Nigeria Extractive Industries Transparency Initiative (NEITI) in its latest report said the solid minerals sector contributed ₦52.75 Billion to federation revenue in 2017. This represents a twenty-one (21) percent increase on the ₦43.22 Billion contributed by the sector in 2016. Also, payment to the Mines Inspectorate Department (MID) and Mining Cadastre Office (MCO) amounted to ₦1.59 Billion and ₦2.08 Billion or about three per cent and four per cent of the total revenue from the sector, respectively.
The significance of the mining and quarrying sector is highlighted by Nigeria’s huge reserves of solid minerals. Although the sector’s output still trails behind Crude Oil and gas output in the extractive sector, its immense reserves of untapped minerals hold the promise of massive contributions to the national output as well as substantial revenue for the government.
The mining sector has witnessed a number of reforms in the last eight years. These include; the development of the Nigerian Minerals and Mining regulations (2011), the establishment of the Mining Cadastre Office (MCO) for mineral rights management, the establishment of control departments for Mines Environmental Compliance (MCE), the introduction of the Seven strategic minerals and the Roadmap.
The most recent intervention for the mining sector was the inauguration of a multi-stakeholder committee to develop a roadmap for the transformation of the sector. The 17 man committee, that was set up by the former Minister of the Ministry of Solid Minerals Development, now the present Governor of Ekiti State, Kayode Fayemi and former Minister of State of the Ministry of Solid Minerals Development, Abubakar Bawa Bwari, was made up of representatives across the value chain of the sector and also consulted with other external stakeholders.
Subsequently, the committee developed a roadmap that centres on the path to sustainable development in the sector for the next several years. It placed special emphasis on the critical issues and challenges which must be addressed for value creation in the immediate, short, mid-term and long-term periods. The roadmap leveraged on prior roadmaps and development initiatives of the Federal Government and is currently the guide to reducing the deficiencies encumbering Nigeria’s mining sector. It aims at making the sector which accounts for only 0.3 percent of national employment and 0.03 percent of export into a highly efficient, revenue-generating venture.
Challenges in Nigeria’s Mining Sector
Nigeria’s mining sector is still posed with a number of challenges. For instance, a report by Dataphyte showed how the government diverted a whopping sum of ₦908.63 Billion meant to develop the natural resource sector in ten years. According to the report, the latest audit report for 2012 to 2016 by the Nigeria Extractive Industries Transparency Initiative revealed the Nigerian government diverted a whopping sum of ₦543.628 billion meant for the Natural Resource Development. By implication, the mining sector continues to face neglect because of the disproportionate attention given to other sectors in the country.
Similarly, investors in the sector are faced with the challenge of inadequate access to capital through credits and loans. For example, during the just concluded 4th annual Mining week held in Abuja, stakeholders raised concerns about the delay in the disbursement of the ₦2.5 billion Solid Minerals Development intervention Fund which has been deposited in the Bank of Industry meant to be given as a loan to the Artisanal Small-scale Miners (ASM). According to the stakeholders at the event, only an operator has been able to access the fund.
Other challenges facing the mining sector include unorganised artisanal mining sub-sector, the dearth of technology, insecurity, the inadequacy of data about the sector, prohibitive laws at sub-national levels, and the low level of government’s investment to the sector.
Impacts of the Roadmap
In spite of the myriad of problems that have beset the sector over time, there have been recorded positive changes in the output and revenue derivation from the sector. These have reflected in the short term and long term growth in output as well as substantial values of government revenue generated from the sector as highlighted below.
The quarter by quarter analysis shows that output in the mining sector increased from quarter to quarter in 2018 from ₦11.19 Billion to ₦32.52 Billion. The sector performed better in the second quarter of 2019 with 0.15% as against 0.08% in the first quarter of 2019. This shows higher output is expected in the next two quarters of 2019.
The half-year 2019 performance also was better with an output of ₦37.39 billion as against the half-year 2018 figure of ₦36,81 billion. This may indicate that the sector’s performance in the second half of the year will surpass that of the same period in 2018. Overall, the sector’s performance in 2019 is expected to surpass that in 2018.
The long term outlook shows that the mining sector saw a general growth in its Real GDP trend between 2013 and 2018, from ₦82.87 billion in 2013 to ₦96.60 billion in 2018. The contribution of the Mining Sector in the six years under review peaked in 2015 with ₦1.03 trillion (₦102,544,000,000) and fell sharply to ₦87.61 billion (₦87,610,000,000) in 2016. However, the sector’s performance began to improve in 2017 with ₦87.73 billion and increased to ₦96.60billion in 2018.
The value of products in the Solid Mineral sector is expected to rise above ₦25.79 billion in the third quarter of 2019 and peak above ₦26.78 billion in the last quarter of the year. Barring any dramatic domestic disruptions, the overall 2019 outcome is expected to be above ₦93.04 billion based on Premium Times reading of growth trends in the sector.
Since 2016 when the government launched its bold Roadmap, the progression has been modest but steady resulting in real GDP from ₦87.6 Billion in 2016 to ₦87.7 Billion in 2017 and a significant leap in 2018 to ₦96.6 Billion.
On the solid mineral sector’s contribution to exports, the NEITI report stated that about 16.34million metric tons of minerals valued at $29.90million were exported in 2017. According to the report, “Nigeria’s total export was about ₦13.60trillion with solid minerals contributing ₦77.23billion or 0.57% of total export in 2017”.
The trend analysis shows that in 2015, solid minerals exports was ₦1.94 billion. This witnessed a geometric leap to ₦11.16 billion in 2016 and an equally impressive figure of ₦77.23 billion in 2017. This is an indication that the solid minerals sector is steadily contributing to the Federation’s export earnings but requires greater government attention.