On behalf of my colleague the Minister of State, Permanent Secretary and staff of the Ministry of Mines and Steel Development, I am delighted to welcome you to this inaugural event for a Development Partner and Donor Agency Coordination Group on Mining.
2. The present administration recognised mining as its core part in the diversification strategy of the Nigeria economy. The Ministry of Mines and Steel Development was therefore charged to put the mining sector back on the growth trajectory in the shortest term. In implementing this mandate, we undertook an intensive sectoral situational analysis. We consulted widely with numerous stakeholders and reviewed previously completed studies. The feedback from our stakeholders was overwhelmingly in support of creating a globally competitive mining sector that contributes to national wealth and provides inclusive growth in the Nigerian economy. The appropriate path to rebuilding the mining industry was to develop a roadmap for the growth and development of the minerals industry.
3. Our process of developing the roadmap was both consultative and inclusive to enable us to meet our mandate and secure the greatest benefit for our country and for citizens. We engaged a broad spectrum of stakeholders in the country, widely acclaimed and respected veterans of the industry, to be members of the committee to develop the roadmap. Once we received the draft roadmap from the committee, we shared it with stakeholders to guide us in finalising our mineral resource decisions. These included the Economic Management Team, the 2016 National Economic Summit, and the National Economic Council (NEC), and the Governors’ Forum. We also disseminated the roadmap to the 36 states and the FCT and received written comments. Finally, on May 26 and 27, 2016, with the Kaduna State Government as host, we held a National Consultative Forum to secure additional comments on the roadmap. Inputs from that session as well as memoranda and other submissions we had received from multiple stakeholders were fully integrated into the final document.
4. On 31st August 2016, the Executive Council of the Federation approved the roadmap for the growth and development of the Nigeria mining industry to tackle the sector challenges and reposition the country for a self- sustained inclusive growth. This is with the goal of raising mining’s overall direct contribution to GDP from about 0.34 percent in 2015 to over 3 percent in the next ten years. Attaining this goal is in line with the Nigerian government’s vision to develop a well-diversified economy and reduce the over-reliance on crude oil through agriculture and mining. I should emphasise that we have domesticated the provisions of the African Mining Vision (AMV) adopted in February 2009 during the African Union Summit in the roadmap. Accordingly, you will find that apart from positioning our mining sector to support economic diversification, we are also positioning it to create jobs and fast-track industrialisation through several initiatives detailed in the roadmap. Another important and critical objective that we seek to achieve is to reposition Nigeria as a serious mining destination in the international mining community.
5. The Roadmap has provided a strategic framework for Nigeria to build an inclusive and sustainable mining industry designed to serve a targeted domestic and export market for ores and minerals. This framework is anchored on globally acceptable mining practices and with due regards to the environment, communities and general benefit to all stakeholders in the industry. Part of the measures taken to implement the roadmap and its reform initiatives is to create a dedicated team – the Mining Implementation Strategy Team (MIST) to drive the reforms. MIST has been established and it is a multi-stakeholder team.
6. Implementing a sector development plan of such magnitude and succeeding requires a multi-sectoral and inter-ministerial approach. We have drawn up plans to collaborate with other key line ministries, departments, and agencies (MDAs) and state governments. Specifically, the Ministry proposes to collaborate with the following:
6.1 Ministry of Budget and National Planning in mainstreaming the minerals and mining industry in the overall economic growth strategy of the country.
6.2 Infrastructure MDAs- Ministries of Transportation as well as Power, Housing and Works. Infrastructure will be key for transporting ores from mines to markets and powering the mines thereby making mining projects viable and linking the mining sector with the broader economy. We are keen to ensure that mine-infrastructure developed by the private sector will be used to anchor and develop other non-mineral industries that will outlive the mine. Ongoing and planned reforms in the transportation, power, housing and works to open up the sectors to private sector investment and improve efficiency will be highly beneficial to our vision.
6.3 Ministries of Agriculture & Rural Development/Water Resources to align our work on agro-minerals particularly phosphate, land use and water rights permit in order to minimise delays, as well as protect the environment to ensure sustainability.
6.4 Ministry of Finance and Central Bank of Nigeria to support the establishment of investment support facilities for the mining industry provided for in the Mining Act, as well as to enable industry to scale up.
6.5 State Governments through the annual National Mining Stakeholders Forum to align policies with the states as well as solve key issues such as issuance of community consent, artisanal mining development and regulation, mine security, mine infrastructure development.
7. I would like to share with you some of our ongoing policy reforms and achievements. Although the mining sector is yet to become a significant source of government revenue in Nigeria, because of the small size of the sector, revenue receipts are low for several other reasons. Our revenue collection and auditing system has been mainly paper-based. Our assessments of taxes and royalties have been hugely reliant on figures disclosed by private companies, which were usually under-stated. But we are starting to make progress in changing this.
8. Within 13 months, we successfully tripled the internally generated revenue of the Ministry up to approximately N2bn in 2016, up from N700m in 2015 through strengthening and enforcing mining rules and regulations among others. In fact, the Q4 NBS report indicated that our sector’s contribution to GDP grew by 7.10% up from a contribution of 6.23% in the preceding quarter. Our audit process is under review to improve production and revenue collection. We are in the middle of developing a Mineral Management Information System for automating processes and procedures and linking the MMSD departments and agencies together as well as with other key ministers, departments, and agencies. We are at the final stages of operationalising a web-based Nigerian Mineral Decision Support System (DSS), which we intend to launch publicly. Once the DSS is fully operational it will allow the MMSD, in conjunction with other government stakeholders, to undertake regionally based resource corridor analysis. Such analysis will support the Government in identifying opportunities for value chain and local content development, as well as infrastructure development in those regions.
9. Our other achievements include improved engagements with state governments, which is beginning to pay off. Some of them have adapted the roadmap and we are collaborating with them to formalise and manage our artisanal miners. We are working with our defense and security agencies to curb the actions of illegal mining and mineral smugglers. We have also started to implement measures in the sector in line with the recent executive order for improving the ease of doing business in the country.
Inauguration of the Coordination Group on Mining
10. Restoring Nigeria’s lost glory in mining means more than simply re-enacting the past. It involves improving governance, transparency and accountability, building an investor-friendly regulatory environment, making the sector more inclusive for artisanal miners and women, and so much more. We are driving a public sector-enabled and private sector-led mineral sector transformation and look forward to the support of the development community in achieving our goals.
11. Although the first phase of reforms from 2005 to 2012, supported by the World Bank under the Sustainable Management of Mineral Resources Project (SMMRP), was largely successful, there were still significant gaps and deficiencies that remained to be addressed. I have already mentioned some of those gaps and deficiencies earlier. Phase one reforms led to the creation of an investor-friendly legal and regulatory framework based on international standards, including enactment of the Minerals and Mining Act 2007 as well as promulgation of enabling regulations including consolidating the transformation of the Federal Government from “owner-operator” to “administrative-regulator”.
12. When the Government started mining sector reforms, it had only the World Bank as a development partner over a 7-year period from 2005 to 2012. Thereafter, the Australian and Canadian Governments supported reforms implemented by the World Bank on our behalf from 2013 to 2015. Since then we have made tremendous progress and I am pleased to inform you that the number of development partners and donor agencies that are working with us to ensure an effective outcome of the mining sector reforms is growing. As an illustration of the projects that have been approved to support us in implementing the roadmap in several key strategic areas:
12.1 Department for International Development (DFID) is financing some of the costs for our advisory and technical team;
12.2 Ford Foundation is financing our strategic communication and environmental and social justice activities as well as the costs for some of our advisory and technical team;
12.3 Medecin San Frontieres (MSF) is undertaking a pilot clean up in ASM communities affected by lead poisoning from gold processing activities;
12.4 Open Society Initiative for West Africa (OSIWA) is reviewing the legal and regulatory obstacles in the sector, financing our strategic communication activities, reviewing field operations and frameworks for regulation of the sector, supporting the Women in Mining, Nigerian Chapter in improving gender inclusiveness in the sector, and financing the costs for my advisory and technical team. Equally notable is the support for increasing the inclusion of women in mining activities as well as advocacy to eradicate child labour in mining opeations;
12.5 United Nations Industrial Development Organisation (UNIDO) is assisting the country to develop the Minamata Initial Assessment and a National Action Plan on Mercury use in Artisanal and Small-Scale Gold Mining as stipulated by the Minamata Convention. This support extends to our ministry and the ministries of environment and health.
12.6 We intend to align all the partners and donors whose programs are associated with gold such as UNIDO, Pact, which has indicated interest, and others, together under a single gold development program. Our purpose is to maximise the benefit of their experience to address the challenges associated with gold mining and production, including smuggling, illicit financial flows, environmental degradation, conflict etc. At the same time, we want to quickly maximise the benefits of being able to process gold domestically through small scale enterprises (SME) development, gold value chain development, and market access development.
12.7 United Nations Development Project (UNDP) is assessing our implementation of the African Mining Vision and the framework for revenue collection with the view to addressing revenue leakages. The institution has also offered to assist us in sustainable livelihoods and poverty reduction for our artisanal miners and environmental management utilising the GEF vehicle.
12.8 World Bank’s support, recently approved by its Executive Board, will focus on strengthening the Government in its role to establish a strong foundation for mining sector development as sector regulator and facilitator. Additionally, support will also be provided to facilitate sector development and enhance competitiveness and attractiveness to investors as well as manage and develop artisanal and small-scale mining as well as development of our industrial minerals for value addition. Most importantly, the Bank has designed a program to increase the economic linkages from our industrial minerals to our domestic industrial and manufacturing sectors. Under this program, support will also be provided to facilitate the flow of mineral transactions into the sector. This support will be extremely useful in helping us to achieve the Government’s import substitution policy. Another very important program being supported by the Bank is identifying and advancing ‘proof of concept’ investments. This is aimed at attracting private sector investment into targeted exploration areas and mineral production at specific sites. The importance of the ‘proof of concept’ investment is to demonstrate Nigeria’s mineral potential to the investment community by bringing few successful medium (or large) size mines into full-scale production, contractual close, and production.
12.9 I must add that we are in discussion with the African Development Bank (AfDB) on a range of issues particularly to support the quest to develop our energy minerals.
13. We appreciate the support we have received so far and hope that discussions we have had with others will materialise into projects shortly. For others who we have not yet engaged with and who are here today, we also look forward to fruitful discussions and outcomes in the future.
14. This takes me to the main reason we are here today, ladies and gentlemen. Our reform program is comprehensive and challenging and we need the support of development partners and donor agencies, research institutes, think-tanks etc. in implementing it. I urge you to also extend this support to state governments keen on collaborating with us in managing their artisanal miners as part of their poverty alleviation, job creation, and economic diversification strategies. Another important area of interest for us is regional integration as encouraged by the African Mining Vision. We are also keen to collaborate with our neighbours in the West African sub-region and beyond to meet our common objectives and address common challenges. Many of you are already supporting these countries as well as regional and continental institutions such as ECOWAS and the AU in integrating countries together. On our part, we hosted my counterpart Ministers from the region and South Africa to a National Mining Summit to discuss our individual AMV domestication successes and challenges from June 13-14, 2017. We look forward to continuing this dialogue beyond this Summit and hope to receive your support and hope that regional integration will feature strongly in the programs we design together.
15. As the number of partners and agencies willing to support the MMSD has increased and, hopefully, continues to increase, we feel that there is a strong need for a Development Partners and Donor Agencies Coordination Group on Mining. I understand establishing this type of group is not new in Nigeria or in the development community, and that there are similar coordination groups for Environment, Power, Agriculture, and Trade and Investment sectors in Nigeria. This should be a forum where partners and agencies meet to review, coordinate, and synergise their programs with the aim of increasing the efficiency and effectiveness of assistance provided to the sector. It should also serve as a platform for making joint decisions on issues of external financing to the mining sector as well as for policy engagement with the Ministry. I am confident that we will achieve our sector reform objectives with your support. Therefore, we hope that launching this group will chart ways toward accelerating implementation of the roadmap and invariably the needed impact mining to the socio-economic development of Nigeria.
16. I hereby inaugurate the development partner and donor agency coordination group on mining.
17. Thank you
Dr. Kayode FAYEMI
Minister of Mines and Steel Development
Abuja-FCT | Friday, June 16, 2016