Stakeholders: Tax Holidays to Minerals’ Miners Impoverish Nigeria

Chineme Okafor in Abuja

Stakeholders tracking regulatory and process issues in Nigeria’s solid minerals sector have said that tax holidays and other tax related incentives often given to mining firms in the sector by the federal government have continued to impoverish the country, and have also failed to lift the sector’s productivity to contribute more to the country’s national Gross Domestic Product (GDP).

They explained that despite the many tax reliefs given to mining firms, the sector has also not contributed more than one per cent to Nigeria’s GDP, adding that over 80 per cent of commercial mining in the country are still unregulated and their revenue unaccounted for.

Rising from a recent two-day workshop where issues relating to transparent and accountable governance of Nigeria’s solid minerals sector were discussed, the stakeholders, which included civil society organisations; government agencies; miners group; and development partners, stated that more than 50 varieties of solid minerals were available in commercial quantities across Nigeria, but the sector has done very poorly in its contribution to national GDP.

The workshop was organised in Abuja by Global Rights, in partnership with the Nigeria Extractive Industries and Transparency Initiative (NEITI) and Civil Society Legislative Advocacy Centre (CISLAC).
They said in a communiqué which was ready out to journalists by the Country Director of Global Rights, Abiodun Baiyewu, that: “More than 80 per cent of mining activities (in particular artisanal mining) are unregulated and their revenue unaccounted for.”

“Mining host communities inordinately bear the burden of the resource curse with seemingly little or no benefits from the wealth that is exploited from their vicinity. The fact that Nigeria’s mining sector is in its nascent stage presents an excellent opportunity to strengthen its governance framework and adopt best practices in order to avoid a repeat of the mistakes Nigeria made in the oil and gas industry,” they added in the communique.

“Contrary to long held beliefs, tax holidays have not incentivised investments in the mining sector but rather have deprived the nation of essential revenues,” the communiqué added.
They equally explained that in contradiction to government’s expectations that tax relief regimes would help grow the sector, it has rather failed to grow because of the dearth of technological innovation in mining operations.

The stakeholders also noted that despite efforts by the NEITI to open up the sector’s operations for public scrutiny, the level of transparency in its activities and governance has remained insufficient, and was thus keeping it from meeting Nigeria’s expectations that it would contribute to her national developmental aspirations.

While making recommendations that could be adopted by the country to grow the sector, the stakeholders said in the communiqué that: “The government should implement a more efficient fiscal and regulatory regime to govern the extractive sector’s value chain.”

They further noted: “Given the size of unregulated artisanal mining activities within the country and the inherent loss of revenue, government must urgently embark on and incentivise their immediate mobilisation into mining cooperatives, provide extension services and ensure adequate oversight of their activities.
“Government must increase the number of mineral buying centers across the country to avoid continued revenue loss through illegal trade.”

They equally asked the government to equip and empower the Nigeria Customs to ensure porous borders for illegal mineral exports are tightened, adding that it was imperative for government to strengthen the framework for the protection and promotion of the rights of mining host communities.
Similarly, they stated that: “There is a need for government to undertake a detailed inventory of the quantum and spread of mineral resources in Nigeria in order to foster strategic planning and determine parameters for their effective management.

“Government needs to massively invest in the development of essential infrastructure, alongside the regulatory and administrative institutions for solid minerals in order to situate Nigeria as one of the top 10 mining destinations in the world.”

“In the interest of maximising revenue and expanding the value chain of minerals harnessed in Nigeria, it is imperative that government policies and laws insist on their beneficiation. Government should scrap its tax holiday incentives, which have led to the loss of essential revenue, and instead strengthen the framework for ensuring the ease of doing business by investors,” they added, while calling on the NEITI to improve its focus on the sector.