The Minister of Mines and Steel Development, Dr Kayode Fayemi, has canvassed an urgent review of the country’s laws to allow states play more prominent roles in mining issues as a necessary step in making the mineral and mining sector more profitable.
The Minister stated this in his keynote address at the fifth annual lecture of the School of Management Technology, Federal University of Technology, Akure (FUTA), on Friday.
Dr Fayemi, in the lecture titled “Mineral Resource Management for National Cohesion and Progress”, said the present situation where state governments were not adequately involved in the administration of mineral titles despite bearing the brunt of impact of resource exploitation, grossly affect growth of the sector.
He said the country needed to take a cue from her experience in the oil rich Niger Delta, where oil riches rather than cementing national cohesion, became a source of discord and a toxic bone of contention in the polity and where decades of oil exploitation have resulted in a legacy of ecological degradation, trans generational poverty and violence.
“The critical difference between resource-rich performers and resource-rich underperformers is simply resource management. We must now end this grossly self-destructive culture of governmental, economic and political irresponsibility.”, he said.
Although the Minister said the Ministry of Mines and Steel Development has put in place some administrative measures to involve the states and ensure they take advantage of the resources in their domains, he maintained that a review of the laws giving the Federal government exclusive rights over mining must be effected in order for states to play more prominent roles.
Dr Fayemi however assured that the President Muhammadu Buhari administration has the political will and the preparedness to do what is necessary in this regard,
The Minister also said that government needs to create about two million jobs annually in the next decade in order to effectively tackle the menace of unemployment among its teeming youths. He added that mining would help in in the realisation of this massive job creation through the on going reforms in the sector.
“About 70% of Nigeria’s population is under 35 years of age. Unemployment levels are high, in some cases approaching 30% – 50% in certain age and education categories. It is critical that we create 2 million jobs per annum to help absorb such manpower over the coming decade; mining can be an important part of the solution.
Speaking further Dr Fayemi said: “The constitution ordains the exclusive jurisdictional hegemony of the federal government over mining matters. The responsibility for licensing and regulating mining operations resides solely in the federal sphere. Accordingly, the very architecture of resource governance resulted in tensions between the federal government, particularly the Federal Ministry of Mines and Steel Development, state governments and communities and became the main hindrance to the development of the mining sector.
“The structure of the sector was designed to relegate state governments, and offered no incentives to the states and local governments to support the growth of the industry. They have no direct access to royalties and taxes and thus, are excluded from optimally sharing revenue from the mining of resources in their respective jurisdictions.
“One consequence of these ills has been the low investment in the sector largely as a reaction to the systemic hostility towards private mining operators by states. These problems are connected to larger contentious subjects such as the proper location of fiscal domain and governmental jurisdiction in a federal system, resource rights and subsidiarity.
“ These issues are valid, and we recognize that we cannot truly achieve sustainable growth without addressing them. This grossly limits the capacity of states to boost their internally generated revenue.
“There is a broad consensus that this arrangement requires reform. A key objective would see the transfer of mines and minerals from the exclusive legislative list and therefore exclusive federal jurisdiction to the concurrent legislative list where states can exercise greater jurisdiction than is presently the case.
“In the long term, fundamental legal, legislative and constitutional reforms are required to fix these problems. These long-term solutions are in our roadmap and we will activate them at the appropriate time. However, in the immediate term, we have sought to leverage available administrative mechanisms that can instantly defuse the tension between the federal government and states, pending the enactment and institutionalization of more sustainable solutions.
“Since exclusive federal jurisdiction and the lack of transparency and accountability in the sector have caused disaffection between the federal government and states and communities, we have taken practical steps to address these two concerns. We have established two key oversight bodies mandated to hold our ministry accountable to following through with the provisions of the Roadmap – the Mining Implementation Strategy Team (MIST) and the National Council on Mining and Mineral Resources Development (NCMMRD). State Governments are represented on the MIST and every state commissioner in charge of the mining sector in the respective states, is a member of the NCMMRD.
The Minister stated that the NCMMRD’s inaugural summit, held two months ago, took some critical decisions to deepen cooperation between federal and state authorities in the mining sector.
According to him, “The participants agreed, among other things to forge synergy among federal, state governments and local government areas “through the instrumentality of Minerals Resources and Environmental Management Committee (MIREMCO) as provided for by Section 19 of Nigerian Minerals and Mining Act, 2007; as well as a synergy between the Ministry of Mines and Steel Development and the state governments to improve operational collaboration and enhance communication for effective execution of the roadmap for the growth and development of the mining industry.”
The minister who echoed opinions of some experts in the sector maintained that partnership between the federal, state, and local governments with regard to the mining sector would go a long way in breaking down existing barriers to the sector’s development and unlock its profit potential.
Saying that the ministry was exploring feasible administrative models that will involve states in the process of issuance of consent for the granting of mineral titles, the Minister said the establishment of a forum of state commissioners responsible for mineral resources development to constantly engage the federal government on crosscutting areas in mining activities, would address some gray areas.
Fayemi also revealed that in line with the ministry’s aim of improving beneficial participation of state governments in the mining sector, approval have been secured for state governments to be beneficiaries of thirteen percent (13%) derivation from mining revenue exploited in their respective states. This , he said, was in addition to “building the capacity of state governments to actively participate in mining enterprise in their states through Special Purpose Vehicles and Joint Ventures with private sector players”.
“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.
“Our first successful assignment in our reform agenda was the release of a collaboratively formulated roadmap for the mining sector that was the product of exhaustive and inclusive deliberations involving representatives of every stakeholder group in the sector, subjected to a rigorous feedback/validation cycle including parleys with state governments and other industry stakeholders and only after broad-based consultation approved by the Federal Executive Council.
“The wide-ranging participatory process of the framework’s development accounts for its broad acceptance. We now have an industry-wide consensus that provides a pathway for the sustainable turnaround and growth of the mining and metals sector, over the short, medium, and long term.”