Olaseni Durojaiye examines the impact of a N5 billion funding support for artisanal and small scale miners in the continuing effort of the federal government to diversify the revenue base of the economy
Efforts to grow and develop the country’s mining sector to make it contribute more effectively to government revenues got a boost with the launch of a N5 billion fund for artisanal and small scale miners recently. Besides providing loans for the miners, the fund is seen as a means of bringing the hitherto unwieldy sector under a structured regime.
The launch was almost overshadowed by the euphoria of celebration bordering on the country’s exit from recession. But economic watchers believed the moment called for deep introspection to find ways to consolidate the efforts to diversify the country’s foreign exchange revenue base beyond oil. Developing the solid minerals sector is seen as a veritable step in this regard.
Exit from Recession
Data released by the National Bureau of Statistics penultimate Tuesday indicated that Nigeria’s economy was finally out of recession, as it recorded 0.55 per cent growth. Many celebrated this as an indication of success in the federal government’s efforts to revamp the economy.
However, analysts at SBM Intelligence said, “A growth of 0.55 per cent does not only compensate for the lost ground, it is also below expectations considering the low base the growth is starting from.” They noted on the company website that the positive growth had been predicted by many analysts.
“It was expected, given how the negative growth had already caused the economy to contract, providing a low base for growth to start from,” SBM Intelligence analysts stated. They explained, “Coming out of a recession is not the same as the economy making a recovery. Nigeria is very far from recovering from the loss of the last 18 months. It will be more beneficial if the government and its agents shelve the unnecessary celebration and backslapping.”
They added, “We have wasted a crisis. We will do well not to waste the aftermath of the crisis. It is time to get to serious work.”
Solid Minerals to the Rescue
Economic analysts believe the mining sector is a good area to channel resources in the attempt to achieve economic diversification. They say optimal utilisation of the resources and opportunities that abound in the sector requires the concerted efforts of the different tiers of government.
According to the Nigerian Extractive Industries Transparency Initiative, there are over 30 different kinds of solid minerals and precious metals, including Sapphire, Aquamarine, and Topaz, buried in Nigerian soil waiting to be exploited.
While Nigeria’s rich reserve of zinc found in several states is left untapped or left to illegal miners to exploit, the item has gained over 90 per cent in price in the global zinc market since January 2016. Zinc has fetched countries like China, Peru, United States, and Australia huge revenues, according to Investment News, an international journal published in Vancouver, Canada.
The roadmap for the growth and development of the solid minerals sector was first announced in August 2016 after a federal executive council meeting. Announcing the roadmap, Minister of Solid Minerals and Steel Development, Dr. Kayode Fayemi, had stated, “What distinguishes this roadmap, which builds on the old roadmap that was approved in 2012, is its determination to set up an independent regulatory agency, which investors have been insisting on that the ministry which has been serving as facilitator should not be the one that regulates them.”
The launch of the N5 billion fund for the benefit of small and medium scale miners, THISDAY gathered, was in furtherance of the solid minerals development roadmap. The initiative, a collaboration between the Ministry of Solid Minerals and Steel Development and the Bank of Industry, will see both parties contributing N2.5 billion each to a N5 billion pool that will be made available to small scale miners in the country. Qualified artisanal miners would be allowed to access between N100, 000 and N10 million, while small-scale miners could get between N10 million and N100 million.
Before the latest initiative, the ministry had embarked on a systematic approach to confronting the challenges facing the sector. THISDAY findings revealed that the ministry recently organised capacity building exercises for miners during which they were trained on various stages of mining and educated to impact on the environment positively in the process of mining.
Other efforts by the ministry to address the challenge of insufficient funding and lack of access to capital include the N20 billion from the mining sector component of the Natural Resources Development Fund and the $150 million from the World Bank to the Mineral Sector Support for Economic Diversification (MinDiver) programme.
Speaking at the launch, Fayemi noted that small scale miners accounted for the bulk of activities in the sector, adding that the launch of the fund was to address the challenge of insufficient funding and poor access to capital, a major factor militating against artisanal and small-scale miners. The minister said the BoI would serve as the custodian and manager of the fund, to be given to the artisanal and small scale miners at five per cent interest rate. He said with the appointment of BoI as the custodian and manager of the fund, it would facilitate financing of artisanal and small scale mining projects involving industrial minerals, precious stones, precious metal (gold), dimension stone and such other strategic minerals in Nigeria as would be approved by the ministry and BoI from time to time. Fayemi also stated that proper funding would help to integrate the artisanal and small scale miners into the formal sector, enhance their growth and development in a structured manner, and spur productivity and job creation in the mining sector.
“The Solid Minerals Development Fund is now spearheading the assembly of a $600 million investment fund for the sector, working with entities as the Nigerian Sovereign Investment Authority, the Nigerian Stock Exchange, and others,” the minister said, “In addition to the funding support from multilateral agencies, partnerships on technical cooperation.”
He added that several agreements had also been brokered or re-activated with foreign governments, including existing technical partnerships with the governments of South Africa, China, Australia, Canada, the United Kingdom, and United States of America in line with the framework of Africa Mining Vision.
Economic policy analysts have hailed the latest funding initiative. They say it is key to unlocking the huge potentials in the solid minerals sector to make it attractive to foreign investors. But many also say there is need for appropriate legal framework, like is the case in the oil and gas industry.
An economist and research analyst with the Nigerian Economic Summit Group, Rotimi Oyelere, said, “The mining sector is critical to diversifying Nigeria’s revenue base or sources of foreign exchange away from oil and hydrocarbon.
“The sector holds great potential for foreign exchange for the country; but we must make the sector attractive to foreign investors as was the case with the oil and gas sector and the only way to do that is to put in place a proper regulatory framework in place. The National Assembly should ensure that mining is taken off the exclusive list and placed in concurrent list.”
The governor of Taraba State, Darius Ishaku, spoke in a similar vein in an interview with THISDAY recently. Ishaku reiterated the need for proper legal framework that would remove mining licensing and administration from the exclusive list so that the states could be involved in mining administration in the country.
The governor said, “There are a lot of taxes which for now we are not getting. After agriculture, the second revenue endowment in the state is mining, and up till now we only have illegal miners, no thanks to lack of enabling law or laws that are not implementable.
“We have more than 30 different kinds of solid mineral resources in Taraba State, the seven rarest minerals are found here. Somebody like me has no business in Abuja going to look for subventions to pay workers’ salary if things were made to work properly.”