(Ecofin Agency) - Artisanal and small-scale mining (ASM) makes up over 70% of Nigeria's mining activities and supports millions of people, according to the UNDP. However, its informal nature fosters massive tax losses for the federal and state governments.

The Nigeria Economic Summit Group (NESG), in a February 2025 report, suggests that better collaboration between federal and state governments could help formalize this sector. Mining governance in the country is currently centralized, with states playing a minor role in licensing and oversight. NESG proposes giving states full control over licensing artisanal miners to simplify processes, improve regulation, and better monitor production and sales.

The concept of "mixed federalism" in managing mineral resources is not new. A report by the United Nations Development Program (UNDP), released in August 2024 and titled "Transforming Nigeria's Artisanal and Small-Scale Mining Sector for Resource Mobilization and Sustainable Development," highlights "mixed federalism" as a potential model for managing mineral resources. 

The document suggests Ethiopia as a case study for Nigeria, emphasizing its federal framework that empowers regional authorities to oversee mining licenses directly. This approach simplifies licensing, involves local communities, and ensures fair revenue sharing between central and regional governments.

Ethiopia also supports miners by providing training, equipment, and access to official markets through mineral purchasing centers. These efforts have helped curb smuggling and improve resource traceability. 

In Ethiopia, the source indicates, the formalization of over 100,000 miners into cooperatives and the organization of 50,000 miners into micro and small-scale operations resulted in a significant increase in gold production, as evidenced by the National Bank of Ethiopia's gold purchases which rose from 735 kilograms in 2009 to 8,386 kilograms in 2013.

The federal grip on mineral ownership is not the only hurdle for Nigeria’s ASM sector. Despite growing state-level involvement in mining regulation, illegal operations remain rampant. Key challenges include a lack of mineral buying centers, miners’ skepticism toward official marketing systems, and insufficient government-backed technical and financial assistance—all stalling the sector’s formalization.

Emiliano Tossou