On the Road to Shared Mining Prosperity
This administration is taking steps to deliver on the promise made by President Muhammadu Buhari on Mining. While Nigeria faces a number of challenges today, we are increasingly optimistic that with the continued support of the citizenry, today we have taken a big step on our road to the fulfillment of our promise to grow Nigeria’s mining sector. Diversifying Nigeria’s revenue base, reducing crude oil’s share of gross domestic product (GDP) by growing the contribution of other sectors, and creating employment and economic opportunities for Nigerians were cardinal election promises of the President. The Mining sector is central to the fulfillment of these strategic goals.
On March 1, 2016, a multi-stakeholder Committee was set-up to develop a Roadmap for the transformation of the mining and metals sector. Note that prior to that decision, my predecessors as Ministers had since 1999 done great work to move the sector from a state led one to a more efficient, privately focused sector with clear guiding laws, regulations and activities. A decent law, the Nigerian Minerals and Mining Act (2007), with globally competitive sector incentives has been in place since 2007.
However, the sector’s growth and contributions to GDP have remained less than ideal, as it accounted for only about N400 billion in GDP, or about 0.33% in 2015. Therefore, to fulfil the Buhari Administration’s pledge, we began a process to deepen reforms, attract new investors and collaborate with a wide network of partners and stakeholders to build an attractive mining ecosystem. That Committee set-up in March was charged with helping us understand why we did not have such an ecosystem and making clear, actionable recommendations on how we solve the challenges.
On March 31, the Committee delivered a draft roadmap for the rejuvenation of the mining sector. The report which draws upon the insights and perspectives of many participants and sources in the industry has laid out a strategic path which I fully endorse regarding how to rebuild Nigeria’s mining sector over the next two decades.
Allow me to briefly summarize: Nigeria’s ambition should be to create a globally competitive sector capable of contributing to wealth creation, providing jobs and advancing our social and human security. Nigeria will achieve this by focusing on using its mining assets to drive domestic industrialization initially, and then migrate to winning in global markets. The strategy calls for a value chain based growth plan.
Building a competitive mining value chain means firms operating in Nigeria must compete on quality and cost versus global peers. Making Nigerian mining competitive means government and private sector have to share the responsibility of investing in key drivers of success such as public geosciences data investors need, the appropriate infrastructure e.g. railways and bulk ports, mine security networks, specialized technical talent, and of course, superb regulatory and enforcement capacity. The Committee’s recommendations on how we can nurture and implement smart growth in the sector are bold, and we are grateful for their courage.
Now that the draft has been created, the Ministry’s next step as agreed at the recent National Economic Council (NEC) retreat is to swiftly share the roadmap with State Governors as well as other stakeholders. We will be doing that and commencing a process for integrating their feedback into the Roadmap. When the committee was set-up, we had tried to ensure all stakeholders were appropriately represented. I am aware the committee consulted far and wide, and received support from other stakeholders not within the committee. Such support is consistent with the warm reception and cooperation the Minister of State and I have enjoyed from the ministry staff and different stakeholders with genuine interest in the industry. We intend to call upon these partners once again to offer their perspectives on the draft Roadmap over the next few weeks.
As the feedback process unfolds, in parallel, we will establish an Implementation Team to coordinate the work of delivering the Roadmap’s short, medium and long term action items. We expect that the Roadmap Committee, ably co-chaired by Professors Ibrahim Garba and Siyan Malomo, as well as their esteemed members will continue to provide critical advisory support going forward.
My team and I will like to thank every member of the committee for the dedication and willingness to support us. We are also grateful to the resource groups, Bain and Company, PriceWaterhouseCoopers, and Deloitte, for providing very strong advisory support, and assisting in steering the deliberations, conclusions and recommendations of the committee.
We will ensure all recommendations within the draft document are considered in the best interest of the Nation. For example, a key recommendation is improving access to finance for miners and the sector. We intend to also intensify our engagement with the industry, financiers and professional associations to ensure a collaborative atmosphere in rebuilding mining finance.
To that end, building on our engagement with the Bankers Committee in December 2015, we will expand our work with Nigerian banks, the Central Bank, DFIs, private equity funds, and the Nigerian Stock Exchange to create new ways of financing the sector. We recognize that the risk in mining is real but through our own actions such as strengthening the Mining Fund or providing updated training to mining engineers at the School of Mines in Jos, we can help significantly de-risk the sector, and support banks as they develop mining teams to further lending into the sector.
The Roadmap contains many clear recommendations like the above, organized around themes such as deepening the use of energy minerals, to improving strict regulatory enforcement, to enabling communities to prosper from mining. As soon as the stakeholder review process is concluded, we shall make this road map available to the general public, so the set direction is clear, and everyone can track it as we proceed. The expectations of us are high, and we will work tirelessly to live up to them based on transparent metrics.
As this is a living document, the Implementation team will continue to refine it periodically, and ensure we remain aligned as the nation embarks on this journey of sustainable mining development. At the end we want to ensure this is a national document that is supported across board, and outlives any administration. The journey for sustainability for the sector has to be a continuous one.
Thus, as we move forward, we will continue to partner with all stakeholders, domestic and foreign to ensure we grow the sector. In particular, we count on the Media and Civil Society as strategic partners to support the successful implementation of this roadmap by holding us accountable to the promises we make.
While rejuvenating mining is a cardinal campaign promise of the APC government, in the end, a successful delivery of the promise will be to the benefit of all Nigerians. Mining is a prosperity multiplier for many host communities and states in that it will provide both direct and indirect opportunities for many Nigerians, from engineers to truck drivers to lawyers to market women.
That said, it is also important that a note of caution be sounded. Mining has not been and will never be the source of overnight, easy monies. Companies have to place smart bets based on geosciences data the Ministry helps create. Sometimes the companies are right and they upgrade their exploration licenses into mining licenses, creating even more jobs. Sometimes they are wrong and such capital expenditures have to be written off, with attendant job losses. Mining also carries a significant environmental burden that we must mitigate in a sustainable manner. All of us inside and outside government should understand this cycle, and provide sincere support, as well as moderate our expectations in order to build a sector that can produce sound wealth from what is a wasting asset. Our role as a government is to create the most enabling environment to support risk taking by investors who ultimately are the ones that can help create the most jobs. We will do ourselves and our best interest a disservice if we insist on extracting unearned profits upfront.
In conclusion, we at the Ministry can make the country one solemn promise: 12 months from today, Nigeria’s mining sector would have moved from the pages of a Roadmap to active results, whether it is in the number of licenses issued, or volume of capital inflow into the sector, or new jobs created, we will have made clear progress based on your continued support.
Dr. Kayode Fayemi, Minister of Solid Minerals Development made these remarks when the Solid Minerals Roadmap Committee submitted the draft report on Thursday, March 31, 2016.