• Friday, June 14, 2024
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FG and states’ involvement in the mining sector

FG and states’ involvement in the mining sector

The Federal and State Governments in Nigeria are urgently in search of a magic wand through which they could address the declining revenue facing them. The dwindling revenue has made the federal and some state governments pile up more debts with attendant huge resources required for debt servicing obligations.

While nothing is bad in borrowing if it is judiciously used to improve the lot of the people, questions usually arise why a country should opt for debt accumulation when a cheaper alternative to debt is available but not explored.

In April this year, the Governor of Rivers State, Nyesom Wike appealed to the federal government to allow states to explore solid mineral resources in their respective states and pay royalties to the federal government. This is a good idea.

Indeed, what urgently needs to be done is to lessen the grip on the sector by the federal government. Sub-national governments should have more say in the management of solid minerals domiciled in their states. More private sector involvement is needed and states have crucial roles to play here. Lagos, Rivers, FCT, Ogun, Delta, and Kaduna have demonstrated their capability to mobilise private sector investments and if given the chance in the mining sector will surpass what the FG has achieved since independence within a short period of time. And going by Nigeria’s worsening socio-economic statistics, the time to open up the nation’s mining sector to state participation is now.

Nigeria is a country blessed with many natural resources, especially solid minerals. The bane of development has been the law, which governs who exercises control over the solid minerals. Based on the Mining Act of 2007, the Federal Government of Nigeria exercises 100 percent control over the solid minerals in Nigeria. The Law states inter alia:

“The Act vests entire property in and control of all Mineral Resources in, under, or upon any land in Nigeria, its contiguous continental shelf and all rivers, streams, and water-courses throughout Nigeria, any area covered by its territorial waters or constituency and the exclusive economic zone in the Federal Government of Nigeria.”

Nigeria is a country blessed with many natural resources especially solid minerals. The bane of development has been the law, which governs who exercise control over the solid minerals

It has been said that the apportioning of almost any meaningful resources to the Federal Government of Nigeria contributes in no small measure to the impoverishment of the other constituents, especially the state governments.

Read also: Mining revenue to hit N8bn December as revival efforts intensify – Adegbite

Beyond reasonable doubt, the federal government has not managed the commonwealth well, which is why only a few states can survive without the monthly allocation from the central government. This should not continue.

There are many resources waiting to be tapped for the economic turnaround of state governments and the federal government. What is required is just for the federal government to accept that the sub-national governments are also critical stakeholders in Nigeria, and without their financial soundness, the nation cannot be sound financially.

The data from the National Bureau of Statistics on mining activities in the last two years corroborate the need for the federal government to empower states to control licensing of solid minerals in the country.

The country produced 64.29 million tons of solid minerals in 2020, out of which 84 percent of the production took place in ten states which are Bayelsa, Lagos, Cross River, Ogun, and Kogi states. Others are Kano, Oyo, Edo, Adamawa, and Ebonyi. Kogi, Ogun, Cross River, and Lagos, these states accounted for 62.2 percent of the total mineral production in Nigeria in 2020. With the resources under FG’s control, the only thing state governments contend with is the effect of the exploration activities on their environment in the form of pollution air, water and land, environmental degradation, and health hazard. A few years ago, lead poisoning ravaged many communities in Zamfara State.

With years of implementing the policy of having only the FG controlling the nation’s mining sector, the sector has remained a shadow of itself. It neither delivers the much-expected gains to the FG nor to Nigerians. Within the mining and quarrying sub-sector, and using the contribution to its sub-sector and the overall GDP, the mining sub-sector is the least important. According to Vice President Yemi Osibajo, the nation’s mining sector’s revenue rose by 26 percent to N3.243 billion in 2020 from N2.56 billion in 2019. Regardless of the growth in revenue, this is not the type of success Nigeria should be celebrating.

According to Statistic, China realized N183.8 billion as mining revenue in 2018. The same year, Australia made $142.9 billion while the United States, Indonesia, and Russia realised $92.9 billion, $59.2 billion, and $54.6 billion mining revenues respectively.

Other countries included Brazil, $41.6 billion; Chile, $40.9 billion, South Africa, $37.8 billion, Peru, $28.9 billion; India, $21.7 billion and Kazakhstan, $20.8 billion.

It should be noted that the revenue of some leading mining companies in the world is more than Nigeria’s total annual budgetary allocation. For instance, in 2021, Glencore from the United Kingdom made $142.36 billion in revenue. BHP Australia and the UK realised $46.28 billion this year. Also, Rio Tinto from Australia and UK made $44.62 billion.

Nigeria’s 2020 budget of N17.12 trillion, at N420/$, will amount to $40.8 billion. This is not up to any of the revenues of the top three aforementioned mining companies in 2021. Glencore revenue is more than the total worth of stocks listed on the Nigerian Stock Exchange. This is just to show the stupendous opportunities which Nigeria is missing due to the archaic regulation of the nation’s mining sector. This regulation needs to be overhauled so that the polity will be better served. And the time to do this is now!