The collapse in the price of crude oil in the international market has changed the tone of the federal government with regard to the development of the economy. While the present government has been hammering on the diversification of the economy, Ruth Tene Natsa, in this piece, wonders why it has shown no interest in investing in the solid minerals sector.
The federal government has always paid lip service to the development of the solid minerals sector despite stakeholder’s assessment of the huge potential of the sector to create jobs, alleviate poverty and create wealth.
The recent report by the Nigeria Extractive Industries Transparency Initiative (NEITI) that the Solid Minerals Audit report earned the economy N31.449 billion in 2012 as against N26.925 billion in 2011 left stakeholders wondering why the government continues to lip service to the development of the sector.
The report revealed an increase of 17 per cent as against the previous year, showing that the sector is capable of yielding more if given the necessary support to stabilise, taking into cognisance the fact that the sector in the past was a major contributor to the nation’s gross domestic product (GDP).
The NEITI audit report on governance and revenue management of the sector for 2012 revealed that “the solid minerals sector is still a minor productive sector with low contributions to the main macro-economic areas of the economy. It accounted for a meagre 0.02 per cent of total exports’ earnings and 0.14 per cent of new employments in the country by the end of 2012. However, out of the 17,000 jobs created by the solid minerals sector in 2012, 96 per cent were Nigerian hires.”
65 companies drawn from construction, quarry and cement manufacturing were covered by the audit based on the materiality threshold of N2 million while from the government side, the Federal Inland Revenue Service (FIRS), Mining Cadastral Office (MCO), Nigeria Customs Service (NCS), Central Bank of Nigeria (CBN), Federal Ministry of Finance as well as Mines Inspectorate Department of the Ministry of Mines and Steel Development were also covered. In 2011, the NEITI also reported that the federal government had earned N26.9 billion from solid minerals, further revealing that Nigeria exported a total of 7.12 metric tonnes (mts) of solid minerals valued at N11.9 billion during the period under review.
While the need to invest in the sector for economic development has been overwhelming, there is no doubt that the sector has been challenged by poor funding, activities of illegal/informal miners as well as the absence of bankable data, thus, the need to invest in the sector. Stakeholders during a meeting in 2013 advocated actionable plans for the development of the sector. Their calls included sourcing for funds from the Solid Minerals Development Fund and the Natural Resources Fund, coordination of long term project financing with the support of the Stanbic IBTC for post exploration financing and mining, off-take arrangements, securitisation, development of finance institutions to provide longer term financing, among other issues.
Stakeholders also advocated for the enforcement of the “Use it or Lose it” principle in the Minerals and Mining Act 2007 in minerals title administration by the MCO in the Ministry of Mines and Steel Development to discourage jobbers and speculators from holding dormant mineral titles. It was agreed that the Nigerian Constitution and the legal and regulatory frameworks in the sector were robust, formidable and comprehensive to address the challenges and problems associated with the sector. Despite these calls by the stakeholders and two years after the call, the sector has remained neglected with very little funding and government’s interest.
Meanwhile, the minister of mines and steel development, Mr Musa Mohammed Sada, has stressed the need for more attention to be paid to the sector, saying that it needs to find a space in the new development plan of government.
“Government is launching an industrial revolution plan that relies on creating value chains and there is no sector that creates more value chain than the minerals sector,” he said at the “Mining on Top” event in London on June 26, 2014.
Speaking on the challenges of the sector, the minister said the first challenge was in the area of policy, noting that it is very important that government takes a stand on this.
He said a “major immediate challenge now is to convince investors to come and invest into the sector. However this does not only rely on the sector itself but the general investment environment of the country is important. If one is to expect sustainability in the mining sector, these are some of the challenges and issues that
With the diversification policy of government in place, there is a huge need to look at other areas with the potential for economic expansion and there is no doubt that the solid mineral sector is a viable sector and it is imperative that government looks into that sector for possible investment expansion in its diversification program.