BusinessDay 11 Dec 2017

Monday 11 December 2017
C002D5556
BUSINESS DAY
25
EXCELLENCE IN PUBLIC SERVICE AWARDS
How Fayemi is leading the way to shared mining prosperity
There is no doubt that Nigeria is
blessed with an abundance of
natural resources. The country
is estimated to have the second
largest deposit of Bitumen in the
world, spanning over 120km across Lagos,
Ogun, Ondo and Edo states. National reserves
of coal are estimated at 2.7 billion
metric tonnes; while iron ore, limestone
and lead are 10 billion, 3 trillion, and 5
million metric tonnes respectively. Nigeria
has at least forty other minerals with
varying estimates of reserves, out of which
government is concentrating on developing
seven priority minerals namely – Coal,
Lead Zinc, Iron Ore, Gold, Bitumen, Barite,
and Limestone.
The reality of our situation however, is
that these minerals have co-existed with
abject poverty, inequality, conflict, and environmental
degradation – a paradox that has
been the subject of scholarly interrogation
and analysis over the years. A recent Tana
Forum report indicates that “the mispricing
of natural resources in Africa leads to the loss
of $50 billion per year – more than Africa’s
combined foreign direct investment and
overseas development aid.” The challenge
before successive administrations of the
Nigerian government therefore, has been
how to turn the tides and make our resources
work optimally for us.
The Buhari administration has iterated
that one of its policy priorities is to reposition
the mining sector to play a more prominent
role in addressing key national challenges.
The objective is to grow the sector’s contribution
to GDP as part of a broader agenda to
diversify government’s revenue sources, and
address our historical dependence on oil.
The sector is projected to create jobs and increase
the range of economic opportunities
available to Nigerians. As the administration
reaches its mid-term mark, what is the state
of the Nigerian Mining Sector? How have the
ministers in charge of the Ministry of Mines
and Steel Development, Kayode Fayemi
and Abubakar Bawa-Bwari, minister and
minister-of-state respectively, fared so far
with the mandate given to them.
To start with, against the grain of political
correctness, the ministers have very often
given credit to their ministerial predecessors
since 1999, for the grounds that had been
covered so far in identifying and tackling
the sector’s seemingly intractable challenges
such as – Limited Supporting Infrastructure;
Insufficient Geological Data; Limited Cooperative
Federalism; Low Productivity; Illegal
Artisanal Mining and Community Challenges;
Weak Institutional Capacity of Government
Entities; Insufficient Funding; and
Weak Ease of Doing Business and Perception
Issues. Commenting on the ‘Roadmap for
the Growth and Development of the Nigerian
Mining Sector’, which was approved by
the Federal Executive Council on August 31,
2016, Minister Fayemi clarified that this was
not yet another policy document produced
for the sake of it, especially since a previous
roadmap was produced as recently as 2012.
The roadmap is a carefully developed
document that synthesises critical elements
from all existing legal and policy instruments
regulating the sector into actionable goals
and strategies, with definite targets over the
short, medium and long term. It builds on,
copiously references, and seeks to address
grey areas in such policy instruments as the
Nigerian Mining and Minerals Act, 2007;
National Minerals and Metals Policy, 2008,
Nigerian Minerals and Mining Regulations,
2011; as well as the 2012 Roadmap. The attention
paid to ensuring continuity in policy
direction, as well as the inclusive process
of broad consultation that guided the development
of the roadmap, has augured
well for its acceptability and the restoration
of the confidence of investors and other
stakeholders in the sector. This is significant
considering the sector requires a great deal
of consensus building and collaboration in
tackling the earlier stated challenges.
The ministry has begun recording considerable
achievements. In addressing
the challenge of insufficient funding, the
ministry has secured approval for N30bn
(approx. $100m) from the mining sector
component of the Natural Resources
Development Fund from the FGN. This is
partly to provide cheap loans and grants to
industry participants as well as for directly
investing in foundation infrastructure. The
ministry has also recently secured the World
Bank’s approval for $150 million to support
the ministry’s Mineral Sector Support
for Economic Diversification (MinDiver)
program. Plans are underway to assemble
a $600M investment fund for the sector,
working with entities such as the Nigerian
Sovereign Investment Authority, the Nigeria
Stock Exchange and others. This is a
departure from the past, judging by the fact
that in 2015, out of the meagre N1 billion
allocated to the ministry, only N352 million
was released.
In addition to funding support from
multilateral agencies, partnerships on
technical cooperation have been forged
or re-activated with several foreign governments.
Partnerships have been operationalised
with the governments of
South Africa, China, Australia, Canada,
the United Kingdom and the United States
of America. Nigeria now takes the lead in
regional efforts to develop mining, especially
within the framework of the Africa
Mining Vision. Two Nigerians have been
elected to the leadership of renowned
Kayode Fayemi
Minister of Mines and Steel Development
mining-related regional bodies including
the Director General of the Nigerian Geological
Survey Agency, Alex Nwegbu, who
is now President of the Organization of
African Geological Surveys (OAGS), and
Gbenga Okunola, who is now President of
the Geological Society of Africa (GSAF).
These positions confer on Nigeria the
visibility and status within the continental
mining community to advance our
national interests.
The institutional capacities of the
ministry and its agencies have been
strengthened with a particular focus on
mines safety and security. The ministry
is collaborating with the Ministry of Interior
and the Nigeria Police Force to establish
the Mining Police as provisioned in
the law. There is significant improvement
in the Mining Cadastre Office’s administration
of mineral titles. The MCO has
now met the target of consistently issuing
licenses to applicants within the statutory
30-45 days, provided the applicant
has fulfilled all requirements.
Another major achievement is the
signing of a ‘Modified Concession Agreement’
between the Federal Republic
of Nigeria and Global Infrastructure
Nigeria Limited, effectively resolving
the protracted litigations surrounding
the ownership of Ajaokuta and Niomco.
The agreement was executed on behalf
of the FGN by the Vice President, Yemi
Osinbajo. With this development, both
NIOMCO and Ajaokuta Steel Company
have been liberated from eight years of
dormancy that was occasioned by the
protracted arbitration between the FGN
and GINL. The implication of the signing
is that ownership of ASCL has now
reverted to the FGN, and government
will now proceed to shop for a new core
investor with the financial and technical
capacity to run the steel complex. The operationalisation
of ASCL will provide the
needed inputs to support the infrastructure
requirements of the country and lead to
import substitution, and save the country
about 3.3 billion dollars annually spent
on the importation of steel products. The
Nigerian Steel Dream, conceived in the
1970s, but which has been elusive is once
again on the way to becoming a reality.
The ministry is similarly working in concert
with industry stakeholders to expand
the domestic processing of our other ores,
which will lead to the creation of jobs and
reduce the pressure on our Naira.
Other achievements in the sector
include the Review of Existing Mineral
Royalties and Licensing Fees leading to
increased revenue for the FGN. Furthermore,
the ministry has embarked on a
structured expansion in federal revenues
across the entire mining value chain with
an initial priority on improving reporting,
tax collection, royalties, personal taxes and
company tax. To stem the illegal trading of
minerals, the ministry has registered over
thirty Mineral Buying Centers, and enacted
the Revenue and Reporting Compliance
Agreement with the Nigeria Customs Service,
which has improved the policing of
mineral exports.
In the FGN’s recently launched ‘Economic
Recovery & Growth Plan (2017-
2020)’, the Minerals and Metals sector was
duly recognised as one of those to drive Nigeria’s
recovery. The document projected
to grow sectoral contribution to GDP from
N103 billion (2015) to N141 billion in 2020,
at an average annual growth rate of 8.54%.
Other targets for the sector include the
facilitation of Coal to Power Plants to
contribute to meeting our energy needs.
The strategy document which is very
much in sync with the sector’s Roadmap,
also aims to produce geological maps of
the entire country by 2020 on a scale of
1:100,000; as well as integrate artisanal
miners into the formal sector. As stated
earlier, industry participants will also
be encouraged to scale up domestic
mineral processing and beneficiation
that strengthens backward and forward
linkages.
Importantly, the ministry has put in
place a Geosciences Communication and
Stakeholder Engagement plan, which
is an integrated strategy that facilitates
the free flow of information, as well as
transparency and accountability. As part of
this plan, the ministry recently inaugurated
its Integrated Automation and Interactive
Solid Minerals Portal (IAISMP) to
facilitate the dissemination and access to
geo-sciences data. The portal will also host
the automation functions of the Mining
Cadastre office to improve mineral titles
administration. This is in addition to the
establishment of the National Council on
Mining and Mineral Resources Development.
Part of the highlights of the council
is a forum where state commissioners in
charge of the mining and mineral ministries
interface with the Federal officials in
taking some crucial decisions.
Clearly, there is a lot more grounds to
cover, but there is no doubt that the Nigerian
Mining Sector has come a long way in
the last two years, and is well on the road
to recovery. The ministry has been commended
for having some of the most active
communication channels on social media,
and a functional website www.minesandsteel.gov.
This has ensured Nigerians are
being effectively carried along On the Road
to Shared Mining Prosperity.