• Friday, June 21, 2024
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Mining sector’s contribution to GDP remains low despite potentials – Minister

Mines and steel minister inaugurates N1b  barite processing plant in Cross River

Despite enormous solid mineral deposits with potentials to ‘fire up the economy,’ Olamilekan Adegbite, the minister of Mines and Steel development, decried that Nigeria’s mining sector contribution to the GDP has remained low for more than 40 years without significant growth.

The minister said the sector steadily declined from 5.6 percent in 1980 to about 0.33 percent, adding that it is significantly lower than other mineral rich countries in the region. Adegbite said this at a workshop on ‘Improving Fiscal Transparency in Nigeria’s Mining Sector”, organised by Global Rights in collaboration with the Nigeria Extractive Industries Transparency Initiative (NEITI) in Abuja on Tuesday.

The minister noted that Nigeria has continued to struggle to become a significant player in most of the core global mining commodities. “Unfortunately in Nigeria, despite the country’s resource potential and its past experience as a significant mineral producer of tin, columbite, and coal, the sector today has one of the lowest outputs in the Nigerian economy,” he said.

“Even during the commodity super cycle, the country was unable to attract significant investment in exploration and mining into the sector. Moreover, productivity from the Nigerian mining sector is still insufficient to meet local demands for key inputs from mining,” he added.

According to Adegbite, the leading barriers to effective development of the sector are: insufficient geodata and geological knowledge; weak governance and weak capacity to implement and enforce the existing mining law and regulations; a very large, poorly regulated and informal Artisanal Mining Subsector (ASM); and environmental and social issues.

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The minister stressed that the government needs to focus on the sector and invest significantly in it. He therefore disclosed that the government is in the process of creating a government-owned agency that would drive local and foreign investment into the sector.

“There is a bill in the National assembly proposing to have what we call Nigeria Mining development cooperation. The cooperation will have some private sector investment in it. It is important that we have a government body that holds the assets of the government,” he said.

Also speaking, Orji Orji, executive secretary/CEO NEITI expressed concerns that the mineral sector is contributing less than 1 percent to the nation’s GDP . Even though the sector contribution to GDP rose from 0.18 percent in 2018 to 0.29 percent in 2019 , Orji however said the contribution was still “abysmally embarrassing”.

“The mineral deposits are enormous. Our Study shows that every state in the country has a solid mineral sector. We are not conformable with the fact that Nigeria is borrowing money when we are sitting on gold, silver and a number of minerals.

“We need to provide infrastructure for the solid minerals to thrive. That’s where NEITI will focus attention. We need to move fast to restore or create a national state owned enterprise to galvanise investment in the sector,” he said.

“No investor will arrive Nigeria to invest in oil and gas without making a stop over at the NNPC. The solid mineral sector is an orphan. Apart from the Ministry, all you have are private players. But that cannot replace a state-owned enterprise where the government has some sensible, sizeable equity investment. And that state-owned company will be in position to galvanise the investors from around the world to come into the country. This exists in other climes. Australia, Japan, Kuwait, Ukraine. We had them in the past, we need them to go home back,” Orji further said.

Abiodun Baiyewu, Executive Director, Global Rights, in her remarks, reiterated that Nigeria loses at least $9 billion annually to leaks in solid mineral mining. She said the workshop is aimed at strengthening and increasing engagements between civil society actors and the government on ensuring fiscal justice in Nigeria’s solid mineral governance, and has as one of its hallmark features, engagement with oversight institutions tasked with fostering transparency and fiscal justice in Nigeria’s extractive industry.