At a recent roundtable session on the Mining sector organised by American Business Council and attended by all the key stakeholders including very high delegation from the Federal Ministry of Mines and Steel, it was revealed that over 80 percent of mining in Nigeria can be described as artisanal mining (previously known as illegal mining). More interesting is the further revelation that the efforts of the federal government are not receiving the appropriate support from the state governments.
Let us be honest with ourselves and call a spade, a spade, “the state governments are sabotaging the efforts of the federal government”, a very important stakeholder openly lamented. The federal government should get more serious and stop all these artisanal/illegal mining or whatever name you want to call it, another stakeholder fumed! To address the problem, the government should help and organise the artisanal miners as Mining SMEs, another key stakeholder suggested.
Irrespective of the varying views, the question is if the current situation where over 80 percent of the mining activities are artisanal and unaccounted for be allowed to continue. With the potential revenue that can be generated from Mines and Steel sector far more than what we are presently getting from oil and gas, I do not think that allowing over 80 percent of our mining to be artisanal or illegal is appropriate. Imagine a sector with far more potential than the oil and gas contributing just about 2 percent of our GDP. Of the suggestions above, the encouraging one is the plan to organise artisanal miners into SMEs but the fact remains that it does not address the root causes of the problem and therefore unsustainable.
Like many other economic sectors, the major problem with our mining sector is the structure of ownership and regulation which creates the environment for sabotage and underdevelopment. Principally, the allocation of the mining sector to the exclusive list controlled by the federal government is the fulcrum of the crisis and underdevelopment. In the current structure, there is no incentive for the states to support and cooperate with the federal government to ensure effective exploitation of our mineral deposits. As the states do not have full knowledge or access to the taxes and royalties, they are somehow excluded from the proper and accountable sharing of revenue derived from their communities.
Consequently, most state government functionaries will prefer artisanal or illegal mining which they can personally benefit more from than support a mining sector controlled by the federal government. It is the same reason why the oil and gas sector and other sectors controlled by the federal government are not doing well. In the recent report from Nigeria Extractive Industries Initiative (NEITI), it was stated that Nigeria has lost over $41.9 billion from 2009- 2018 due to oil theft and bunkering. Imagine Ondo and Ekiti states celebrating that they have secured the approval of the federal government to construct and toll Akure-Ikere road. Is the federal government not controlling more than it should?
If we really want to pull out Nigeria from the increasing economic crisis and debt entrapment, we cannot continue to be doing the same thing that has failed over these years and still expect a different result. The truth is that there is no reason for our level of underdevelopment, poverty and debt burden if we can agree to make and execute the right decisions. Just as PMB has signed the Deep Offshore and Inland Basin Production Sharing Contract (DOIBPSC) that will give Nigeria additional annual revenue of over $1billion, he needs to be bold and encouraged do more.
PMB and his key government functionaries need to boldly review both the exclusive list with a clear determination to move certain critical development sectors from the exclusive to the concurrent list. The reason is that given our size and plurality, the federal government cannot effectively manage and transform all the sectors in the exclusive list.
Of the over 40 items in the list, the question is which ones the federal government can competently discharge, and which ones should go to the concurrent list or even residual list for the states and local governments respectively. With the aim being for effective and rapid development of Nigeria, I think that items such as construction and maintenance of trunk A roads, Mines and Minerals, Natural Parks, Railways, Commercial and Industrial monopoly, Waterways, Aviation and Power (Generation, Transmission and Distribution) among others should go to the concurrent list. While the items that can be transferred are many, a good way to start is transferring may be four items as pilot cases to see their economic development impact. The four that stand out are Mines and Minerals, Power, Railway and Construction/maintenance of trunk A roads.
In Mines and Steel, not only will it incentivise the states to properly participate, it will significantly reduce artisanal or illegal mining while improving the revenue of both the states and federal government through taxes and royalties. It will even create a better environment for the formalization of the artisanal miners into Mining SMEs monitored and supervised by the states. More jobs will be created, and insecurity will reduce.
In the power sector, the reform should be such that will allow the generation, transmission and distribution of electricity within states or regions without first sending the generated power to the Transmission Company of Nigeria and then to the Discos to distribute. As a significant portion of the generated electricity is lost within the transmission process, allowing the states or regions to own the whole process (generation, transmission and distribution) will not only enhance available electricity but will engender competition among the states and regions. To be continued with the other sectors.
FRANKLIN NNAEMEKA NGWU
Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- [email protected],
