Now, it is no longer business as usual with the Federal Government’s recent approval given to the states to exploit mineral resources in their domains if they so wish. This has been a long-standing advocacy of critical assessors of the economy, deeply concerned about the danger of Nigeria’s overwhelming dependence on crude oil for its revenue to the neglect of other resources. The global crash in oil prices, which began mid-2014, is worsening by the day, and has imposed a new economic reality.
Giving the directive in Abuja, the Minister of Solid Minerals, Kayode Fayemi, said states could set up investment companies or form partnerships with private investors to realise this objective, stressing its importance in boosting their dwindling revenues and creating jobs. “Once you do that within the law, the government will at least get royalties from you, get taxes paid legitimately, have people employed in this area. This achieves our objectives of alternative revenue generation for the country and job creation for our people,” Fayemi said.
Nigeria has 34 solid mineral types already identified in commercial quantity. They include tin, iron ore, limestone, gold, gypsum, kaolin, lead/zinc, coal and bitumen. Interestingly, all the states in the country are blessed with one or more of these resources. Nasarawa State is reportedly endowed with over 20 solid mineral types. The exploitation of these resources was a major plank of the economy in the First Republic and contributed over 12 per cent to the Gross Domestic Product. The Lagos State Commissioner for Energy and Mineral Resources, Wale Oluwo, said Lagos State had carried out aerial and land geological surveys as it built a solid minerals data bank to assist it in taking economic decisions. He claimed the state had an estimated 12 million metric tons of limestone around Epe, and 200 billion cubic tons of silica sand in the Ibeju Lekki zone. This is a huge dormant wealth waiting to be tapped. The remaining 35 states and the Federal Capital Territory are not less endowed.
The flood of petro-dollars from the mid-1970s changed our economic priorities. The military administration’s centralised control of economic resources put mines and minerals on the Exclusive Legislative List. Thus, local and foreign rogue miners seized control; and by 2012, 400 children engaged in artisanal activities had died from lead poisoning in Zamfara State while mining for gold. The neglect of this sector is evident in its 0.3 per cent input to the GDP as of 2010. The Nigeria Extractive Industries Transparency Initiative’s lamentation last week that only N113 billion was generated from the sector in five years, further mirrors our shared error of negligence and irresponsibility.
Economic linkages in mining are enormous. Coal deposits spread across 13 states, with proven reserves of 639 million metric tons, are assets in electricity generation. According to the Bureau of Public Enterprises, this could generate 7,000 megawatts of electricity. Juxtapose this with the current 4,000MW national average, for which reason most homes are in darkness, and manufacturing industries dislocated, the folly in not exploiting it as yet becomes obvious. Also, iron ore, a raw material for making steel, could breathe life into the country’s comatose railway transport sector. Steel, being heavy metal, is easier moved by rail.
Each mineral exploited means additional jobs created, and more people in the tax net. Planning should be thorough to create a value chain effect so that derivable economic gains could be maximised. The South African paradigm provides us with an example. Its mining sector, which contributes an average of 20 per cent to its GDP, triggered a raft of industries that either support it, or are end-users of its products. The country has first-rate primary processing facilities that span carbon steel, stainless steel, aluminium, gold and platinum. It is by adopting this system that Nigeria would avoid the resource-curse that has befallen it from crude oil export for over four decades.
We urge states to take advantage of this liberal space to diversify their revenue base as the days of crude oil as a money-spinner for the economy are over. The horizon remained ominous on Monday as a barrel of crude sold at $31.42, $7, below the $38 on which the 2016 budget before the National Assembly is predicated.Ironically, the solid minerals that Nigeria neglected is an economic pillar in Canada, Australia, South Africa and other nations that are creative. The Mining Association of Canada, in a report, said that mining contributed $36 billion to the country’s Gross Domestic Product and employed 308,000 persons in 2010. The industry exported $84.5 billion worth of metals, non-metals and coal, while 3,215 companies provided support services to engineering, environmental, geotechnical and financial outlets. The president of MAC, Pierre Gratton, states, “Mining in Canada is playing a leading role in Canada’s economic recovery. We are generating significant results; we are creating valuable new jobs….” It is the same success story in Australia where coal mining and coal economy in 2011-12 created 49,300 and 181,200 jobs respectively, according to the ABS.
Our 36 states, 27 of which can no longer pay salaries regularly, should seize the solid minerals initiative and free themselves from the fatal grip of oil revenue. There are 200 Australian mining companies in African countries, according to its High Commissioner to Nigeria, Jonathan Richardson. They can be tapped by serious-minded states for the partnership that Fayemi suggested. Indeed, the changing economic climate is no joke.
