both domestically and internationally. Domestically,
smuggling deprives the Nigerian government of revenue and undermines efforts to promote
economic development and diversification. Moreover, the loss of income to legitimate miners
and businesses exacerbates poverty and inequality within mining communities, leading to social
unrest and instability. Internationally, the influx of smuggled coltan distorts prices, undermines
market transparency, and fuels illicit financial activities, perpetuating a cycle of economic
exploitation and inequality.
The extraction of coltan in Nigeria is associated with unique social and environmental
consequences. Artisanal and small-scale coltan mining often occurs in environmentally sensitive
areas, leading to habitat destruction, land degradation, and water pollution. Moreover, the
informal nature of coltan mining operations exacerbates social tensions and conflicts over land
rights, resource allocation, and labor conditions, further undermining the well-being and
livelihoods of affected communities. Additionally, the use of child labor and exploitative
practices in coltan mining exacerbates poverty and inequality, perpetuating cycles of
vulnerability and exploitation within mining communities.
5.2.4. Strategies for Combating Illicit Trade
To effectively combat illicit trade in precious metals, enhancing regulatory oversight is
paramount. This involves implementing strategies to strengthen regulatory frameworks and
enforcement capacity specific to the precious metals sector. One crucial step is to enhance
monitoring and transparency throughout the entire mining and export process. This can be
achieved by implementing robust tracking mechanisms to trace the origin of precious metals
from extraction to export. Technologies such as blockchain can be leveraged to create immutable
records of transactions, providing transparency and accountability. Additionally, the
establishment of a centralized database to track mining permits, production volumes, and export
declarations can help identify discrepancies and suspicious activities. Strengthening monitoring
systems at mining sites and border checkpoints, including the deployment of surveillance
equipment and trained personnel, can further deter illicit activities and enhance regulatory
compliance.

Collaboration with international agencies is essential to disrupt illicit trading networks involved
in the smuggling of precious metals. Joint intelligence-sharing initiatives and coordinated
enforcement operations can help identify and dismantle transnational smuggling networks
operating across borders. Bilateral and multilateral agreements with neighboring countries can
facilitate information exchange and coordination of law enforcement efforts to intercept
smuggled goods and apprehend perpetrators. Moreover, engagement with international
organizations such as INTERPOL, the United Nations Office on Drugs and Crime (UNODC),
and the Financial Action Task Force (FATF) can provide technical assistance and support in
combating illicit trade and financial crime.

Another critical strategy is to increase scrutiny of financial transactions linked to the precious
metals sector. This involves strengthening anti-money laundering (AML) and counter-terrorism
financing (CTF) measures to detect and deter illicit financial flows associated with smuggling
activities. Financial institutions, including banks and money service businesses, should
implement robust customer due diligence procedures and transaction monitoring systems to
identify suspicious activities and report them to relevant authorities. Furthermore, collaboration
between regulatory agencies, financial intelligence units, and law enforcement agencies is
essential to investigate and prosecute individuals and entities involved in illicit financial
activities. Enhanced cooperation with international financial institutions and regulatory bodies
can help track and freeze assets linked to illicit trade and disrupt the financial networks
supporting smuggling operations.
Addressing corruption is paramount in effectively combating smuggling of precious metals.
Corruption at all levels of government and within enforcement agencies facilitates illicit
activities and undermines efforts to uphold regulatory frameworks. Therefore, it is imperative to
implement comprehensive strategies to tackle corruption head-on. One critical step is to
strengthen anti-corruption measures through legislation, enforcement, and institutional reforms.
This involves enacting and enforcing stringent anti-corruption laws that impose severe penalties
for bribery, embezzlement, and abuse of power. Additionally, establishing independent anti-
corruption agencies with the authority to investigate and prosecute cases of corruption is
essential. These agencies should be adequately resourced and empowered to conduct thorough
investigations, hold perpetrators accountable, and recover stolen assets.
Building capacity in investigative bodies is essential to effectively uncover and prosecute cases
of corruption related to smuggling. This includes providing specialized training and technical
assistance to law enforcement agencies, prosecutors, and judicial authorities involved in
investigating and prosecuting corruption cases. Moreover, investing in forensic capabilities,
digital forensics, and intelligence-gathering techniques can enhance the effectiveness of anti-
corruption efforts and strengthen the criminal justice system's ability to combat smuggling and
financial crimes. Promoting accountability and transparency in government institutions is crucial
to reducing opportunities for corruption and increasing public trust in governance processes.
This entails establishing mechanisms for transparency and accountability, such as public
procurement reforms, asset disclosure requirements for public officials, and whistleblower
protection mechanisms. Furthermore, promoting open government initiatives, citizen
engagement, and access to information can empower civil society and the media to hold
government officials accountable and expose corrupt practices. Thus, in addressing corruption, it
is essential to effectively combat smuggling of precious metals. By enhancing anti-corruption
measures, building capacity in investigative bodies, and strengthening accountability and
transparency in government institutions, countries can create an environment that is hostile to
corruption and conducive to upholding the rule of law. However, tackling corruption requires
sustained political will, commitment from government officials, and collaboration between state
institutions, civil society, and the private sector. Only through collective action can we root out
corruption and effectively combat smuggling in the precious metals sector, promoting integrity,
fairness, and transparency in governance processes.
Promoting formalization and responsible sourcing is essential for combating illicit trade in
precious metals. By incentivizing miners and businesses to operate within formal channels,
governments can enhance transparency, accountability, and sustainability in the sector. Several
strategies can be employed to achieve this goal:

Firstly, by streamlining licensing and procedures, governments can simplify the process for
artisanal and small-scale miners to obtain legal permits and licenses. Complex and cumbersome
bureaucratic processes often discourage miners from complying with regulatory requirements,
pushing them towards informal and illicit activities. Consequently, implementing clear and
transparent procedures can reduce barriers to entry and encourage miners to formalize their
operations. Moreover, providing technical assistance, training programs, and capacity-building
initiatives to miners can significantly improve their skills, productivity, and compliance with
environmental and safety standards. Training in responsible mining practices, occupational
health and safety, and environmental management can empower miners to operate more
efficiently and sustainably within formal channels. Additionally, access to appropriate
technologies, equipment, and financial resources can further support miners in transitioning to
formalized operations.

Furthermore, collaborating with international initiatives and certification schemes is crucial for
promoting responsible sourcing and due diligence in precious metals supply chains. Partnering
with organizations like the Responsible Jewellery Council (RJC), the Extractive Industries
Transparency Initiative (EITI), and the Kimberley Process Certification Scheme (KPCS) can
raise awareness about ethical and sustainable mining practices. By aligning with internationally
recognized frameworks and standards, governments can enhance the credibility and
marketability of their precious metal’s exports, attracting responsible buyers and investors.

In conclusion, promoting formalization and responsible sourcing requires a multifaceted

approach that combines streamlining licensing procedures, providing technical assistance to
miners, and collaborating with international initiatives. By implementing these strategies,
governments can create a more transparent, ethical, and sustainable precious metals industry that
benefits all stakeholders.
5.3 Official-Actual Productions Discrepancy and Increased Income Allocated to Debt
Servicing.

5.3.1. Understanding the Discrepancy in Official-Actual Production

Official production records refer to the data collected and reported by government agencies and
regulatory bodies responsible for tracking mineral production in Nigeria. These records are
typically compiled from various sources, including mining companies, licensed operators, and
formal mining cooperatives. The primary sources of official production records include mining
permits, production declarations, export documents, and tax filings submitted by mining entities
to regulatory authorities. Additionally, government surveys, audits, and inspections provide
supplementary data to verify and cross-reference production figures. These official records serve
as the basis for assessing the performance of the mining sector, calculating royalties and taxes,
and formulating policies to promote sustainable development and resource management.

Factors Contributing to the Discrepancy:

1. Informal Mining:
One key factor contributing to discrepancies between official records and actual production
levels is the prevalence of informal and unregistered artisanal and small-scale mining (ASM)
activities. Informal miners, often operating outside regulatory frameworks and without legal
permits, may not report their production to authorities. These miners typically extract minerals
using rudimentary tools and techniques, often in remote or inaccessible areas where government
oversight is limited. As a result, their production remains unreported in official records, leading
to underestimations of total mineral output.
2. Under-reporting:
Under-reporting by licensed mining operators and intermediaries is another significant
contributor to discrepancies in production data. Miners and intermediaries may have various
motivations to under-report production, including tax evasion, avoiding regulatory compliance
costs, and engaging in illicit trade. By under-reporting production, mining entities can minimize
their tax liabilities, evade regulatory scrutiny, and circumvent environmental and safety
regulations. Moreover, under-reporting may facilitate the illicit trade of minerals, allowing
smugglers to profit from unrecorded production and evade export controls.

Defective Data Collection Mechanisms:

Weaknesses in data collection methods further exacerbate discrepancies between official records
and actual production levels. These deficiencies stem from limited reach and accessibility to
informal miners, lack of standardized data collection procedures, and inadequate technical
capacity and resources of regulatory agencies. Informal miners, operating in remote or
marginalized areas, may not be included in government surveys or databases, leading to gaps in
production data. Additionally, the absence of standardized reporting requirements and
inconsistent data collection practices among regulatory agencies can result in inconsistencies and
inaccuracies in official records. Furthermore, regulatory agencies may lack the technical
expertise, resources, and infrastructure to collect, analyze, and verify production data effectively.

The knowledge of discrepancy in official-actual production requires examining the sources of

official production records and analyzing the key factors contributing to discrepancies. Informal
mining, under-reporting by licensed operators, and defective data collection mechanisms all play
significant roles in distorting production data in Nigeria's mining sector. Addressing these
challenges requires strengthening regulatory oversight, promoting formalization of informal
mining activities, and enhancing data collection methods to ensure accurate and reliable
production records.
5.3.2. Impact of Production Discrepancy on Revenue Generation
Lost Revenue:
The production discrepancy in Nigeria's mining sector has significant implications for revenue
generation, leading to substantial losses for the government. Estimating the potential revenue
losses due to this discrepancy involves considering various factors, including taxes, royalties,
export duties, and license fees:

1. Taxes and Royalties: The underreporting of mineral production results in lower tax and
royalty payments to the government. Mining companies and operators pay taxes and royalties
based on their reported production levels. However, if actual production exceeds reported
figures, the government misses out on potential revenue. This loss in tax and royalty revenue
directly impacts government coffers, reducing funds available for public services and
infrastructure development.

2. Export Duties: Mineral exports are subject to export duties imposed by the government.
However, if production levels are underreported, the value of exported minerals may be
underestimated, leading to lower export duties collected by customs authorities. As a result, the
government loses out on revenue that could have been generated from export duties, further
exacerbating revenue losses.

3. License Fees: Mining companies are required to pay license fees for the right to extract
minerals from designated areas. These fees contribute to government revenue and are typically
based on reported production volumes. However, if production levels are underreported, license
fees collected by regulatory authorities will be lower than expected, resulting in additional
revenue losses for the government.
Impact on Revenue Allocation:
The underestimation of actual production in the mining sector has broader implications for
revenue allocation and budgetary planning:

1. Reduced Budgetary Allocations for Critical Sectors: Lower-than-expected mineral revenue

due to production discrepancies can result in reduced budgetary allocations for critical sectors
such as healthcare, education, and infrastructure development. Governments rely on mineral
revenue to fund these sectors and support socio-economic development initiatives. However,
when revenue falls short of projections due to production discrepancies, policymakers may be
forced to cut funding for essential services, negatively impacting public welfare and economic
growth.

2. Increased Dependence on Debt: To address budget shortfalls caused by lower-than-expected

mineral revenue, governments may resort to borrowing to finance expenditure needs. Increased
dependence on debt to cover budget deficits can lead to higher debt levels and debt servicing
costs, further straining government finances in the long run. Moreover, excessive borrowing can
undermine fiscal sustainability and macroeconomic stability, posing risks to economic resilience
and growth prospects.
The production discrepancy in Nigeria's mining sector has significant implications for revenue
generation and allocation. Lost revenue from taxes, royalties, export duties, and license fees due
to underreporting of production levels deprives the government of critical funds needed for
public services and infrastructure development. Moreover, the impact on revenue allocation can
result in reduced funding for essential sectors and increased reliance on debt to address budget
shortfalls. Addressing production discrepancies and improving transparency and accountability
in the mining sector are essential to maximize revenue generation and promote sustainable
development in Nigeria.
5.3.3. Consequences of Increased Debt Servicing Allocations

Rising Debt Burden:

Increased allocations towards debt servicing can exacerbate Nigeria's national debt burden,
posing significant challenges to economic stability and sustainable development. As debt
servicing consumes a larger share of government expenditure, the country's debt-to-GDP ratio
may rise, indicating a higher level of indebtedness relative to the size of the economy. A rising
debt burden raises concerns about debt sustainability, as it becomes increasingly challenging for
the government to meet its debt obligations without resorting to additional borrowing or fiscal
consolidation measures. Moreover, servicing a growing debt burden diverts resources away from
productive investments and essential public services, limiting the government's ability to address
socio-economic challenges and promote inclusive growth.
Crowding Out of Other Spending:
Prioritizing debt servicing can crowd out funding for crucial investments in infrastructure
development, social welfare programs, and economic diversification initiatives. As a larger
portion of government revenue is allocated towards servicing debt, there is less funding available
for productive investments that enhance productivity, improve living standards, and stimulate
economic growth. Infrastructure projects essential for transportation, energy, and water supply
may be postponed or scaled back, leading to inadequate infrastructure development and
hindering economic competitiveness. Similarly, reductions in funding for social welfare
programs such as healthcare, education, and poverty alleviation can exacerbate social
inequalities and impede human capital development. Furthermore, limited resources for
economic diversification initiatives may hamper efforts to reduce dependence on oil revenues
and promote sustainable economic development across sectors.

Reduced Long-Term Economic Growth:

High debt servicing allocations can have a detrimental impact on long-term economic growth,
undermining prospects for sustainable development and prosperity. Several factors contribute to
this negative effect:

1. Reduced Resources for Investments: High debt servicing obligations divert resources away
from productive investments that spur economic activity and stimulate growth. With limited
funds available for infrastructure, education, and innovation, Nigeria may miss out on
opportunities to enhance productivity, attract investment, and create jobs, hindering long-term
economic expansion.

2. Potential Credit Rating Downgrades and Increased Borrowing Costs: Persistently high debt
servicing allocations raise concerns among investors and credit rating agencies about the
government's ability to manage its debt obligations. This may lead to credit rating downgrades,
signaling higher perceived risks associated with investing in Nigerian debt securities.
Consequently, Nigeria may face higher borrowing costs in international markets, further
exacerbating debt servicing burdens and reducing fiscal space for other priority expenditures.

In conclusion, the consequences of increased debt servicing allocations are multifaceted and pose
significant challenges to Nigeria's economic stability and long-term prosperity. As debt servicing
consumes a larger share of government revenue, the country faces risks of rising debt burdens,
reduced funding for critical investments, and constraints on future economic growth. Addressing
these challenges requires prudent fiscal management, prioritization of productive investments,
and structural reforms to enhance revenue generation and debt sustainability. Only through
concerted efforts to manage debt effectively and promote sustainable development can Nigeria
mitigate the adverse consequences of increased debt servicing allocations and foster inclusive
growth and prosperity for its citizens.

5.3.4. Case Studies: Specific Minerals

In examining specific minerals known for significant discrepancies between official and actual
production figures in Nigeria, gold and coltan emerge as illustrative examples. Delving into these
minerals provides valuable insights into the challenges faced in accurately estimating production
volumes, the scale of production discrepancies, and their impact on affected communities and
sectors.
Gold:
Gold mining in Nigeria presents several challenges in accurately estimating production volumes.
One major challenge stems from the prevalence of informal and unregistered artisanal and small-
scale mining (ASM) activities, which often operate beyond the purview of regulatory oversight.
ASM miners utilize rudimentary techniques and equipment, making it difficult to track their
production accurately. Moreover, the informal nature of gold mining activities means that a
significant portion of production remains unreported, contributing to discrepancies between
official and actual figures.
The estimated scale of production discrepancy in the gold mining sector is substantial, with
significant revenue losses for the Nigerian government. Studies suggest that the actual gold
production in Nigeria exceeds official records by a considerable margin, leading to significant
revenue leakage through tax evasion, royalty underpayments, and illicit trade. These revenue
losses undermine the government's ability to fund essential services and infrastructure projects,
hindering socio-economic development efforts.

The impact of production discrepancies in the gold mining sector extends beyond financial
losses, affecting affected communities and sectors. Local development initiatives, infrastructure
projects, and social welfare programs in gold-producing regions may suffer from inadequate
funding due to lower-than-expected mineral revenues. Additionally, environmental degradation,
land disputes, and social conflicts associated with gold mining activities can exacerbate socio-
economic challenges in affected communities, further underscoring the need for effective
regulation and governance in the sector.

Coltan:
Coltan mining in Nigeria presents similar challenges in accurately estimating production
volumes, primarily due to the predominance of informal mining operations and inadequate
regulatory oversight. Coltan, a vital component in electronic devices, is often extracted through
ASM activities in remote and inaccessible areas, making it challenging to monitor and regulate
production effectively. Moreover, the clandestine nature of coltan mining contributes to
underreporting and discrepancies between official and actual production figures.
The estimated scale of production discrepancy in the coltan mining sector is significant, with
substantial revenue losses for the Nigerian government. As with gold, the underreporting of
coltan production results in missed opportunities for tax revenue, royalties, and export duties,
depriving the government of critical funds needed for public services and infrastructure
development. The resulting revenue shortfall exacerbates budgetary constraints and hampers
efforts to address socio-economic challenges in coltan-producing regions.
The impact of production discrepancies in the coltan mining sector mirrors that of gold, affecting
affected communities and sectors in similar ways. Inadequate funding for local development
initiatives, infrastructure projects, and social welfare programs undermines efforts to alleviate
poverty and promote inclusive growth in coltan-producing areas. Additionally, environmental
degradation and social tensions associated with coltan mining activities pose significant
challenges to sustainable development and community well-being, highlighting the urgent need
for enhanced regulation and governance in the sector.
The case studies of gold and coltan mining in Nigeria exemplify the challenges posed by
discrepancies between official and actual production figures in the mining sector. Addressing
these challenges requires comprehensive reforms to strengthen regulatory oversight, promote
formalization of mining activities, and enhance transparency and accountability in mineral
resource governance. Only through concerted efforts to address production discrepancies can
Nigeria harness the full potential of its mineral resources for sustainable development and shared
prosperity.

5.3.5. Strategies for Addressing Production Discrepancy

To effectively address production discrepancies in Nigeria's mining sector, implementing
targeted strategies is crucial. Emphasizing the formalization of informal mining activities and
enhancing data collection methods are key approaches to improve transparency, accuracy, and
accountability in estimating production volumes.

Formalization of ASM:
Formalizing informal mining activities is essential to improve data collection and increase
revenue generation from the mining sector. Streamlining and simplifying licensing procedures
for artisanal and small-scale miners (ASM) can encourage compliance and reduce the prevalence
of unregistered mining operations. By making the licensing process more accessible and
transparent, authorities can incentivize miners to operate within the formal sector, facilitating
better monitoring and regulation of production activities. Additionally, providing technical
assistance and capacity building to ASM miners enhances their skills, productivity, and
compliance with environmental and safety standards. Training programs on responsible mining
practices, occupational health, and environmental management empower miners to operate more
sustainably and transparently, contributing to improved data collection and increased revenue
generation. Moreover, building trust and collaboration with mining communities is essential to
foster cooperation and information sharing between authorities and miners. Establishing dialogue
mechanisms, community engagement initiatives, and participatory decision-making processes
can strengthen relationships and enhance mutual understanding, ultimately leading to better
compliance and more accurate data reporting.

Enhancing Data Collection Methods:

Improving the accuracy and reliability of data collection is critical for addressing production
discrepancies in the mining sector. Utilizing advanced technologies such as satellite imagery,
geographic information systems (GIS), and mobile applications enables more efficient and
precise monitoring of mining activities. Remote sensing techniques can provide real-time data on
mining sites, production volumes, and environmental changes, enhancing the government's
ability to track and verify mineral extraction. Strengthening collaboration with local communities
and stakeholders is another effective strategy to improve data collection methods. Engaging
community members as data collectors and monitors fosters a sense of ownership and
accountability, ensuring that information gathered reflects local realities and concerns.
Additionally, investing in capacity building and training for data collection personnel enhances
their skills in data management, analysis, and interpretation. By equipping personnel with the
necessary tools and expertise, governments can enhance the quality and reliability of production
data, facilitating more informed decision-making and resource management.

Addressing production discrepancies in Nigeria's mining sector requires a multi-faceted approach

that emphasizes formalization of ASM activities and enhancement of data collection methods.
By streamlining licensing procedures, providing technical assistance to miners, and building trust
with mining communities, governments can encourage compliance and transparency, leading to
more accurate production data and increased revenue generation. Similarly, leveraging advanced
technologies, strengthening collaboration with stakeholders, and investing in capacity building
for data collection personnel enhances the reliability and effectiveness of data collection efforts,
facilitating better governance and management of mineral resources. Through concerted efforts
to implement these strategies, Nigeria can unlock the full potential of its mining sector for
sustainable development and inclusive growth.

5.3.6. Strengthening Transparency and Accountability

Transparency and accountability are crucial pillars for ensuring the sustainable and responsible
management of Nigeria's mineral sector. By promoting transparency, stakeholders can access
crucial information about production data and revenue allocation, fostering trust and
accountability. Simultaneously, enhancing accountability mechanisms ensures that all actors
within the sector are held responsible for accurate reporting and ethical conduct.

Promoting Transparency:

Advocating for increased transparency in the mineral sector is essential for building trust and
confidence among stakeholders. One key aspect is ensuring public access to production data and
revenue allocation information. Transparency in production data allows for better monitoring of
extraction levels, ensuring that revenues generated from mineral resources are accurately
reported and allocated. Moreover, making revenue allocation information publicly available
enhances accountability by enabling citizens to hold government officials accountable for the
management of mineral revenues.

Implementing effective anti-corruption measures is another crucial step in promoting

transparency. Corruption poses a significant threat to transparency and accountability in the
mineral sector, leading to revenue leakage and mismanagement of resources. Therefore, robust
anti-corruption measures, including strict enforcement of anti-corruption laws and regulations,
are necessary to combat corrupt practices and promote integrity within the sector. Engaging in
open dialogues with stakeholders is also essential for promoting transparency. By involving
communities, civil society organizations, and industry stakeholders in decision-making
processes, governments can ensure that policies and regulations are developed and implemented
in a transparent and inclusive manner. Open dialogues facilitate information sharing, increase
public awareness, and build consensus on key issues affecting the mineral sector.

Enhancing Accountability:
Emphasizing the need to hold all actors accountable for accurate reporting and responsible
management of the mineral sector is essential for promoting integrity and sustainability.
Strengthening regulatory frameworks and enforcement mechanisms is crucial for holding mining
companies and operators accountable for compliance with laws and regulations. This includes
implementing stringent monitoring and inspection systems, conducting regular audits, and
imposing sanctions for non-compliance. Encouraging civil society participation and oversight
plays a vital role in enhancing accountability within the mineral sector. Civil society
organizations can serve as watchdogs, advocating for transparency, and holding governments
and companies accountable for their actions. Through public awareness campaigns, advocacy
efforts, and citizen engagement initiatives, civil society can contribute to greater accountability
and integrity in the management of mineral resources. Holding government authorities
accountable for efficient resource management is essential for ensuring that mineral revenues are
effectively utilized for the benefit of the country. Governments must be transparent in their
decision-making processes, accountable to the public, and subject to oversight mechanisms to
prevent mismanagement and corruption. This includes establishing independent oversight
bodies, such as parliamentary committees or ombudsman offices, to monitor government actions
and ensure compliance with laws and regulations (Hilson, 2020).
Strengthening transparency and accountability in Nigeria's mineral sector is essential for
promoting sustainable development, reducing corruption, and maximizing the benefits of mineral
resources for the country and its citizens. By promoting transparency through public access to
information, implementing effective anti-corruption measures, and engaging stakeholders in
open dialogues, Nigeria can build trust and confidence in the management of its mineral wealth.
Simultaneously, enhancing accountability through robust regulatory frameworks, civil society
participation, and government oversight mechanisms ensures that all actors within the sector are
held responsible for their actions and decisions.
Chapter Five delves into the critical issues of illegal mining and the smuggling of solid minerals
as pivotal factors exacerbating Nigeria's earnings and debt crisis. It systematically outlines how
unauthorized extraction and illicit trade practices undermine the nation's economic stability by
significantly reducing potential government revenue from the solid minerals sector. The chapter
draws on the work of scholars like Hilson (2002) and McQuilken and Hilson (2016), who have
documented the socio-economic and environmental ramifications of unregulated mining
activities in developing countries. Additionally, it highlights findings from Banchirigah (2008)
and Siegel and Veiga (2009), who explore the challenges and opportunities of formalizing
artisanal and small-scale mining to curb illegal activities. By illustrating the link between these
informal practices and Nigeria's financial instability, the chapter advocates for robust policy
reforms. It argues for the enforcement of stricter regulations, the enhancement of surveillance
and monitoring mechanisms, and the implementation of initiatives aimed at formalizing the
sector to harness its full economic potential. The chapter posits that such reforms could not only
mitigate the negative impacts of illegal mining and smuggling but also significantly improve
Nigeria's earnings from its rich solid minerals reserves, thereby contributing to a solution for the
ongoing earnings and debt crisis (World Bank, 2017; IMF, 2018).
 CHAPTER SIX

WEAK IMPLEMENTATION OF THE PRESIDENTIAL ARTISANAL GOLD MINING

INITIATIVE AND NIGERIA'S EXTERNAL RESERVES

The central objective of this chapter is to interrogate the weak implementation of the presidential
artisanal gold mining initiative and Nigeria’s external reserves. The Presidential Artisanal Gold
Mining Initiative (PAGMI) was introduced by the Nigerian government as a strategic effort to
harness the potential of the country's artisanal and small-scale gold mining sector. The initiative
aims to regulate the sector, improve environmental and occupational standards, and, importantly,
increase the contribution of artisanal gold mining to Nigeria's external reserves. However, the
implementation of PAGMI has faced numerous challenges that have significantly impacted its
effectiveness and the anticipated benefits to the nation's economy.

The weak implementation of PAGMI can be attributed to a variety of structural, operational, and
regulatory challenges. Among these is the lack of coordination among the various stakeholders
involved, including the government, local communities, and the miners themselves. This has
resulted in inefficiencies and inconsistencies in policy application across different regions.
Additionally, insufficient infrastructure and limited access to financing and modern mining
technology for artisanal miners have hindered the sector's development and its ability to
contribute significantly to Nigeria's external reserves. The regulatory framework underpinning
PAGMI has faced criticism for not being robust enough to address the myriad issues facing the
artisanal mining sector. This includes environmental degradation, child labor, and the illicit trade
of gold, which not only undermines the goals of the initiative but also affects Nigeria's reputation
in the global market. The lack of stringent enforcement of regulations has allowed these
problems to persist, further complicating efforts to integrate artisanal mining into formal
economic structures.

This chapter demonstrates using tables, figures and logical action/deduction, that weak
implementation of the presidential artisanal gold mining initiative impacted on the Nigeria’s
external reserves. Moreover, the initiative's impact on Nigeria's external reserves is contingent
upon the country's ability to increase gold production and sales within a regulated framework
that benefits the national economy. However, due to the weak implementation of PAGMI,
Nigeria has not fully capitalized on the economic opportunities presented by the artisanal gold
mining sector. This has implications for the country's external reserves, which are crucial for
stabilizing the economy, supporting the Nigerian Naira, and providing a buffer against external
shocks. What follows is a detailed analysis of the means that the weak implementation of the
presidential artisanal gold mining initiative impacted on the Nigeria’s external reserves.

6.1 Poor Establishment of Gold Refineries and Decrease in the Federation Component of
the Reserve

The Presidential Artisanal Gold Mining Initiative (PAGMI) in Nigeria represents a

transformative approach by the government to address challenges in the artisanal mining sector
while leveraging the potential of gold production for economic development. The objectives and
goals of PAGMI, as outlined by the Nigerian government, encompass a comprehensive strategy
aimed at formalizing artisanal gold mining, increasing government revenue, and bolstering the
nation's foreign exchange reserves. These objectives are designed to promote sustainable mining
practices, enhance transparency and accountability, and create opportunities for economic
diversification and poverty alleviation (Presidential Artisanal Gold Mining Initiative (PAGMI) -
NSIA, 2023). Formalizing artisanal gold mining is a key objective of PAGMI. By bringing
artisanal miners into the formal sector, the government aims to regulate and monitor their
activities, ensuring compliance with environmental, safety, and ethical standards. Formalization
also involves providing miners with access to training, technology, and support services to
improve productivity and efficiency. Through formalization, artisanal miners can transition from
informal, unregulated operations to legitimate businesses that contribute to the formal economy.
This process not only enhances the sector's credibility but also promotes responsible mining
practices and sustainable development (Presidential Artisanal Gold Mining Initiative (PAGMI) -
NSIA, 2023). Below is an image that shows people mining for gold and others.
Figure : People Mining for Gold
Source: Nigerian Sovereign Investment Authority (2022).

In addition to formalization, PAGMI seeks to increase government revenue by capturing a larger

share of the value generated from artisanal gold mining activities. By integrating artisanal miners
into the formal economy, the government can collect taxes, royalties, and other levies on gold
production, sales, and exports. This revenue stream contributes to national development
initiatives, infrastructure projects, and social welfare programs. Increased government revenue
from the gold sector can reduce reliance on external financing, support fiscal sustainability, and
enhance the government's capacity to provide essential services to its citizens (Everything You
Need to Know About the Presidential Artisanal Gold Mining Development Initiative (PAGMI) –
the Statehouse, Abuja, 2023).

Furthermore, PAGMI aims to bolster Nigeria's foreign exchange reserves through the purchase
and utilization of locally produced gold. By sourcing gold from artisanal miners and aggregators,
PAGMI supplies Good Delivery Gold Bars to the Central Bank of Nigeria for use as a reserve
instrument. This strategic approach diversifies the composition of foreign reserves, reduces the
country's dependence on imported gold, and strengthens economic stability. Bolstering foreign
exchange reserves through domestic gold production enhances the nation's financial resilience,
mitigates external shocks, and contributes to a more robust and sustainable economy (Owoeye,
2020).

Promoting responsible sourcing and sustainability is another critical goal of PAGMI. By

adhering to international standards such as the OECD Due Diligence Guidance and LBMA
certification requirements, PAGMI ensures that gold produced in Nigeria meets ethical,
environmental, and social criteria. Responsible sourcing practices not only enhance the
marketability of Nigerian gold but also promote ethical mining practices, community
engagement, and environmental stewardship. Sustainability considerations are integrated into
PAGMI's operations to ensure the long-term viability of artisanal mining activities and to create
positive social impacts in mining communities.

Moreover, PAGMI aims to create economic opportunities and alleviate poverty in artisanal
mining communities. By supporting the growth of artisanal mining operations, providing access
to markets, and enhancing productivity and efficiency, PAGMI stimulates economic activity, job
creation, and income generation. The initiative's holistic approach addresses structural and
institutional barriers that hinder the integration of artisanal miners into the formal economy. By
improving livelihoods, reducing poverty, and fostering sustainable development in mining
regions, PAGMI contributes to inclusive growth and economic empowerment at the grassroots
level (Presidential Artisanal Gold Mining Initiative (PAGMI) - NSIA, 2023).

We have seen that the objectives and goals of the Presidential Artisanal Gold Mining Initiative
(PAGMI) reflect a comprehensive and ambitious vision to transform the artisanal mining sector
in Nigeria. Through formalization, revenue generation, reserve accumulation, responsible
sourcing, and poverty alleviation efforts, PAGMI aims to harness the potential of artisanal gold
mining for sustainable development and economic prosperity. By aligning with international best
practices, engaging stakeholders, and prioritizing social and environmental considerations,
PAGMI seeks to position Nigeria as a responsible and competitive player in the global gold
market while improving the well-being of artisanal miners and mining communities (Lysenko &
Istomin, 2022).

Implementation Strategies:

The implementation strategies outlined in the Presidential Artisanal Gold Mining Initiative
(PAGMI) are crucial for achieving its goals of formalizing artisanal mining, increasing
government revenue, and bolstering Nigeria's foreign exchange reserves. In particular, the
strategies related to gold refining and reserve management play a significant role in realizing
these objectives. By establishing gold refineries, promoting formalization among artisanal
miners, and streamlining procedures for selling refined gold to the Central Bank of Nigeria
(CBN), PAGMI aims to enhance transparency, efficiency, and sustainability in the gold sector
while maximizing the economic benefits for the country (Owoeye, 2020).

One of the key strategies outlined in PAGMI is the establishment of gold refineries to process
artisanally mined gold to meet international standards. By refining gold to Good Delivery Bar
quality, PAGMI ensures that the gold produced in Nigeria is certified by reputable organizations
such as the London Bullion Market Association (LBMA). This certification not only enhances
the marketability of Nigerian gold but also facilitates its acceptance in major international
markets, thereby increasing the country's export potential and foreign exchange earnings. The
presence of local gold refineries strengthens Nigeria's position as a reliable and responsible gold
producer, attracting investment and fostering economic growth in the mining sector (La Hovary,
2014).

In addition to refining gold, PAGMI focuses on promoting formalization among artisanal miners
to improve compliance with regulations and standards. Formalization involves registering
artisanal mining operations, providing miners with legal recognition, and integrating them into
the formal economy (Presidential Artisanal Gold Mining Initiative (PAGMI) - NSIA, 2023). By
formalizing artisanal mining activities, PAGMI enhances transparency, accountability, and
governance in the sector, reducing illicit practices and promoting sustainable mining practices.
Formalized miners have access to training, technology, and support services that improve their
productivity, safety, and environmental stewardship, leading to increased efficiency and
profitability in gold production (Lefteratou, 2019)

Furthermore, PAGMI streamlines procedures for selling refined gold to the Central Bank of
Nigeria (CBN) through a Centralized Offtake and Supply System. This system ensures that all
gold produced by artisanal miners and aggregated by licensed buying centers and aggregators is
purchased by PAGMI for supply to the CBN (Presidential Artisanal Gold Mining Initiative
(PAGMI) - NSIA, 2023). By centralizing the off-take process, PAGMI simplifies the
transactional flow, reduces intermediaries, and minimizes opportunities for corruption and
leakage. The direct sale of refined gold to the CBN not only strengthens the country's foreign
exchange reserves but also enhances the transparency and traceability of gold sourcing, aligning
with responsible mining practices and ethical standards (Owoeye, 2020).

Moreover, PAGMI implements capacity-building initiatives to enhance the skills and knowledge
of artisanal miners in gold refining and reserve management. Training programs on responsible
mining practices, environmental conservation, occupational health and safety, and financial
literacy are provided to artisanal miners to improve their technical capabilities and business
acumen (Owoeye, 2020). By empowering miners with the necessary skills and expertise,
PAGMI enables them to operate more efficiently, sustainably, and profitably, contributing to the
overall success and sustainability of the artisanal mining sector.

Additionally, PAGMI collaborates with relevant stakeholders, including government agencies,

industry partners, and international organizations, to support the implementation of its strategies
for gold refining and reserve management. Partnerships with reputable gold testing and weighing
equipment manufacturers such as Thermofisher and Metler Toledo enhance the quality control
and assurance processes in gold refining operations (Owoeye, 2020). Engagement with financial
institutions, regulatory bodies, and industry associations facilitates the development of
supportive policies, regulations, and standards that promote responsible gold production and
trade. By fostering collaboration and coordination among stakeholders, PAGMI strengthens the
governance framework of the gold sector and ensures the effective implementation of its
initiatives.

The implementation strategies outlined in the Presidential Artisanal Gold Mining Initiative
(PAGMI) demonstrate a comprehensive and integrated approach to achieving its goals of
formalizing artisanal mining, increasing government revenue, and bolstering Nigeria's foreign
exchange reserves. By focusing on gold refining, formalization, and supply chain management,
PAGMI aims to enhance the competitiveness, sustainability, and transparency of the gold sector
while maximizing the economic benefits for the country. Through the establishment of gold
refineries, promotion of formalization among artisanal miners, streamlining of off-take
procedures, capacity-building initiatives, and stakeholder engagement, PAGMI paves the way
for a responsible, inclusive, and prosperous artisanal mining industry in Nigeria.
Challenges in Establishing Gold Refineries

Limited existing infrastructure poses a significant challenge in establishing gold refineries,

particularly in regions like Nigeria where the gold refining industry faces constraints due to
inadequate facilities and capacity (Owoeye, 2020). The current state of gold refining
infrastructure in Nigeria reveals a landscape characterized by a limited number of operational
refineries with constrained capacities. These refineries often operate below their full potential
due to various limitations, hindering the objectives of initiatives such as the Presidential
Artisanal Gold Mining Initiative (PAGMI) aimed at capturing and refining gold from artisanal
miners (Owoeye, 2020).

In Nigeria, the gold refining infrastructure is marked by a scarcity of operational refineries

equipped to handle the refining demands efficiently (Olujobi & Irumekhai, 2024). The existing
refineries in the country are predominantly small-scale operations with restricted refining
capacities. These facilities often struggle to operate at optimal levels due to technological
limitations and inadequate infrastructure support. The lack of modern equipment and processes
in these refineries further exacerbates the challenges faced by the industry, impacting the quality
and efficiency of gold refining processes (Olujobi & Irumekhai, 2024).

The limited capacity of existing refineries in Nigeria presents a significant hurdle in meeting the
refining needs of the gold mining sector. With only a few refineries operational in the country,
the processing capabilities fall short of the volume of gold ore produced by artisanal miners. This
capacity constraint leads to bottlenecks in the refining process, causing delays and inefficiencies
in the overall gold refining operations. Additionally, the technological constraints faced by these
refineries impede their ability to produce refined gold that meets international standards,
affecting the marketability of Nigerian gold on a global scale (Olujobi & Irumekhai, 2024).

Moreover, (Oladipo, 2023) described the infrastructure deficiencies in Nigeria's gold refining
sector contribute to the challenges faced by existing refineries. Issues such as unreliable power
supply, inadequate water resources, and logistical challenges further strain the operations of
refineries, impacting their productivity and operational costs. Regulatory hurdles add another
layer of complexity, with unclear or cumbersome regulations hindering the expansion and
growth of the refining industry in Nigeria.

The impact of the limited gold refining infrastructure in Nigeria extends to initiatives like
PAGMI, which aims to formalize and support artisanal gold mining activities in the country. The
lack of adequate refining capacity hampers PAGMI's objective of capturing and refining gold
from artisanal miners effectively. Artisanal miners, who form a significant part of the gold
mining sector, may face challenges in accessing refining services due to the limited number of
operational refineries and their constrained capacities. This limitation not only delays the
formalization process but also affects the quality control measures essential for ensuring the
purity and market acceptance of refined gold (Adekeye & Akintola, 2007).

Furthermore, the supply chain disruptions caused by the inadequate infrastructure in gold
refining pose obstacles to the seamless flow of gold from artisanal miners to refineries and
ultimately to the market. These disruptions can lead to inefficiencies, delays, and uncertainties in
the gold supply chain, impacting the overall growth and sustainability of the gold mining sector
in Nigeria. The missed economic opportunities resulting from the lack of infrastructure in gold
refining further underscore the importance of addressing these challenges to unlock the full
potential of Nigeria's gold mining industry (Adekeye & Akintola, 2007).

The limited existing infrastructure in Nigeria's gold refining industry presents a multifaceted
challenge that impedes the establishment of a robust and efficient refining sector. Addressing
these infrastructure deficiencies through investments in modernizing existing refineries, building
new facilities, and improving regulatory frameworks is essential to support initiatives like
PAGMI and drive the growth of the gold mining sector in Nigeria (Liman et al., 2021). By
overcoming these challenges, Nigeria can enhance its capacity for capturing, refining, and
adding value to gold production, contributing to economic development, job creation, and
sustainable growth in the country.

Financing and Investment Constraints:

Establishing gold refineries poses a significant challenge due to financing and investment
constraints, particularly in regions like Nigeria where the gold refining industry faces hurdles in
securing the necessary funding for new refinery projects. The financial and investment
challenges encountered in establishing gold refineries in Nigeria are multifaceted, encompassing
factors such as high capital costs, perceived risks associated with the industry, and limited access
to financing for such projects (Grotewold, 1967).

In Nigeria, the high capital costs involved in setting up a gold refinery present a major barrier to
entry for potential investors and entrepreneurs looking to venture into the gold refining sector.
The substantial investment required to acquire land, construct refinery facilities, purchase
machinery and equipment, and ensure compliance with regulatory standards can deter investors
from committing to such projects. The capital-intensive nature of establishing a gold refinery
necessitates significant financial resources, which may not always be readily available or
accessible to interested parties, especially in an environment where funding options are limited.
Moreover, the perceived risks associated with investing in the gold refining industry in Nigeria
contribute to the financing challenges faced by potential stakeholders. The volatile nature of the
global gold market, fluctuations in gold prices, regulatory uncertainties, and operational risks
inherent in the refining process can deter investors from committing funds to refinery projects.
The perceived risks associated with gold refining operations, including issues related to security,
environmental compliance, and market volatility, can make investors hesitant to allocate capital
to such ventures, further exacerbating the financing constraints in the sector.

Limited access to financing options for gold refinery projects in Nigeria compounds the
challenges faced by potential investors and entrepreneurs seeking to establish new refineries. The
lack of specialized financial institutions or investment vehicles catering to the needs of the gold
refining industry can restrict access to capital for refinery projects. Traditional lending
institutions may be reluctant to finance gold refinery ventures due to the perceived risks and
uncertainties associated with the sector, leading to a scarcity of funding sources for prospective
refinery operators (Grotewold, 1967).

Furthermore, the absence of supportive financial mechanisms, such as government-backed loans,

grants, or incentives tailored to the gold refining industry, hinders the ability of entrepreneurs to
secure the necessary funding for refinery projects. The lack of targeted financial support for gold
refinery initiatives limits the growth and expansion of the sector, constraining the development
of a robust refining infrastructure in Nigeria. Without adequate financial backing and investment
incentives, potential refinery operators may struggle to overcome the financial barriers to entry
and establish viable and sustainable refining operations (Hilson, 2020; Lambertini, 2023).

The financing and investment constraints in establishing gold refineries in Nigeria underscore the
need for innovative financing solutions, risk mitigation strategies, and supportive policies to
facilitate investment in the sector. Addressing the high capital costs through partnerships,
consortium arrangements, or public-private collaborations can help spread the financial burden
and reduce individual investment requirements for refinery projects. Implementing risk
management measures, such as insurance products tailored to the gold refining industry, can help
mitigate perceived risks and enhance investor confidence in financing refinery ventures
(Lambertini, 2023).

Additionally, enhancing access to financing through the development of specialized financial

instruments, venture capital funds, or industry-specific lending programs can provide alternative
funding sources for gold refinery projects. Creating a conducive regulatory environment,
offering incentives for investment in the gold refining sector, and promoting transparency and
accountability in the industry can attract investors and unlock financing opportunities for refinery
initiatives (Hook, 2019). By addressing the financing and investment constraints in establishing
gold refineries, Nigeria can foster a conducive environment for growth, innovation, and
sustainability in the gold refining industry, contributing to economic development and job
creation in the country.

Technical Expertise and Capacity:

Establishing gold refineries presents a significant challenge in terms of technical expertise and
capacity, as the efficient operation of such facilities requires specialized knowledge, skills, and
workforce capabilities (Singo et al., 2022). The need for technical expertise in gold refining is
crucial to ensure the quality, accuracy, and efficiency of the refining process, from the initial
stages of receiving raw materials to the final production of refined gold products. Addressing the
challenges related to technical expertise and capacity in establishing gold refineries involves
recognizing the importance of skilled personnel, implementing capacity building initiatives, and
bridging potential skills gaps to enhance the operational efficiency and competitiveness of
refinery operations.

The successful operation of gold refineries hinges on the availability of technical expertise to
oversee and manage the complex refining processes involved in transforming raw materials into
high-quality refined gold products. The specialized nature of gold refining necessitates a
workforce with in-depth knowledge of metallurgy, chemical processes, quality control standards,
and regulatory requirements specific to the industry (Landrigan et al., 2022). Recruiting and
retaining skilled professionals with expertise in gold refining techniques, equipment operation,
and process optimization is essential for ensuring the smooth functioning of refinery operations
and maintaining product quality standards (Singo et al., 2022).

Furthermore, the capacity of gold refineries to attract and retain qualified personnel with the
requisite technical skills and experience can be a significant challenge, particularly in regions
where the gold refining industry is still emerging or lacks a well-established talent pool. Skills
gaps related to specialized knowledge in gold refining processes, laboratory testing procedures,
and quality assurance protocols may hinder the efficient operation of refineries and limit their
ability to meet international standards and customer expectations. Addressing these skills gaps
through targeted training programs, knowledge transfer initiatives, and capacity building efforts
is essential to enhance the technical capabilities of refinery personnel and improve overall
operational performance (Singo et al., 2022).

Capacity building initiatives aimed at enhancing the technical expertise and skills of workforce
in the gold refining industry can play a crucial role in overcoming the challenges associated with
establishing and operating refineries. Investing in training programs, workshops, and
certification courses focused on gold refining technologies, best practices, and quality control
measures can help build a competent and knowledgeable workforce capable of meeting the
demands of the industry. Collaborating with educational institutions, industry associations, and
technical experts to develop specialized training modules and skill development programs
tailored to the needs of the gold refining sector can facilitate the transfer of technical know-how
and promote continuous learning among refinery personnel (Macháček et al., 2022).

Moreover, fostering a culture of innovation, continuous improvement, and knowledge sharing

within gold refineries can enhance the technical capabilities of the workforce and drive
operational excellence in refining processes. Encouraging cross-functional collaboration,
promoting professional development opportunities, and incentivizing employees to acquire new
skills and expertise can create a dynamic and skilled workforce capable of adapting to evolving
industry trends and technological advancements. By investing in the technical expertise and
capacity of personnel, gold refineries can enhance their competitiveness, ensure compliance with
quality standards, and position themselves for sustainable growth and success in the global
market (Rodríguez-Novoa & Holley, 2023).
Addressing the challenges related to technical expertise and capacity in establishing gold
refineries requires a strategic focus on recruiting, training, and retaining skilled professionals,
implementing capacity building initiatives, and fostering a culture of continuous learning and
innovation within refinery operations. By investing in the development of technical skills,
knowledge, and capabilities of the workforce, gold refineries can overcome operational
challenges, improve efficiency, and enhance the quality of refined gold products, ultimately
contributing to the growth and sustainability of the industry.

Impact on the Federation Component of External Reserves.

The impact of external reserves on the Federation component of Nigeria's economy is significant
and multifaceted. One crucial aspect to consider as suggested by Oladipo, (2023) is the role of
unrefined gold and its effect on export revenue, the Central Bank of Nigeria's (CBN) gold
purchases, and the broader implications for national economic stability (Oladipo, 2023).

Unrefined Gold and Lost Export Revenue:

The absence of adequate gold refining capacity in Nigeria has led to a situation where artisanal
miners often export unrefined gold through informal channels. This practice results in lost
potential for value addition and revenue generation. When gold is exported in its raw form, the
country misses out on the opportunity to add value through refining processes that could increase
the final product's market value. By refining gold domestically and exporting finished products,
Nigeria could capture a larger share of the value chain and generate more revenue from its
natural resources.

Reduced CBN Gold Purchases and Reserve Accumulation:

The limited availability of refined gold within the formal system poses challenges for the CBN's
ability to purchase gold from artisanal miners and accumulate gold reserves. Without a robust
domestic refining industry, the CBN may struggle to source enough refined gold to bolster its
reserves. This limitation can hinder the CBN's efforts to diversify its reserve assets and reduce
reliance on traditional foreign exchange holdings. As a result, the Federation component of the
external reserves, which includes foreign exchange assets managed by the CBN for the benefit of
the federal, state, and local governments, may not reach its full potential in terms of gold
reserves.
Negative Impact on National Economic Stability:
The declining Federation component of the external reserves, exacerbated by challenges related
to unrefined gold exports and limited CBN gold purchases, can have negative implications for
national economic stability. External reserves play a crucial role in supporting a country's
currency stability, facilitating international trade, and providing a buffer against external shocks.
A reduction in the Federation component of the external reserves could weaken Nigeria's ability
to withstand economic challenges, such as fluctuations in global commodity prices or currency
volatility. This, in turn, may affect the overall economic stability of the nation and its resilience
to external shocks.
Addressing the challenges related to unrefined gold exports, enhancing the domestic gold
refining industry, and improving the CBN's ability to purchase and accumulate gold reserves are
essential steps to strengthen the Federation component of Nigeria's external reserves. By
maximizing the value of its natural resources and bolstering its reserve assets, Nigeria can
enhance its economic stability and better position itself to navigate global economic
uncertainties.
Recommendations for Strengthening the PAGMI

From previous text, we can see that to strengthen the Presidential Artisanal Gold Mining
Initiative (PAGMI), several recommendations can be implemented to enhance its effectiveness
and sustainability. Public-Private Partnerships (PPPs) play a crucial role in facilitating the
establishment and operation of new gold refineries under PAGMI. By advocating for the
development of PPPs, the initiative can leverage private sector expertise and resources alongside
government support to overcome financing and technical challenges. PPPs enable the sharing of
risks and responsibilities between the public and private sectors, leading to more efficient project
implementation and sustainable operations. Through collaborative efforts, PPPs can drive
innovation, improve operational efficiency, and ensure the long-term viability of gold refineries
established under PAGMI (Adekeye & Akintola, 2007; Lambertini, 2023; Grotewold, 1967;
Bulmer, 2018; Uduu, 2022; & Hook, 2019).
In addition to PPPs, investment incentives and risk mitigation strategies are essential for
attracting private sector participation in gold refinery development under PAGMI. Specific
measures such as tax breaks, government guarantees, or technical assistance programs can
incentivize private investors to engage in the establishment and operation of gold refineries. Tax
incentives can reduce the financial burden on investors and enhance the attractiveness of gold
refinery projects, while government guarantees provide assurance against potential risks and
uncertainties (Hilson et al., 2022). Technical assistance programs offer valuable support in
addressing operational challenges, enhancing technical capabilities, and ensuring compliance
with industry standards. By implementing targeted investment incentives and risk mitigation
strategies, PAGMI can create a conducive environment for private sector investment in gold
refinery development, fostering economic growth and job creation in the mining sector (Hilson et
al., 2022).

Furthermore, capacity building for artisanal miners is crucial for strengthening PAGMI and
promoting responsible mining practices in the artisanal gold sector. Capacity building programs
play a vital role in enhancing the skills, knowledge, and capabilities of artisanal miners, enabling
them to improve their understanding of responsible mining practices, gold quality standards, and
the benefits of selling to formal channels. Training initiatives focused on proper mining and
processing methods, occupational health and safety practices, and environmental conservation
measures can empower artisanal miners to operate more efficiently, sustainably, and profitably.
Additionally, financial literacy programs can equip miners with the necessary skills to manage
their finances, access credit facilities, and make informed business decisions. By investing in
capacity building for artisanal miners, PAGMI can enhance the professionalism, productivity,
and sustainability of the artisanal mining sector, leading to improved livelihoods, reduced
environmental impact, and increased compliance with regulatory requirements.

The recommendations for strengthening the Presidential Artisanal Gold Mining Initiative
(PAGMI) through Public-Private Partnerships, investment incentives, and capacity building
initiatives are essential for enhancing the effectiveness and sustainability of the initiative
(Premium times, 2023). By advocating for the development of PPPs, PAGMI can leverage
private sector expertise and resources to overcome financing and technical challenges in
establishing new gold refineries. Investment incentives and risk mitigation strategies can attract
private sector participation in gold refinery development, while capacity building programs for
artisanal miners can improve their understanding of responsible mining practices and enhance
their technical and financial capabilities. By implementing these recommendations, PAGMI can
foster a conducive environment for private sector investment, promote sustainable mining
practices, and drive economic development in the artisanal gold sector in Nigeria.

Collaborative Approach for Sustainable Development

To strengthen the Presidential Artisanal Gold Mining Initiative (PAGMI) and promote
sustainable development in the gold refining sector, a collaborative approach involving multiple
stakeholders is essential. Advocating for a multi-stakeholder engagement model that includes the
government, private sector, civil society organizations, and artisanal mining communities can
significantly contribute to addressing the challenges faced in establishing gold refineries and
enhancing the effectiveness of the PAGMI initiative (Didham & Ofei-Manu, 2020). By
emphasizing the importance of collaboration, transparency, and shared benefits, stakeholders can
work together to foster responsible mining practices, promote ethical sourcing, and ensure that
the refining sector operates in a sustainable and socially responsible manner (Feyers et al., 2019).

In addition to fostering collaboration among stakeholders, it is crucial to consider long-term

sustainability factors when developing the gold refining sector under the PAGMI framework.
Encouraging the adoption of environmentally friendly refining technologies, promoting
responsible sourcing practices, and ensuring the equitable distribution of benefits within mining
communities are key aspects that can contribute to the long-term sustainability of the sector. By
integrating sustainability considerations into the planning and implementation of refining
activities, the PAGMI initiative can not only enhance its environmental performance but also
contribute to the social and economic well-being of artisanal mining communities (Didham &
Ofei-Manu, 2020).

Furthermore, the establishment of a robust monitoring and evaluation framework is

recommended to track the progress and effectiveness of the PAGMI initiative in achieving its
objectives (Wen & Zhang, 2022). This framework should focus on measuring key performance
indicators related to the establishment of refineries, the increase in formal gold purchases, and
the enhancement of the Federation component of external reserves. Additionally, the monitoring
and evaluation framework should take into account the environmental and social impacts of gold
refining activities, ensuring that the sector operates in a sustainable and responsible manner
(Afolayan et al., 2021).

By adopting a collaborative approach that emphasizes multi-stakeholder engagement, integrating

long-term sustainability considerations, and implementing a comprehensive monitoring and
evaluation framework, the PAGMI initiative can strengthen its efforts to develop a sustainable
and responsible gold refining sector in Nigeria. Through collective action and shared
commitment to responsible mining practices, stakeholders can work together to promote
transparency, ethical sourcing, and equitable distribution of benefits, ultimately contributing to
the sustainable development of the artisanal gold mining sector and the broader economy.

6.2 Non-establishment of Gold Buying Centers and Decrease in the Federal Government
Component of the Reserve

The Presidential Artisanal Gold Mining Development Initiative (PAGMI)

The Presidential Artisanal Gold Mining Development Initiative (PAGMI) is a strategic program
aimed at formalizing and enhancing the artisanal gold mining sector in Nigeria. One of the key
pillars of PAGMI is its specific focus on establishing a formal mechanism for purchasing gold
from artisanal miners through designated buying centers (PAGMI, 2020). The press release
emphasizes gold purchase as it is essential for several reasons:
Firstly, by setting up designated buying centers, PAGMI creates a structured and transparent
system for artisanal miners to sell their gold. This formal mechanism provides miners with a
reliable and regulated platform to trade their gold, ensuring fair pricing and reducing the risk of
exploitation or underpayment (PAGMI, 2020).
Secondly, the focus on gold purchase under PAGMI helps to streamline the supply chain of
artisanally mined gold. By centralizing the purchasing process through designated buying
centers, PAGMI can efficiently aggregate and process the gold before supplying it to the Central
Bank of Nigeria. This centralized approach enhances traceability and accountability in the gold
supply chain, promoting responsible sourcing practices. Furthermore, the establishment of
designated buying centers under PAGMI facilitates the implementation of quality control
measures. By standardizing the evaluation and grading of artisanally mined gold, PAGMI can
ensure that only gold meeting specified quality standards is purchased and processed. This
quality assurance mechanism not only enhances the value of the gold produced but also
contributes to the credibility and market acceptance of Nigerian artisanal gold (PAGMI, 2020).
Moreover, the focus on gold purchase through designated buying centers enables PAGMI to
support and empower artisanal miners economically. By providing a formal avenue for selling
their gold, miners can access fair market prices, secure payment for their produce, and improve
their livelihoods. This direct engagement with artisanal miners through buying centers also
presents opportunities for capacity building, training, and knowledge transfer to enhance mining
practices and productivity (PAGMI, 2020).
The emphasis on gold purchase through designated buying centers is a critical component of the
Presidential Artisanal Gold Mining Development Initiative (PAGMI). By establishing a formal
mechanism for purchasing gold from artisanal miners, PAGMI promotes transparency,
accountability, and responsible sourcing practices in the artisanal gold sector. This focused
approach not only strengthens the gold supply chain but also empowers artisanal miners, fosters
economic development, and contributes to the sustainable growth of Nigeria's mining industry.

Non-establishment of Gold Buying Centers: Reasons and Consequences.

The delayed or incomplete implementation of the establishment of gold buying centers under the
Presidential Artisanal Gold Mining Development Initiative (PAGMI) can be attributed to various
multifaceted reasons (Nuapia, Chimuka, and Cukrowska, 2018). Analyzing these factors
provides insights into the challenges that may have hindered the planned rollout or full
implementation of buying centers across targeted areas. Some of the key reasons for the delay or
incomplete implementation include:

1. Logistical Challenges: Establishing and operating buying centers in remote mining locations
present significant logistical challenges. These challenges may include inadequate infrastructure
such as roads, electricity, and water supply, which are essential for the smooth functioning of
buying centers. Additionally, security concerns in remote areas, including the risk of theft,
vandalism, or conflict, can further complicate the establishment of buying centers. Addressing
these logistical challenges requires substantial planning, investment, and coordination to ensure
the effective operation of buying centers in remote mining locations (Obasi, et al. 2012).

2. Financial Constraints: Government budgetary constraints or delays in allocating resources can

impede the timely establishment and operationalization of buying centers under PAGMI.
Insufficient funding for infrastructure development, equipment procurement, staff salaries, and
operational expenses may hinder the progress of setting up buying centers. Limited financial
resources may also restrict the capacity of the government to invest in the necessary resources
and support systems required for the successful operation of buying centers (Odoh, et al., 2012).

3. Bureaucratic Hurdles: Complex administrative procedures, licensing requirements, and

approval processes can create bureaucratic hurdles that delay the establishment and management
of buying centers. Obtaining the necessary permits, licenses, and regulatory approvals for setting
up buying centers may involve navigating through a maze of bureaucratic red tape, which can
prolong the implementation timeline. Streamlining administrative processes and enhancing
coordination between relevant government agencies are essential to overcome bureaucratic
hurdles and expedite the establishment of buying centers (Okeke, 2021).

4. Stakeholder Coordination Issues: Insufficient collaboration and communication between

government agencies, local communities, and potential investors can impede progress in setting
up buying centers. Effective stakeholder coordination is crucial for aligning interests, addressing
concerns, and mobilizing support for the establishment of buying centers. Lack of coordination
among stakeholders may lead to conflicting priorities, misunderstandings, or resistance to the
initiative, thereby slowing down the implementation process. Building strong partnerships,
fostering dialogue, and enhancing stakeholder engagement are essential for overcoming
coordination issues and ensuring the successful establishment of buying centers (Nuapia, et al,
2018).
In addressing the logistical challenges, financial constraints, bureaucratic hurdles, and
stakeholder coordination issues is essential to overcome the reasons for the delayed or
incomplete implementation of gold buying centers under PAGMI. By identifying and mitigating
these factors, the initiative can enhance its effectiveness, accelerate the establishment of buying
centers, and promote the formalization and sustainable development of the artisanal gold mining
sector in Nigeria.

Consequences of Non-established Buying Centers:

Nwosa, (2017), looked at the consequences of the delayed or incomplete establishment of gold
buying centers under the Presidential Artisanal Gold Mining Development Initiative (PAGMI)
can have significant negative impacts on the artisanal gold mining sector and the overall
objectives of the initiative toward external reserves on Economic growth in Nigeria. Some of the
key consequences of non-established buying centers discussed include:

1. Persistence of Informal Markets: Without official buying centers, artisanal miners may
continue to sell their gold through informal channels, such as local traders or middlemen. This
persistence of informal markets can lead to several negative outcomes, including the
underestimation of national gold production. The lack of official data on artisanal gold
production hinders accurate monitoring and assessment of the sector's contribution to the
economy. Additionally, selling gold through informal channels may result in miners receiving
lower prices for their produce, leading to income disparities and exploitation within the sector
(Nwosa, 2017).

2. Discouragement of Formalization:
The absence of readily accessible and trustworthy buying options can discourage artisanal miners
from participating in the formalization process under PAGMI. Formalization is essential for
improving mining practices, enhancing transparency, and promoting responsible sourcing in the
artisanal gold sector. However, without established buying centers that offer fair prices, reliable
payment mechanisms, and adherence to quality standards, miners may be reluctant to engage
with the formalization process. This reluctance can hinder the overall effectiveness of PAGMI in
achieving its objectives of integrating artisanal mining activities into the formal economy
(Nwosa, 2017).

3. Reduced Government Revenue:

The delayed or incomplete establishment of gold buying centers deprives the government of
potential revenue from taxes, royalties, and foreign exchange earnings. Formalizing the artisanal
gold mining sector through PAGMI is not only aimed at promoting responsible sourcing and
sustainable practices but also at maximizing government revenue from the sector. By purchasing
gold formally from artisanal miners, the government can generate income through taxes,
royalties, and the accumulation of foreign reserves. The absence of established buying centers
limits the government's ability to capture this revenue stream, thereby impacting its fiscal
sustainability and economic development efforts (Nwosa, 2017).

The consequences of non-established buying centers under PAGMI highlight the importance of
expediting the establishment of formal purchasing mechanisms for artisanal gold. Addressing
these consequences requires urgent action to establish transparent, efficient, and accessible
buying centers that incentivize miners to participate in the formalization process. By mitigating
these negative impacts, PAGMI can enhance its effectiveness in promoting sustainable
development, maximizing government revenue, and fostering responsible practices in the
artisanal gold mining sector.

Impact on the Federal Government's External Reserves

External reserves, also known as foreign exchange reserves, refer to the assets held by a
country's central bank in foreign currencies, gold, Special Drawing Rights (SDRs), and other
reserve assets (Abdu, 2013). These reserves play a crucial role in supporting the stability of a
nation's economy and are essential for facilitating international trade and investment. In the
context of Nigeria, external reserves are managed by the Central Bank of Nigeria (CBN) and
serve as a buffer against external shocks, ensuring the country's ability to meet its international
financial obligations and maintain a stable exchange rate.

Chen (2013) examined the significance of how external reserves for Nigeria cannot be
overstated. These reserves act as a form of insurance, providing the country with a financial
cushion to weather economic uncertainties and external pressures. By holding a sufficient level
of reserves, Nigeria can instill confidence in foreign investors, creditors, and trading partners,
demonstrating its ability to honor financial commitments and maintain a stable economic
environment. Additionally, external reserves play a vital role in supporting the value of the
national currency, as they can be used to intervene in the foreign exchange market to stabilize
exchange rates and prevent excessive currency depreciation. One of the primary functions of
external reserves according to Nawab (2016) is to ensure liquidity in times of crisis or economic
downturn. By holding reserves in foreign currencies, Nigeria can access funds to address balance
of payments deficits, repay external debt, and mitigate the impact of external shocks such as
fluctuations in commodity prices or global financial instability (Elom et al., 2018). This liquidity
provides the government with the flexibility to respond to economic challenges and maintain
macroeconomic stability (Nawab, 2016). Furthermore, external reserves play a crucial role in
supporting international trade. As a net importer of goods and services, Nigeria relies on foreign
exchange reserves to facilitate trade transactions, pay for imports, and maintain the country's
external competitiveness. Adequate reserves enable Nigeria to meet its import obligations,
support domestic industries, and ensure a steady supply of essential goods and services.
Additionally, external reserves can be used to build confidence in the stability of the Nigerian
economy, attracting foreign investment and promoting economic growth (Ogbuene et al 2023).
External reserves are a vital component of Nigeria's economic infrastructure, serving as a
safeguard against external risks, supporting currency stability, and facilitating international trade.
By maintaining adequate reserves and managing them prudently, Nigeria can enhance its
economic resilience, promote investor confidence, and ensure sustainable growth and
development.

Table 3: Distribution of Mineral Titles (SSML) across Cooperatives, Individuals & Companies

# States No of No of No of No of Total
Cooperatives Cooperatives individuals individuals Numbers
with SSML with SSML and and of SSML
for Gold for other companies companies
Minerals with SSML with SSML
for Gold for
Minerals

1 Abia 0 0 0 14 14

2 Adamawa 0 3 8 25 36

3 Akwa-Ibom 0 0 0 7 7
4 Anambra 0 14 0 23 37

5 Bauchi 0 5 5 73 83

6 Bayelsa 0 0 0 0 0

7 Benue 0 2 0 40 42

8 Borno 0 0 0 0 0

9 Cross River 0 4 0 27 31

10 Delta 0 6 0 22 28

11 Ebonyi 0 - - - -

12 Edo 0 3 0 43 46

13 Ekiti 0 13 0 8 21

14 Enugu 0 2 0 9 11

15 FCT 0 0 0 13 13

16 Gombe 0 3 0 17 20

17 Imo 0 2 0 26 28

18 Jigawa 0 4 0 6 10

19 Kaduna 0 10 15 235 260

20 Kano 0 3 0 94 97

21 Katsina 0 5 19 15 39

22 Kebbi 1 0 16 18 35

23 Kogi 0 4 11 55 70

24 Kwara 0 0 8 20 28

25 Lagos 0 0 0 11 11

26 Nasarawa 0 3 10 94 107

27 Niger 4 0 80 32 116
 28 Ogun 0 3 1 56 60

29 Ondo 0 7 0 6 13

30 Osun 0 2 27 32 61

31 Oyo 0 1 14 86 101

32 Plateau 0 3 0 80 83

33 Rivers 0 0 0 10 10

34 Sokoto 0 3 1 7 11

35 Taraba 0 0 2 45 47

36 Yobe 0 0 0 8 8

37 Zamfara 3 5 39 10 57

8 110 256 1267 1641

The data on SSML in the State was not listed

Expected Role of PAGMI in Boosting Reserves:

The Presidential Artisanal Gold Mining Initiative (PAGMI) in Nigeria holds significant potential
to contribute to an increase in the federal government's external reserves if fully implemented
and successful. PAGMI aims to formalize and regulate the artisanal gold mining sector in
Nigeria, providing a structured framework for artisanal miners to operate legally and sustainably.
By leveraging the benefits of PAGMI, the federal government could enhance its external
reserves through increased official gold purchases, improved transparency and traceability in the
gold trade, and the diversification of reserve assets (Abiola, A.G. & Adebayo, F.O. 2013).

Increased Official Gold Purchases:

One of the key ways in which PAGMI could boost the federal government's external reserves is
through increased official gold purchases. By establishing formal buying centers under PAGMI,
the government could directly purchase gold from artisanal miners at fair market prices. This
would not only provide a reliable source of gold for the government but also incentivize miners
to sell their gold through legal channels, thereby increasing official gold holdings. The
accumulation of gold through official purchases would contribute to the growth of the country's
external reserves, adding a valuable asset to the reserve portfolio.

Improved Transparency and Traceability:

Formalization through PAGMI would bring about enhanced transparency and traceability in the
gold trade. By creating a structured system for artisanal miners to sell their gold, PAGMI could
reduce illicit activities and smuggling in the sector (Eze, 2019). Improved transparency would
instill confidence in Nigeria's gold exports, making them more attractive to international buyers
and investors. This increased credibility in the gold trade could lead to higher foreign exchange
inflows from gold exports, ultimately bolstering the country's external reserves. Additionally, the
establishment of clear supply chains and documentation processes under PAGMI would ensure
that the origin and authenticity of Nigerian gold are verifiable, further enhancing the market
reputation of Nigerian gold. (Alasanl, & Shaib, 2011)

Diversification of Reserves:
Another significant impact of PAGMI on the federal government's external reserves would be
the diversification of reserve assets. By increasing official gold holdings through PAGMI,
Nigeria could diversify its reserve portfolio beyond traditional foreign exchange assets.
Diversification is essential for reducing the risks associated with over-reliance on a single
reserve asset, such as foreign currencies. Gold is considered a valuable reserve asset due to its
intrinsic value, stability, and ability to act as a hedge against economic uncertainties. Therefore,
by incorporating gold into its reserve holdings through PAGMI, Nigeria could strengthen the
resilience of its external reserves and enhance overall financial stability (Amassoma, D. 2016).
The successful implementation of PAGMI has the potential to significantly contribute to an
increase in the federal government's external reserves. Through increased official gold purchases,
improved transparency and traceability in the gold trade, and the diversification of reserve assets,
PAGMI could play a vital role in enhancing Nigeria's external reserves and promoting economic
stability and growth. By leveraging the benefits of PAGMI, Nigeria can harness the value of its
gold resources to strengthen its financial position and support sustainable development.
Impact of Non-established Buying Centers:
The non-establishment of gold buying centers as part of the Presidential Artisanal Gold Mining
Initiative (PAGMI) in Nigeria represents a significant shortcoming that could have contributed to
the decline in the federal government's external reserves. By failing to capture gold from
artisanal miners through formal channels, PAGMI missed out on revenue opportunities, hindered
the diversification of reserves, and potentially created negative perceptions that could impact
investor confidence and, consequently, the country's external reserves (Benigno, G. & Fornaro).

Lost Revenue Opportunities:

One of the primary impacts of not establishing gold buying centers under PAGMI is the loss of
revenue opportunities for the government. Artisanal gold mining represents a significant
economic activity in Nigeria, with a considerable portion of gold production occurring
informally and outside the formal sector. Without designated buying centers, the government
misses out on the opportunity to purchase gold from artisanal miners at fair prices, thereby losing
potential revenue that could have been generated through official gold sales. This lack of revenue
inflow limits the pool of resources available for inclusion in the external reserves, reducing the
government's capacity to strengthen its financial position and support economic stability
(Benigno, G. & Fornaro, 2012).

Missed Diversification Opportunity:

The absence of established buying centers as part of PAGMI also results in a missed opportunity
for diversifying the country's reserves through increased official gold holdings. Gold is a
valuable reserve asset known for its stability and ability to act as a hedge against economic
uncertainties (Eze et al., 2019). By not facilitating the formal purchase of gold from artisanal
miners, PAGMI fails to leverage the potential benefits of incorporating gold into the reserve
portfolio. Diversification is crucial for reducing risks associated with over-reliance on a single
reserve asset, such as foreign currencies (PAGMI, 2020). The failure to diversify reserves
through increased official gold holdings limits the government's ability to strengthen the
resilience of its external reserves and mitigate potential economic shocks (Boboye, L. & Ojo, M.
2012).
Potential Negative Perception:
Gomes et al., (2014) discussed the non-establishment of gold buying centers under PAGMI
could also lead to negative perceptions regarding the government's management of the gold
sector. Incomplete implementation of PAGMI raises concerns about the government's capacity to
effectively regulate and formalize artisanal gold mining activities. This lack of progress may
create doubts among investors and stakeholders about the government's commitment to
transparency, accountability, and sustainable resource management. Such negative perceptions
could deter foreign investors, undermine confidence in the national economy, and have indirect
implications for the country's external reserves. Reduced investor confidence may lead to capital
outflows, currency depreciation, and overall economic instability, all of which can impact the
level and stability of external reserves (PAGMI, 2020).

The failure to establish gold buying centers as part of PAGMI represents a significant
shortcoming that could have contributed to the decline in the federal government's external
reserves. By missing out on revenue opportunities, hindering diversification efforts, and
potentially creating negative perceptions that impact investor confidence, the non-establishment
of buying centers under PAGMI highlights the importance of effective implementation and
oversight in maximizing the initiative's potential benefits for Nigeria's economy and external
reserves.
6.3 Inadequate Environmental Sustainability Measures and Reduction in the CBN
Component of the Reserve

Environmental Concerns Associated with Informal Artisanal Gold Mining

The burgeoning concern over inadequate environmental sustainability measures and the
concomitant reduction in the Central Bank of Nigeria (CBN) component of the reserve
necessitates a critical examination of the environmental impacts of informal artisanal gold
mining. Foremost among these concerns is the rampant deforestation and land degradation
attributed to artisanal mining activities (Mohsin, et al., 2021). Artisanal gold mining operations
often entail the clearing of large swathes of forest, leading to significant deforestation. This
unchecked deforestation not only disrupts vital ecosystems but also contributes to the loss of
biodiversity and habitat destruction. Furthermore, the resultant land degradation exacerbates soil
erosion and diminishes soil fertility, adversely impacting agricultural productivity in affected
regions.
Moreover, the cumulative effects of deforestation and land degradation from artisanal gold
mining activities contribute to the alarming phenomenon of desertification, particularly in
vulnerable areas. Desertification poses grave threats to local communities, exacerbating food
insecurity, water scarcity, and socio-economic instability.

Water Pollution:
The repercussions of unregulated gold mining on environmental sustainability and the stability of
the CBN reserve are starkly evident in the widespread water pollution it causes. At the heart of
this issue lies the improper disposal of mining waste, which includes highly toxic chemicals like
mercury and cyanide. As these substances are carelessly discarded, they infiltrate water sources,
contaminating them with alarming efficiency.

The impact of this contamination is most acutely felt by local communities that rely on these
water sources for various aspects of their livelihood. The water becomes unfit for consumption,
posing serious health risks to those who depend on it for drinking and sanitation purposes.
Additionally, agricultural activities suffer as irrigation from polluted sources leads to crop
damage and reduced yields. The consequences extend beyond immediate health concerns to
broader socioeconomic implications, threatening food security and economic stability in affected
regions.

Furthermore, the long-term consequences of water pollution from unregulated gold mining
cannot be understated. Persistent contamination disrupts ecosystems, causing irreversible
damage to aquatic life and biodiversity. This not only undermines the natural balance of these
environments but also poses significant challenges to their recovery and restoration.
Economically, the continued degradation of these regions jeopardizes their long-term viability,
perpetuating a cycle of environmental decline and economic hardship. Addressing these issues
necessitates comprehensive action, including the implementation of stringent regulations on
mining practices, the development of effective waste management strategies, and active
engagement with local communities in sustainable resource management efforts. Failure to
address the water pollution resulting from gold mining not only compromises environmental
sustainability but also undermines the integrity of the CBN reserve. It underscores the imperative
of recognizing and addressing the interconnectedness of economic and environmental concerns
in crafting effective and sustainable policies.

Air Pollution:
Artisanal gold mining activities pose a significant threat to environmental sustainability, with air
pollution emerging as a primary concern. The process of extracting gold from ore involves
various activities that release pollutants into the atmosphere. Dust generated from mining
operations contains harmful particles like silica, which can cause respiratory issues when inhaled
(Irefin & Yaaba, 2012). Additionally, the burning of mercury, often used in gold extraction,
releases toxic vapors into the air. These pollutants not only pose immediate health risks but also
have long-term consequences. Exposure to mining-related air pollution can lead to respiratory
problems such as coughing, shortness of breath, and chronic conditions like bronchitis.
Moreover, the fine particles present in mining dust can penetrate deep into the lungs, increasing
the risk of developing serious lung diseases like pneumoconiosis and pulmonary fibrosis.
Furthermore, mercury exposure through air pollution poses a significant threat, particularly to
neurological health. Mercury is known to be neurotoxic, causing cognitive impairment, tremors,
and developmental delays, especially in children.
The impact of air pollution from artisanal gold mining extends beyond human health to
agricultural production and overall environmental health. Airborne pollutants can settle on crops
and soil, contaminating them with harmful substances and reducing agricultural productivity.
Contaminated soil may hinder plant growth and lead to decreased crop yields, impacting food
security and livelihoods. Moreover, air pollution can disrupt ecosystems and harm biodiversity,
leading to long-term environmental degradation and ecological imbalances (Omolade &
Ngalawa, 2016).

2.2. Inadequate Environmental Sustainability Measures in PAGMI

Inadequate Environmental Sustainability Measures in the Presidential Artisanal Gold Mining
Initiative (PAGMI) highlight various systemic challenges. Firstly, weaknesses in environmental
regulations exacerbate the situation (Solomon &Fidelis, 2018). Existing regulations often fail to
adequately address the unique challenges posed by artisanal gold mining. Specific regulations
tailored to this sector are lacking, leaving a regulatory gap that allows for environmentally
harmful practices to persist. Moreover, enforcement mechanisms are weak, and monitoring
compliance is challenging due to limited governmental capacity. Additionally, many artisanal
miners lack awareness and understanding of environmental regulations, further hindering their
implementation. Without robust regulations and effective enforcement, environmental
sustainability in artisanal gold mining remains compromised.

Furthermore, the limited environmental integration within PAGMI is a significant concern.

While PAGMI aims to formalize and regulate artisanal gold mining for economic development,
its approach to environmental protection is often secondary. Environmental sustainability should
be considered a core objective alongside economic goals. However, the current framework lacks
sufficient emphasis on environmental safeguards and technical assistance for miners to adopt
sustainable practices. There are apparent gaps in training, technology, and resources dedicated to
mitigating environmental damage caused by artisanal gold mining under the PAGMI initiative.
Without prioritizing environmental integration and providing necessary support, PAGMI risks
exacerbating environmental degradation in mining communities (Ejeh and Orokpo, 2019).

Lastly, the lack of stakeholder engagement further hampers efforts to address environmental
concerns in artisanal gold mining. Engaging stakeholders, including local communities,
environmental NGOs, and technical experts, is crucial for developing and implementing
sustainable mining practices (Ibientan and Ekhosuehi, 2013). Collaborative efforts can lead to
the co-creation of effective solutions that consider local contexts and community needs.
Community awareness campaigns and education programs play a vital role in fostering
responsible mining practices and environmental stewardship among artisanal miners. Without
meaningful stakeholder engagement, initiatives like PAGMI may overlook critical perspectives
and fail to address the root causes of environmental degradation in artisanal gold mining
communities. Therefore, prioritizing stakeholder engagement is essential for promoting
environmental sustainability in the PAGMI framework and beyond.

2.3. Environmental Impact on CBN Gold Purchase and External Reserves

According to Olalekan et al. (2016), the Central Bank of Nigeria's (CBN) gold purchase
program, particularly through the Presidential Artisanal Gold Mining Development Initiative
(PAGMI), faces significant reputational risks due to environmental concerns associated with
artisanal gold mining. The environmental impact of PAGMI gold production could tarnish
Nigeria's image internationally, inviting scrutiny and potentially damaging the country's
reputation. International pressure may mount, particularly from countries and organizations
advocating for ethically sourced gold, urging the CBN to address environmental sustainability in
its gold acquisition practices. Negative publicity surrounding the environmental footprint of
PAGMI gold could erode investor confidence and deter foreign direct investments in Nigeria.
Maintaining trust and credibility in international markets necessitates demonstrating responsible
sourcing practices, underscoring the importance of environmental compliance within the
artisanal gold mining sector.

Furthermore, Onwualu (2016) argued that environmental concerns may impede the CBN's ability
to acquire gold efficiently and contribute to its reserves, potentially undermining the objectives
of the gold purchase program. Stringent environmental requirements or negative perceptions
regarding unsustainable mining practices could deter some artisanal miners from participating in
the program, reducing the pool of available gold for acquisition by the CBN. Additionally, the
possibility of international sanctions or restrictions on gold imports linked to environmental
concerns looms large, further complicating the acquisition process. Ensuring environmental
compliance within the artisanal gold mining sector is paramount to maintaining a reliable source
of gold for the CBN's reserves. By addressing environmental sustainability concerns and
promoting responsible mining practices, the CBN can mitigate reputational risks, secure a stable
supply of gold, and uphold Nigeria's standing in the international community.

6.4 Lack of Investments in Infrastructure and Percentage Decline Nigeria’s Foreign

Reserves

2. Lack of Infrastructure Investment and Its Impact:

The lack of infrastructure investment in Nigeria poses significant challenges to the effective
implementation of the Presidential Artisanal Gold Mining Initiative (PAGMI) and the broader
development of the artisanal gold mining sector. Specifically, transportation infrastructure
deficiencies present major obstacles to the sector's growth and sustainability (Uche, 2019). In
key mining areas, poor road conditions severely hinder the efficient transport of equipment and
extracted gold. The unpaved and often impassable roads not only slow down transportation but
also increase the risk of accidents and damage to equipment, leading to operational disruptions
and additional costs for miners. Moreover, the seasonal variations in weather conditions
exacerbate the road challenges, with heavy rainfall causing flooding and erosion, further
deteriorating the road infrastructure. These poor road conditions not only impede the movement
of goods but also limit access to essential services, such as healthcare and education, for mining
communities, highlighting the broader impact of inadequate transportation infrastructure on local
development. Additionally, the lack of reliable and affordable transportation options in these
areas impacts production costs and access to markets for artisanal miners (Africa Minerals
Governance Framework, 2017). They often rely on informal and costly transportation methods,
such as hiring trucks or motorcycles, to transport their equipment and gold, leading to increased
operational expenses and reduced profitability. The absence of efficient transportation services
not only raises costs but also limits miners' ability to reach buyers, processing facilities, or
government-designated gold buying centers, affecting their income and overall contribution to
the formal economy. The reliance on informal transportation channels exposes miners to risks
such as theft, extortion, and delays, further undermining the sustainability and security of their
operations. Addressing these transportation infrastructure deficiencies is crucial to unlocking the
sector's growth potential, improving operational efficiency, and enhancing the socio-economic
impact of artisanal gold mining on local communities and the national economy. Investing in
road rehabilitation, expanding transportation networks, and promoting affordable and secure
transportation options are critical steps towards overcoming these challenges and fostering a
conducive environment for the formalization and growth of artisanal gold mining in Nigeria
(Africa Mining Vision, 2009).

Energy Infrastructure:
The lack of infrastructure investment in Nigeria extends beyond transportation to energy
infrastructure, presenting significant challenges to the artisanal gold mining sector and the
successful implementation of the Presidential Artisanal Gold Mining Initiative (PAGMI).
Inadequate access to electricity stands out as a critical issue, hindering the sector's ability to
utilize efficient processing equipment and impacting miners' livelihoods. The unreliable power
supply limits the operational hours of mining activities, leading to inefficiencies in gold
extraction and processing. Artisanal miners often resort to diesel generators or other costly
alternatives to power their operations, increasing production costs and reducing profitability.
Moreover, the reliance on fossil fuels for energy-intensive mining activities not only contributes
to environmental concerns, such as air pollution and carbon emissions but also poses long-term
sustainability challenges for the sector. The use of fossil fuels not only exacerbates
environmental degradation but also exposes miners to health risks associated with pollution
exposure (Ango, 2019).
Additionally, the fluctuating prices of fossil fuels can lead to unpredictable operational costs,
further impacting the economic viability of artisanal gold mining operations. Addressing these
energy infrastructure challenges is essential to enhancing the sector's productivity, sustainability,
and socio-economic impact. Investing in reliable and sustainable energy sources, such as
renewable energy technologies, can not only reduce operational costs and environmental impact
but also improve the overall resilience of artisanal gold mining activities. By promoting access to
clean energy solutions and supporting the adoption of energy-efficient practices, policymakers
can create a more conducive environment for the formalization and growth of the artisanal gold
mining sector in Nigeria. Efforts to enhance energy infrastructure will not only benefit artisanal
miners by improving their working conditions and economic prospects but also contribute to the
broader development goals of the country, fostering sustainable and responsible mining practices
that align with global environmental standards (Atimati, 2019).

Communication Infrastructure:
The inadequate investment in communication infrastructure in Nigeria poses significant
challenges to the artisanal gold mining sector, impacting the effective implementation of the
Presidential Artisanal Gold Mining Initiative (PAGMI) and hindering the sector's development.
One of the key issues is the lack of reliable internet connectivity, which hampers communication
with relevant authorities, access to markets, and information sharing among stakeholders in the
artisanal gold mining value chain. The unreliable internet service in mining areas limits miners'
ability to engage with government agencies, report operational challenges, or seek assistance,
thereby impeding regulatory compliance and access to support services. Furthermore, the
absence of consistent internet connectivity hinders market access for artisanal miners, restricting
their ability to connect with buyers, negotiate prices, and access market information crucial for
decision-making. This lack of digital connectivity not only isolates miners from broader market
dynamics but also undermines their competitiveness and bargaining power in the gold supply
chain (Azobu and Jayeola, 2019).
Additionally, the inefficiency of communication channels within mining communities further
exacerbates the information gap and limits knowledge dissemination about responsible mining
practices and available support programs (Banerjee, 2015). The limited access to communication
tools such as mobile phones, radios, or community notice boards restricts the dissemination of
critical information on safety protocols, environmental regulations, and training opportunities,
hindering miners' capacity to adopt sustainable and responsible mining practices. The lack of
effective communication channels also impedes the coordination of community-led initiatives,
cooperative efforts, and knowledge-sharing platforms essential for enhancing the social and
environmental sustainability of artisanal gold mining operations.
Addressing these communication infrastructure deficiencies is crucial for promoting
transparency, enhancing governance, and fostering inclusive participation in the artisanal gold
mining sector. Investing in reliable internet connectivity, expanding mobile network coverage,
and establishing community communication hubs can facilitate information exchange, empower
miners with relevant knowledge, and strengthen collaboration among stakeholders. By
improving communication infrastructure, policymakers can bridge the information gap, promote
responsible mining practices, and enhance the socio-economic impact of artisanal gold mining
on local communities and the broader economy. Efforts to enhance communication infrastructure
will not only facilitate better engagement with authorities and markets but also empower
artisanal miners with the tools and resources needed to operate sustainably and contribute to the
formalization and growth of the sector in Nigeria (Centre for Energy, Petroleum and Mineral
Law and Policy, 2020).

Impact on PAGMI.
The inadequacies in communication infrastructure in Nigeria have a profound negative impact on
the successful implementation of the Presidential Artisanal Gold Mining Initiative (PAGMI),
undermining its objectives and hindering the formalization and sustainable growth of the
artisanal gold mining sector (Ansa et al., 2021). These infrastructure gaps play a significant role
in discouraging formalization among artisanal miners, as the perceived high operational costs
and logistical difficulties associated with poor communication networks deter miners from
transitioning to formal mining practices. The lack of reliable internet connectivity and efficient
communication channels within mining communities creates barriers to compliance with
regulatory requirements, access to market information, and engagement with government
agencies, impeding the formalization process envisioned by the PAGMI initiative. Moreover, the
communication infrastructure deficiencies hinder efficient gold processing and value addition in
artisanal mining operations, limiting the sector's export potential and reducing government
revenue from gold exports.

The inability to communicate effectively with buyers, investors, and regulatory bodies due to
poor connectivity disrupts the supply chain, delays production timelines, and compromises the
quality and quantity of gold output, ultimately impacting the sector's contribution to the national
economy. Additionally, the limited reach and effectiveness of capacity-building programs and
support services for artisanal miners further exacerbate the challenges faced by small-scale
miners in adopting responsible mining practices and accessing essential training and resources.
The lack of reliable communication channels restricts the dissemination of information on safety
protocols, environmental regulations, and technical skills development, hindering the capacity-
building efforts essential for enhancing the productivity, sustainability, and socio-economic
impact of artisanal gold mining activities (Arthur-Holmes, 2022).
These communication infrastructure gaps not only impede the progress of the PAGMI initiative
but also undermine the overall development potential of the artisanal gold mining sector in
Nigeria. Addressing these challenges through targeted investments in communication
infrastructure, such as expanding internet connectivity, establishing community communication
hubs, and providing training on digital literacy, is crucial for overcoming the barriers to
formalization, enhancing operational efficiency, and promoting responsible mining practices
among artisanal miners. By improving communication networks and facilitating information
exchange, policymakers can strengthen the foundation for sustainable growth, foster inclusive
participation, and maximize the socio-economic benefits of artisanal gold mining for local
communities and the broader economy. Efforts to bridge the communication infrastructure gaps
will not only support the objectives of the PAGMI initiative but also contribute to the long-term
development and transformation of the artisanal gold mining sector in Nigeria (Asori et al.,
2022).

3. Foreign Reserve Decline and Linkages.

Foreign reserves play a crucial role in the economic stability and resilience of a country like
Nigeria. These reserves consist of foreign currency assets held by the central bank and are
essential for maintaining currency stability, supporting international trade, and mitigating
external shocks. Nigeria's foreign reserves serve as a buffer to ensure the smooth functioning of
the economy by providing liquidity in times of need, facilitating international transactions, and
instilling confidence in the domestic currency (Aydin et al., 2021). These reserves are a key
indicator of a country's ability to meet its external obligations and manage economic risks
effectively.
In recent years, Nigeria has experienced a decline in its foreign reserves, raising concerns about
the country's economic vulnerability and financial stability. Data shows a downward trend in the
level of foreign reserves, with various factors contributing to this decline. One significant factor
is the volatility in global commodity prices, particularly oil, which has a substantial impact on
Nigeria's foreign exchange earnings due to its heavy reliance on oil exports. The fluctuations in
oil prices have led to a reduction in export revenues, affecting the inflow of foreign currency
reserves into the country. Additionally, Nigeria's current account deficit, resulting from
imbalances between imports and exports, has put pressure on the foreign reserves, further
contributing to their decline (Baddianaah et al., 2022).

The recent decline in Nigeria's foreign reserves is a matter of concern as it has implications for
the country's economic stability and ability to withstand external shocks. A dwindling level of
reserves can weaken the value of the local currency, leading to exchange rate volatility and
inflationary pressures. Moreover, a reduced buffer of foreign reserves limits the central bank's
capacity to intervene in the foreign exchange market to stabilize the currency and maintain
external balance. The issues discussed in the lack of infrastructure investment, particularly in the
context of the artisanal gold mining sector and the weak implementation of the Presidential
Artisanal Gold Mining Initiative (PAGMI), indirectly contribute to the decline in Nigeria's
foreign reserves. The inadequate infrastructure in the mining sector hampers the formalization of
artisanal mining activities, leading to revenue leakages, tax evasion, and illicit financial flows
that can impact the country's foreign exchange earnings. The lack of efficient communication
channels and technological tools in the mining communities limits the transparency and
traceability of gold production, affecting the accurate reporting of export revenues and
potentially reducing the inflow of foreign currency reserves (Conti et al., 2016).

Furthermore, the weak implementation of PAGMI due to infrastructure gaps in the artisanal gold
mining sector hinders the sector's potential contribution to export earnings and foreign reserves.
The lack of proper infrastructure investment in the mining communities limits the productivity
and efficiency of gold processing and value addition, reducing the sector's export potential and
diminishing the foreign exchange inflows. Additionally, the limited reach and effectiveness of
capacity-building programs and support services for artisanal miners impede the sector's growth
and formalization, leading to a suboptimal utilization of the country's natural resources and
hindering the generation of foreign exchange reserves (Dorleku et al., 2018).
The decline in Nigeria's foreign reserves reflects the challenges facing the economy, including
external vulnerabilities and structural deficiencies. Addressing the issues related to infrastructure
investment, particularly in the artisanal gold mining sector, is essential to enhance the sector's
productivity, promote formalization, and boost export earnings, thereby contributing to the
replenishment and sustainability of Nigeria's foreign reserves. Efforts to strengthen
infrastructure, improve governance, and enhance the regulatory framework in the mining sector
can help mitigate the indirect linkages between the lack of infrastructure investment and the
decline in foreign reserves, fostering economic growth and stability in Nigeria (Foster et al.,
2013a).

Reduced Gold Exports: The decline in Nigeria's foreign reserves, exacerbated by inefficient
gold production and limited export potential in the artisanal mining sector, has led to reduced
gold exports, contributing to a shortfall in foreign exchange earnings. The lack of adequate
infrastructure, including processing facilities, transportation networks, and technology, hampers
the efficiency and productivity of gold production in artisanal mining communities. As a result,
the country's ability to extract, process, and export gold at optimal levels is compromised,
leading to lower revenues from gold exports and a diminished contribution to foreign reserves
(Khan, 2009).
The inefficiencies in gold production, exacerbated by infrastructure limitations, not only impact
the volume of gold exports but also affect the quality and value of the exported gold. Without
proper processing facilities and technology, artisanal miners may resort to informal and
rudimentary methods of gold extraction, resulting in lower purity levels and reduced market
value for the gold produced. This, in turn, diminishes the potential earnings from gold exports
and limits the inflow of foreign currency reserves into the country (Mohsin, 2021).

Increased Reliance on Imports: Moreover, the challenges in attracting investments and

fostering growth in the artisanal mining sector due to infrastructure gaps can lead to increased
reliance on imports of minerals and related equipment as have been discussed by Lamare and
Singh (2017). The lack of adequate infrastructure, such as access roads, power supply, and
processing plants, deters potential investors from engaging in the sector and limits the sector's
capacity to expand and modernize. As a consequence, artisanal miners may resort to importing
essential mining equipment, machinery, and inputs, increasing the demand for foreign currency
to finance these imports (Lamare, and Singh, 2017).

The increased reliance on imports of minerals and related equipment not only strains Nigeria's
foreign exchange reserves but also exacerbates the trade imbalance by inflating the import bill.
The lack of domestic production capacity and self-sufficiency in the mining sector due to
infrastructure limitations further widens the trade deficit, putting additional pressure on the
country's foreign reserves. This heightened dependence on imports for mining activities
underscores the importance of addressing infrastructure gaps and promoting investment in the
artisanal mining sector to enhance domestic production, reduce import reliance, and bolster
foreign exchange earnings (Zeng, S, 2011).
The inefficiencies in gold production, limited export potential, and infrastructure gaps in the
artisanal mining sector have direct implications for Nigeria's foreign reserves. The reduced gold
exports resulting from these challenges, coupled with the increased reliance on imports of
minerals and equipment, underscore the urgent need to address infrastructure limitations and
promote investment in the mining sector. By enhancing infrastructure, fostering growth in
artisanal mining, and reducing import dependence, Nigeria can strengthen its export capacity,
boost foreign exchange earnings, and contribute to the replenishment and sustainability of its
foreign reserves.

Summarily, the weak implementation of the Presidential Artisanal Gold Mining Initiative
(PAGMI) significantly undermines its potential to enhance Nigeria's external reserves, reflecting
a missed opportunity in leveraging the artisanal gold mining sector for economic stabilization
and growth. Despite the initiative's objectives to regulate the sector, foster environmental and
occupational standards, and integrate artisanal miners into the formal economy, persistent
challenges such as inadequate coordination among stakeholders, insufficient infrastructure, and a
lax regulatory framework have impeded progress. These shortcomings not only restrict the
sector's contribution to the nation's economy but also exacerbate issues like environmental
degradation, illegal trading, and social injustices within the mining communities. Consequently,
the initiative's ineffectual execution hampers Nigeria's ability to capitalize on its gold resources,
thereby affecting the augmentation of its external reserves, which are vital for economic
resilience and sustainable development. Addressing these challenges with a robust and
comprehensive strategy is imperative to realize the full potential of the artisanal gold mining
sector and its contribution to Nigeria's external reserves.
 CHAPTER SEVEN

SUMMARY, CONCLUSION AND RECOMMENDATIONS

7.1 Summary
This study interrogated the impact of artisanal mining on the import-export deficit of Nigeria,
leading to a debt crisis that has plagued the economy of the country. The research eloquently
described the background settings of the problematique in Chapter One. The first chapter offers a
comprehensive exploration of the mining sector, focusing on artisanal mining's role within the
broader spectrum of mining activities, its impact on economies, particularly in Nigeria, and the
regulatory and environmental challenges it presents. Mining, a critical process for extracting
precious minerals and geological elements from the Earth, significantly contributes to global
economic advancement by supplying raw materials for industry, technology, and infrastructure.
Mining methods vary, with surface mining preferred for resources near the Earth's surface and
underground mining for those deep below. Artisanal mining, characterized by small-scale,
informal operations using rudimentary techniques, contrasts sharply with large-scale, industrial
mining in terms of scale, technology, and environmental impact. While artisanal mining supports
local economies and provides livelihoods where conventional employment opportunities are
scarce, it often suffers from environmental degradation, unsafe working conditions, and legal
challenges.

In Nigeria, artisanal mining is a substantial economic activity with a notable impact on several
states known for their mineral resources. This sector, driven by economic necessity, engages in
the extraction of various minerals without sophisticated technology. Despite its economic
contributions, artisanal mining in Nigeria is plagued by environmental issues, safety hazards, and
legal non-compliance, mirroring challenges faced globally by such activities. Efforts towards
formalization and regulation aim to mitigate these challenges, yet the sector remains largely
informal, with significant regulatory hurdles inhibiting a transition to safer, more
environmentally friendly practices.

The narrative extends to discuss the government's stance towards artisanal mining and the
broader implications for Nigeria's economy. The informalization of artisanal mining, driven by
weak regulatory frameworks and inadequate enforcement, presents a complex challenge with far-
reaching social and economic effects. Attempts at formalization, including the establishment of
regulatory bodies and initiatives aimed at supporting artisanal miners, highlight the government's
recognition of the sector's significance. Nonetheless, these efforts often fall short due to a myriad
of obstacles including limited access to capital, poor infrastructure, and persistent environmental
issues.
The chapter concludes by delving into the broader economic context in Nigeria, highlighting the
intricate relationship between artisanal mining and the country's revenue generation. Despite the
potential for mining to bolster government revenues through taxes, royalties, and levies, the
predominance of informality in the sector hampers these efforts, exacerbating Nigeria's economic
challenges. The excessive reliance on oil revenue, coupled with mismanagement and corruption,
further complicates the revenue crisis. This analysis underscores the critical need for
comprehensive regulatory frameworks that encompass both formal and informal mining
operations, to enhance revenue generation and support economic stability. Arising, therefore,
from this established epistemic lacuna, the study investigates the broad problematique of revenue
crisis in Nigeria within the context of state (in)formalization (parallel existence of formality and
informality) of artisanal mining, by raising the following specific questions for critical
investigation:

1. Is the parallel existence of formality and informality in artisanal mining implicated in Nigeria's
solid minerals export-import deficit?

2. Have illegal mining and smuggling of solid minerals worsened Nigeria's earnings and debts
crisis?

3. Has weak implementation of the Presidential Artisanal Gold Mining Initiative (PAGMI)
undermined the attainment of its goal of increasing Nigeria's external reserves?

From the above questions, the study’s specific objectives were outlined thus, to:

1. Examine how the parallel existence of formality and informality in artisanal mining is
implicated in Nigeria's solid minerals export-import deficit.
2. Interrogate how illegal mining and smuggling of solid minerals worsened Nigeria's earnings
and debts crisis.
3. Ascertain how the weak implementation of the Presidential Artisanal Gold Mining Initiative
(PAGMI) undermined the attainment of its goal of increasing Nigeria's external reserves.

The study's relevance/significance to the intellectual community and policymakers at various

levels of decision-making was outlined, with the Nigerian government and several states as the
main benefactors outside academia.
Chapter Two reviewed the literature extensively. Scholarship includes literature reviews to
examine what academics and research institutes have done on the problem or issues under
examination. This chapter critically reviewed relevant literature on key topics from the title and
research questions. This chapter critically examines researchers' viewpoints in existent literature
as they impact the topic matter under investigation, based on key themes. These themes are:

1. (In)formality in Artisanal Mining and Nigeria's Solid Minerals Export-import Deficit

2. Illegal Mining & Smuggling of Solid Minerals and Nigeria's Earnings/Debts Crisis
3. Weak Implementation of the Presidential Artisanal Gold Mining Initiative (PAGMI) and
Nigeria's External Reserves.

Chapter Three addressed itself to the methodological underpinnings and preferences of the study.
The study is premised on the Regulatory Non-compliance Theory (RNT) as propounded by
Elffers, Heijden and Hezemans in 2003. The theory aided a proper grasp of the essence of the
study, wherein the Mining Act of 2007 that formalized ASM also introduced some regulations in
artisanal economic activities such as formation of mining cooperative and quarrying associations,
obtainment of mining license and lease and the automatic criminalization of artisanal mining
undertaken outside these provisions and regulations. Another of the theory’s proposition is that
non-compliance to regulatory frameworks and established official operational modalities is
facilitated by perceived inequity, limited detectability, minimal anticipated penalties, and the
absence of social coercion. The parallel existence of formality and informality in artisanal
mining is first and foremost an acknowledgement of non-compliance. Furthermore, the restricted
capacity to detect unlawful mining and smuggling operations enables their persistence, posing a
challenge for regulatory agencies to adequately identify and combat these activities. Moreover,
the small expected penalties for failing to comply with regulations exacerbate the continuation of
these illicit activities, since wrongdoers may see the prospective repercussions as inadequate to
dissuade their behaviour.

Chapter Four is the first of the three empirical chapters (others being chapters five and six),
dedicated to data presentation, analysis and discussions using qualitative content analysis. In this
chapter, the first hypothesis was subjected to the crucible of validation through rigorous content
analysis of data. To this, the chapter focused on exploring the complex interplay between the
informal practices prevalent in artisanal mining and the resulting impact on Nigeria's solid
minerals export-import deficit. It aims to critically examine how the largely unregulated and
informal sector of artisanal mining, characterized by small-scale operations and the use of
rudimentary techniques, contributes to or exacerbates the country's challenges in balancing its
solid minerals trade. Despite the potential for solid minerals to significantly bolster Nigeria's
economy, the dominance of informal mining practices poses substantial hurdles. These include
environmental degradation, safety risks, legal non-compliance, and a lack of official oversight,
which collectively hinder the sector's efficiency and its contribution to national revenue. The
topic seeks to unravel the underlying causes of the export-import deficit within the solid minerals
sector, emphasizing the need for a regulatory framework that can formalize artisanal mining
operations, ensure environmental and safety standards, and unlock the sector's economic
potential by improving Nigeria's trade balance in solid minerals.

Chapter Five sought to validate the study’s second hypothesis. To this, the chapter delves into
the critical issues of illegal mining and smuggling of solid minerals as pivotal factors influencing
Nigeria's fiscal health, specifically examining their impact on the country’s earnings and
exacerbating the debt crisis. Illegal mining and the resultant smuggling of solid minerals not only
deprive the Nigerian government of substantial revenue through uncollected taxes and royalties
but also undermine the formal economy, exacerbating the already precarious balance of trade and
contributing to a wider economic deficit. The illicit nature of these activities complicates efforts
to regulate and harness the full potential of Nigeria's abundant solid mineral resources, which
could otherwise offer a significant buffer against the volatility of oil prices that the country
heavily relies on. This scenario feeds into the broader narrative of Nigeria's fiscal challenges,
where the loss of potential earnings from solid minerals intensifies the debt crisis, compelling the
government to increase borrowing to meet its financial obligations. The chapter, thus,
underscores the need for stringent regulatory frameworks, enhanced enforcement mechanisms,
and international cooperation to curb illegal mining and smuggling, aiming to improve Nigeria's
revenue generation and mitigate its debt predicament.

Chapter Six focused on confirming and validating the study’s last hypothesis through a
systematic presentation and a qualitative content analysis of data. The chapter investigated the
consequences of the weak implementation of the Presidential Artisanal Gold Mining Initiative
(PAGMI) on Nigeria's external reserves, highlighting a missed opportunity in strengthening the
country's economic buffers. Launched with the intent to formalize and boost the artisanal mining
sector, particularly gold mining, PAGMI aimed to reduce illegal mining and smuggling, increase
government revenue through taxes and royalties, and enhance foreign exchange earnings by
bolstering the country’s gold reserves. However, the initiative's lackluster execution has resulted
in suboptimal outcomes, failing to significantly impact Nigeria's external reserves. This
ineffectiveness stems from a variety of challenges, including inadequate regulatory frameworks,
limited infrastructure, lack of access to finance for artisanal miners, and persistent illegal
activities. The chapter emphasizes that the failure to fully capitalize on PAGMI not only
undermines the potential diversification of Nigeria’s economy away from oil dependence but
also weakens its external reserves. These reserves are crucial for maintaining currency stability
and managing economic shocks, implying that the initiative’s underperformance could
exacerbate vulnerabilities in Nigeria’s financial health and overall economic resilience.

7.2 Conclusion
The examination of (in)formality in artisanal mining and its impact on Nigeria's solid minerals
export-import deficit reveals critical insights into the challenges and opportunities within the
sector. Chapter 4 underscores the importance of official recognition and regulation of Artisanal
and Small-scale Mining (ASM) to mitigate Nigeria’s solid minerals deficit. The lack of
formalization contributes significantly to the country’s inability to harness its solid mineral
wealth, exacerbating the trade deficit. Unregistered artisanal miners' operations elude the formal
economy, leading to a significant undervaluation of solid mineral imports. Furthermore, the
prevalence of black market transactions undermines the total value of solid mineral exports, as
the country fails to capture the full economic value of its natural resources. Tax avoidance
practices among artisanal miners and the inefficacy of the national gold purchase programme
further compound these issues, highlighting the systemic weaknesses in policy implementation
and regulatory oversight.
In addressing the ramifications of illegal mining and smuggling of solid minerals, the study
delves into how these activities aggravate Nigeria's earnings and debts crisis. The exploration of
illegal mining sites in selected states illustrates a direct correlation with the decrease in Nigeria’s
average total earnings, as significant potential revenue is lost to illicit activities. The smuggling
of precious metals intensifies the country's overall national debt, as the evasion of taxes and
royalties deprives the government of crucial income streams. Discrepancies between official and
actual productions indicate a profound governance challenge, leading to increased allocations of
income to debt servicing. This cycle not only strains Nigeria's fiscal health but also impedes
sustainable economic growth.
The poor establishment of gold refineries and the non-establishment of gold buying centers
directly contribute to a decrease in both the federation and the federal government components of
the reserve. Moreover, inadequate environmental sustainability measures and a lack of
investments in infrastructure significantly reduce the Central Bank of Nigeria (CBN) component
of the reserve. These shortcomings highlight a missed opportunity for Nigeria to bolster its
external reserves through a well-managed artisanal gold mining sector. The failure to effectively
implement PAGMI not only undermines efforts to formalize the sector and improve
environmental practices but also impacts the country’s ability to build a robust economic buffer
against external shocks.

The persistent issues of informality, illegal mining, smuggling, and the underwhelming
implementation of PAGMI paint a complex picture of missed opportunities and challenges.
Addressing these issues requires a concerted effort from the government, industry stakeholders,
and communities to develop comprehensive policies that encourage formalization, ensure
environmental sustainability, and promote economic development. By tackling the root causes of
these challenges, Nigeria can harness its solid mineral wealth to improve its trade balance,
enhance government revenue, reduce dependency on external debt, and build a more resilient
economy.

7.3 Recommendations
In the light of the above findings, therefore, the study has put forward the following
recommendations for policy implementation:

1. The government should prioritize the formalization of Artisanal and Small-scale Mining
(ASM) through the establishment of a clear regulatory framework that facilitates the easy
registration of artisanal miners and their operations. This framework should include
simplified, accessible processes that encourage miners to operate within the formal
sector, coupled with incentives such as access to financing, technical support, and market
information. Furthermore, implementing a robust monitoring and enforcement
mechanism to curb illegal mining and smuggling activities is crucial. Strengthening
cross-border collaboration and employing advanced technology for surveillance and
tracking of mineral outputs can significantly mitigate these activities. Enhanced
transparency and accountability mechanisms, such as blockchain technology, could be
adopted to trace the origin and transaction history of minerals, reducing the prevalence of
black-market transactions and tax avoidance practices.
2. Targeted interventions aimed at increasing the sector's contribution to the economy are
necessary. This includes investing in infrastructure development that supports mining
activities, such as transportation and processing facilities, to improve the sector's
efficiency and output quality. Establishing a comprehensive national gold purchase
program, with competitive pricing and transparent operations, could incentivize artisanal
miners to sell their gold through official channels, thereby increasing government
revenue. Policy measures should also focus on enhancing the value chain of solid
minerals through the development of local refining capacities and the promotion of value-
added exports, which can lead to higher earnings and job creation. Fiscal policies should
be reevaluated to ensure a fair, yet incentivizing tax regime for miners and investors,
aiming to maximize government revenue without discouraging participation in the formal
economy.

3. Long-term commitment to responsible mining practices and substantial investments in

community development. Policies should mandate environmental impact assessments and
the implementation of sustainable mining practices by artisanal miners, supported by
training and capacity building programs. The government, in partnership with private
stakeholders, should invest in the establishment of eco-friendly gold refineries and
buying centers strategically located near mining sites to reduce logistical challenges and
environmental impact. Infrastructure development, including access to clean water,
renewable energy sources, and safe mining equipment, should be part of an integrated
approach to improving the sector's sustainability. By taking these comprehensive steps,
Nigeria can leverage its artisanal mining sector as a catalyst for economic growth,
environmental sustainability, and social development, thereby enhancing its solid
minerals sector's contribution to national development and economic resilience.