Abstract
•Global lithium demand is increasing due to the energy transition and green technologies.•Nigeria’s small-scale lithium sector is growing but faces major governance challenges.•This study identifies drivers of revenue leakage in Nigeria’s lithium ASM sector.•It reveals policy and regulatory challenges affecting revenue generation in the sector.•It links lithium governance to formalization, economic diversification, and the SDGs.
The rapid global demand for lithium, driven by the energy transition and the adoption of green technologies, has intensified interest in Nigeria's lithium-rich mineral deposits. However, the burgeoning small-scale lithium mining sector is plagued by significant revenue leakages that undermine the country’s economic potential and sustainable development efforts. This study examines the root causes and mechanisms of revenue losses in Nigeria’s small-scale lithium mining, with a focus on regulatory loopholes, informal trading networks, inadequate monitoring systems, and weak institutional enforcement. The study employed a qualitative research method, which involved a grounded theory approach using inductive reasoning to analyse semi-structured interviews with stakeholders in the Nigerian small-scale lithium sector, including miners, buyers, and regulatory officials. The field data, which were collected through interviews, were transcribed, coded and thematically analysed using Atlas.ti to identify patterns of leakage in royalty collection and governance. The findings reveal six major drivers of revenue leakage: false production disclosure, inadequate logistics for monitoring, lack of data collection, lack of export disclosure, lack of incentives for royalty payment-compliant miners, and mineral smuggling by foreigners. Additionally, the study identified six counterproductive policies and regulatory challenges affecting revenue generation in the sector, which include weak monitoring, bureaucracy, policy change and inconsistencies, extortion by enforcement agencies, regulatory inefficiency, and multiple taxation by different levels of government. The study concludes by underscoring the urgent need for policy reform, capacity building in regulatory institutions, and the formalisation of artisanal and small-scale mining operations. By addressing these structural gaps, Nigeria can not only curb revenue leakages but also position itself as a key player in the global lithium supply chain while advancing economic diversification and the UN Sustainable Development Goals (SDGs).