Nigeria’s artisanal and small-scale mining (ASM) sector is a paradox of potential and peril. It is a main income source for a number of communities in Nasarawa and Plateau states, where ASM has become a major rural non-farm activity. Despite its significant contributions to livelihoods and the economy, the sector remains largely informal, hindering its growth and the nation’s ability to attract substantial investment. 

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Nearly all unlawful mining activities occur in the ASM, which is primarily composed of family-run, artisanal businesses that lack the necessary safety precautions, equipment, and regulations to protect their employees. The minimal or non-existent use of mechanisation frequently distinguishes them. This industry covers the extraction of industrial minerals, raw materials for building, and valuable minerals, including gold, silver, and gemstones. Even though small-scale miners are not very productive, their relative output can have a significant impact on local communities, families, and even some national economies.  The ASM sector employs thousands who might otherwise struggle to find formal work, enabling them to meet basic needs, including education and healthcare for their families. However, this sector must be more structured and organised to become a safe enterprise.

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The ASM Landscape in Nigeria

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Artisanal and small-scale mining contributes over 70% of Nigeria’s mining activities, directly employing around 500,000 people and indirectly supporting millions. The sector currently consists of 393 registered ASM cooperatives, representing 4,663 miners.

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Source: NEITI

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The key legislation guiding artisanal mining in Nigeria is the Minerals and Mining Act 2007, backed by the Minerals and Mining Regulations 2011. Oversight falls to the Ministry of Mines and Steel Development through its Artisanal and Small-Scale Mining Department (ASSMD), which supports miners and facilitates access to the Solid Mineral Development Fund. Under the Act, small-scale mining leases must cover between five acres and three-square kilometres. Leaseholders are required to rehabilitate mined areas and pay a rehabilitation fee tied to their profits. In 2023 alone, approximately 790 small-scale mining licences were issued out of a total of 2,833 licences. By complying with the regulations, artisanal miners can drive sustainable development, protect the environment, and improve local livelihoods.

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Source: NEITI

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Nigeria’s ASM sector remains critical to economic development, but is hampered by deep-rooted informality. Many operations are unregistered, leading to tax evasion, unsafe working conditions, and widespread environmental degradation, including land erosion, deforestation, and contaminated groundwater. The absence of formal structures discourages investment as investors seek regulatory clarity and stability. Beyond environmental concerns, the sector faces challenges such as bureaucratic hurdles, insecurity linked to illegal mining, child labour, and limited access to finance.

Bridging these gaps will require coordinated efforts from government, communities, and private stakeholders to design practical policies that encourage formalisation. Strengthening the sector could safeguard the environment and public health, and transform ASM into a driver of sustainable economic growth.

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Challenges Impeding Formalisation

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• Regulatory and Bureaucratic Hurdles

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The process surrounding obtaining mining licences in Nigeria remains complex and costly, discouraging many artisanal miners from formalising their operations. Under the Nigerian Minerals and Mining Act of 2007, small-scale miners are required to obtain a lease from the Ministry of Mines and Steel Development. Beyond fees, applicants must submit a pre-feasibility study, proof of capital, technical competence, and site coordinates. While miners are encouraged to form cooperatives to share costs, this approach does not fully address the structural barriers faced by poor communities. Further complicating matters, frequent policy changes and disputes between federal and state governments over resource control create uncertainty for operators and investors alike. These regulatory hurdles have made formalisation difficult, limiting the sector’s potential for structured growth and responsible investment.

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• Insecurity and Illegal Activities

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Illegal mining operations continue to be a major threat to Nigeria’s mining sector, resulting in significant annual revenue losses of $9 billion. Beyond the economic impact, illegal mining activities have been linked to the financing of militant groups and the escalation of insecurity, particularly in mineral-rich regions. Despite government efforts to clamp down on illegal operations, including the deployment of mining marshals and collaborations with security agencies, enforcement remains weak. Corruption within regulatory and security bodies often undermines crackdowns, allowing illegal activities to persist. 

Moreover, poor data management, limited surveillance technology, and a lack of local community engagement further hinder effective monitoring and control. The unchecked growth of illegal mining deprives the government of crucial revenue and deters legitimate investors from seeking stable, regulated environments.

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• Child Labour and Exploitation

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Child labour remains a serious concern within Nigeria’s artisanal and small-scale mining sector, particularly in mineral-rich regions like Nasarawa State. Reports have revealed that children as young as six work under hazardous conditions in unregulated lithium mines. These young workers endure long hours for little pay, sacrificing their education and facing severe health risks from exposure to toxic substances and unsafe environments. Although Nigeria’s legal framework, including the Child Rights Act and Labour Act, prohibits child labour and mandates compulsory education, enforcement remains weak, especially in remote and poorly monitored mining communities.

Corruption, limited resources, and the isolated nature of many mining sites further complicate government intervention efforts. As a result, many vulnerable families see child labour as a necessary means of survival. Without stronger enforcement, community engagement, and targeted social interventions, the cycle of child exploitation in Nigeria’s mining sector is likely to persist, undermining long-term development goals.

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• Poverty and Low Formal Financing

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Poverty is a major driver of informal mining in Nigeria, as many individuals turn to artisanal and small-scale mining to make a living due to limited economic opportunities. A critical barrier to formalisation is the lack of access to affordable financing, which prevents miners from upgrading equipment and adopting safer practices. Many small-scale miners rely on predatory lenders for supplies, forcing them to sell minerals below market value and trapping them in a cycle of poverty and dependence. Strengthening access to formal credit would enable miners to invest in better equipment, participate in broader markets, and achieve greater economic stability. Although the Nigerian government has committed $30 million to support small and medium-sized enterprises (SMEs) as part of its poverty reduction drive, accessing these funds remains difficult for artisanal miners, who often lack formal documentation or credit histories required by financial institutions.

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Bridging the Gap

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• Streamlining Licensing Processes and Adequate Regulatory Oversight

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Simplifying Nigeria’s mining licensing process is vital to formalising artisanal operations. The Nigeria Economic Summit Group (NESG) recommends decentralising licensing powers, giving states greater authority to approve applications and oversee mining activities. Currently, governance is highly centralised, creating delays and weak oversight. 

In response, the federal government recently revoked 924 dormant mining titles to curb license racketeering and attract legitimate investors, offering new licences on a “first come, first served” basis with tax incentives and profit repatriation benefits. NESG’s report further suggests that full state control over artisanal mining licences could streamline processes, strengthen environmental monitoring, and boost transparency in mineral sales. Meanwhile, enforcing environmental regulations and training on sustainable practices remain crucial to reducing the harmful effects of mining. Supporting miners with access to proper equipment would also encourage safer and more responsible operations across Nigeria’s growing artisanal mining sector.

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• Tackling Insecurity

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Tackling insecurity linked to illegal mining is critical for restoring order and boosting investor confidence in Nigeria’s mining sector. The government has intensified enforcement efforts, arresting numerous unlicensed miners, including foreign nationals, and seizing large volumes of illegally extracted minerals. These operations involve coordinated action from soldiers, police forces, and the newly formed corps of mining marshals, specifically tasked with securing mining areas. The primary goal is to disrupt unauthorised mining activities that fuel insecurity and deprive the government of billions in lost revenue annually. However, sustaining these efforts will require more than force; building intelligence networks, engaging mining communities, and strengthening judicial processes to prosecute offenders are equally essential. By combining security operations with community-based surveillance and legal reforms, Nigeria can better combat illegal mining, reduce the funding streams for militant groups, and create a safer environment for legitimate mining investments.

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• Combating Child Labour

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Addressing child labour in Nigeria’s artisanal and small-scale mining sector demands a comprehensive, multi-pronged strategy. Strict enforcement of existing labour laws must be combined with proactive community education to raise awareness about the dangers and long-term consequences of child exploitation. Equally important is creating alternative livelihoods for families and expanding access to affordable, quality education, which can reduce the economic pressure that drives children into mining activities. While the government has taken steps, such as deploying mining marshals to monitor mining sites and revising legal frameworks to strengthen child protection, the effectiveness of these initiatives remains uncertain without consistent implementation and sustained funding. Collaborating with local leaders, NGOs, and international partners will build trust within mining communities and promote behavioural change. By investing in long-term solutions, Nigeria can break the cycle of poverty and exploitation that perpetuates child labour in the mining sector.

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• Financial Support and Capacity Building

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Access to finance remains one of the most critical barriers facing Nigeria’s artisanal and small-scale miners. Many miners lack the capital to invest in safer equipment, formalise their operations, or scale their businesses. To address this gap, the Federal Ministry of Mines and Steel Development established a ₦5 billion ASM Finance Support Fund, managed by the Bank of Industry, to offer targeted financial assistance. This initiative is designed to help miners move away from hazardous, informal practices and integrate into the formal economy. In addition, last year, the Ministry of Solid Minerals Development formalised the activities of 250 small and artisanal miners into cooperatives, a strategy aimed at reducing illegal mining and improving access to structured financing and technical support. Strengthening these efforts through expanded funding, technical training, and easier access to credit is crucial to achieving sustainable growth in Nigeria’s mining sector. The government should establish a simplified registration and identity verification system specifically tailored for artisanal miners to formalise their operations without burdensome requirements. It should also create dedicated financial inclusion programmes with flexible collateral standards to bridge the gap between miners and access to credit.

The Possibility of Investment Opportunities

Nigeria’s artisanal and small-scale mining (ASM) sector employs over 500,000 people, but its potential remains untapped. Successful formalisation could engage up to 13–20 million Nigerians across key commodities such as tantalite, gold, barite, gypsum, limestone, and kaolin. Currently, the solid minerals sector contributes just 0.53% to GDP, with construction companies, quarries, small-scale miners, and manufacturers as the dominant players.

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Source: NEITI

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Examples from Ethiopia show the transformative potential: the formalisation of over 100,000 miners helped boost gold purchases from 735 kg in 2009 to 8,386 kg in 2013. Similarly, Nigeria’s $1.3 billion lithium deal to build two processing plants signals growing investor confidence. The legalisation of artisanal gold mining in 2020 aimed to generate $500 million annually in royalties and taxes and create 250,000 jobs.

The government’s focus on granting licenses only to companies committed to local processing is crucial for stimulating industries, creating jobs, and increasing revenues. Countries like Angola, Morocco, and South Africa have shown that mining can drive industrial growth in the right environment.

Minerals are essential for manufacturing, ICT, energy, and construction. Maximising opportunities in ASM would create jobs, reduce import dependency, lower production costs, and enhance Nigeria’s industrial competitiveness. Strategic reforms, a strengthened legal framework, and targeted foreign investment will transform ASM from an informal activity into a vital engine of sustainable economic development.

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References

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Ecofin Agency. (2023, September 10). Nigeria to invest $30m in SMEs to tackle poverty and drive growth. https://www.ecofinagency.com/public-management/1009-45868-nigeria-to-invest-30m-in-smes-to-tackle-poverty-and-drive-growth

Miningmx. (2020, November 30). Nigeria legalises artisanal mining in effort to generate $500m in royalties, create jobs. https://www.miningmx.com/news/markets/42693-nigeria-legalises-artisanal-mining-in-effort-to-generate-500m-in-royalties-create-jobs/

Nigeria Extractive Industries Transparency Initiative. (2024, December). Solid minerals industry report: 2023. https://neiti.gov.ng/cms/wp-content/uploads/2024/12/NEITI-SMA-REPORT-2023.pdf

Premium Times. (2017, August 10). Nigerian govt launches N5 billion loan for small-scale miners. https://www.premiumtimesng.com/business/business-news/241880-nigerian-govt-launches-n5-billion-loan-small-scale-miners.html

Punch. (2023, September 22). FG forms cooperatives for 250 artisanal miners to curb illegal mining. https://punchng.com/fg-forms-cooperatives-for-250-artisanal-miners-to-curb-illegal-mining/

Reuters. (2024, April 24). Nigeria revokes 924 dormant mining titles, seeks new investors. https://www.reuters.com/world/africa/nigeria-revokes-924-dormant-mining-titles-seeks-new-investors-2024-04-24/

Salau, A. T., & Waziri, A. (2024). Nigeria’s solid minerals and mining sector: A critical review. Open Journal of Business and Management, 12(2), 679–698. https://doi.org/10.4236/ojbm.2024.122037

TheCable. (2024, April 19). Reps panel: Nigeria loses $9bn yearly to illegal mining. https://www.thecable.ng/reps-panel-nigeria-loses-9bn-yearly-to-illegal-mining/

United Nations Development Programme. (2024, August). Transforming Nigeria’s artisanal and small-scale mining sector: Resource mobilisation and sustainable development. https://www.undp.org/nigeria/publications/transforming-nigerias-artisanal-and-small-scale-mining-sector-resource-mobilization-and-sustainable-development

World Bank. (2014). Moments of mining: Ethiopia’s artisanal and small-scale mining sector [Conference presentation]. Ethiopia Extractive Industries Forum 2014. https://www.worldbank.org/content/dam/Worldbank/Event/Africa/Ethiopia%20Extractive%20Industries%20Forum%202014/4a_MOM.pdf

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