By Remi Adebayo
Funding are major constraints in Federal Government’s attempt at diversifying the economy. Right from the start, President Muhammadu Buhari-led Administration has intensified its commitment to shift from near-total reliance on oil as major economic earning for nation’s sustenance.
The pipeline vandalization by Niger Delta militants and price fluctuations; coupled with technology shift from oil consumption by foreign country are sad start for a country whose mainstay was same and understandably added to unleash a regime of recession from which the nation just quit officially.
Britain, France, India, Norway, including Austria, China, Denmark, Germany, Ireland and Japan have set out official deadlines towards when they proposed to eliminate gasoline –powered cars to be replaced by non-emitting and environment friendly electric ones, starting as close as eight years away.
The Netherlands, Portugal, Korea and Spain have similarly followed suit. Although the United States does not set a central deadline, yet, some of its states have made pronouncements towards that target. With nations around the world fully dumping fuel consuming automotives for electric cars, it is certain that the days of petroleum products as safe haven for oil-dependent nations were over.
This is a precautionary notice to oil-dependent nations like Nigeria on the imperatives for vigilance and need to prompt thoughtful alternatives to oil, considering the absence of strategic plans for economic survival in an oil-slump era.
Acting from foreknowledge of impending economic down slide, the Buhari Government has embarked on aggressive agricultural and solid minerals policy changes to raise the bar in revenue generation.
In response to the solid mineral sector challenges, earlier in the year, a three-day summit of industry experts, organised in Kaduna by Proedge Limited and the Kaduna Chamber of Commerce, Industry, Mine and Agriculture, KADCCIMA, laboriously brainstormed on the way forward in the minerals-rich north.
At the end of the summit which had Building a solid ground for a resilient economy as its theme, it was agreed that enormous investment opportunities exist in solid mineral but the sector must be properly positioned to attract investors.
The gathering went further to identify four minerals adjudged to be world class in Nigeria, and these include Bitumen, Coal, Gold, and Barite which are estimated to have over 1 billion tons deposit reserve. This is massive!
But the lacklustre interest in their exploration has disturbed stakeholders, most of whom blamed the inclusion of the mineral sector on the Exclusive List as hindrance where only the Federal Government has the mandate to prospect solid minerals wherever they may be found in the country; this, many considered to be a setback and reason for foot-drags by states to invest in the industry as overbearing federal control may be undue bottlenecks posing serious challenge to prospective operators in accessing mining licences.
On the policy level, states in the north in particular, with its huge minerals deposit, could accelerate economic diversification; create jobs and wealth for the people if it could access the sector through value addition, while funding has largely hampered investment by vast number of artisanal and small scale miners.
Need for improved mining techniques different from the current crude, protracted, unprofitable and environmentally-hostile methods involving over 80 percent artisanal miners requires significant contemplation by the government.
Added to that is demand for exploratory data and mechanized exploitation which require technical and skilled manpower to make the sector viable, safe and profitable.
Again, for effective buy in, there should be incentives in the form of grants, soft loans and financial support to small scale operators for conducive mining operations and competitive pricing.
Although funding was identified as a clog in the wheel, local banks were helpless in its exposure to solid minerals financing due to limited resources and skills. Therefore, the summit advocated the establishment of a Solid Mineral Development Bank where a part of the 13 percent Derivation Fund could be used as seed capital in order to stimulate investment in the sector and prevent loss of revenues to illegal mining.
Just recently, two companies; Solid Unit Limited and Geotess Nigeria Limited were shut down at Zurak, in Wase Local Government Area of Plateau State for mining minerals worth over N100 billion illegally.
Operators of the firms include 16 Chinese nationals and eight Nigerians whose main advantage is volume of resources at their disposal and systemic loopholes which was leveraged upon to unleash what the Minister of Mines and Steel Development, Dr. Kayode Fayemi described as “economic terrorism” during a meeting with staff of the ministry in Abuja.
“The arrested Nigerians have been in active connivance with foreigners to carry out massive illegal mining in the state thereby depriving the country of revenue. Their unwholesome activities have also led to environmental degradation and abandoned mine pits,” Fayemi said in a statement signed by his media aide, Olayinka Oyebode.
But the small scale miners are faced with lack of capital, skilled manpower and dependence on imported inputs and equipment and spares, lack of enabling investment climate and lack of information on mineable deposits.
Succour has however come the way of these miners as the Federal Government through the Ministry and the Bank of Industry, (BoI), for the first time, signed a Memorandum of Understanding in support of these weak operators with counterpart funding to the volume of N5 billion. The agreement stipulated counterpart contribution of N2.5 billion, each from the Ministry and matched by equal amount by the development bank.
According to its terms, a certified Artisanal Scale miner, under the scheme, has the opportunity to access from N100,000 to N10 million; while a Small Scale Miner can access between N10 million and N100 million.
The MoU was signed recently in Abuja by the Minister of Mines and Steel Development, Dr. Kayode Fayemi and the Managing Director of the bank, Mr. Olukayode Pitan.
Expanding on the imperatives of the grant, the Minister said the fund became necessary to address challenges of insufficient funding and access to capital, which are parts of the major factors militating against Artisanal and Small Scale miners who account for about 80 per cent of activities in the sector.
The icing of the agreement is the confidence reposed on the BoI, pursuant to its antecedents of experience and expertise in managing such funds to reflect its mandate as foremost development bank, therefore, offering same service as custodian and manager of this fund where artisanal and small scale miners would benefit at a friendly interest rate of five (5) per cent.
“This agreement is a meeting of minds between the FMMSD and the BoI. We are in the first instance launching a N5 billion fund. With our ministry’s pilot contribution of N2.5 billion, BoI will match our contribution with another N2.5 billion.
“Consequently, with this agreement, the FMMSD appoints BoI as the custodian and manager of the Nigerian Artisanal and Small-Scale Miners (ASM) Financing Support Fund, for the purpose of financing artisanal and small scale mining projects involving industrial minerals, precious stones, precious metal (gold), dimension stone and such other strategic minerals in Nigeria as shall be approved by the ministry and BoI from time to time,” Fayemi said.
The Minister said the fund would be available in the form of term loans or working capital to be utilised for the purchase of requisite items of plant and machinery; payment for drilling, geological and other services related to mining business as may be required, among others.
He added that proper funding would help to integrate the Artisanal and Small Scale Miners into the formal sector, enhance their growth and development in a structured manner, and spur productivity and job creation in the mining sector.
The Ministry of Mines and Solid Mineral Development had secured approval for N30 billion from the mining sector component of the Natural Resources Development Fund from the Federal Government to tackle the challenges of funding in the sector.
Similarly, it got the World Bank’s approval for $150 million to aid the ministry’s Mineral Sector Support for Economic Diversification (MinDiver) program.
“The Solid Minerals Development Fund (SMDF) is now spearheading the assembling of a $600M investment fund for the sector, working with entities such as the Nigerian Sovereign Investment Authority, the Nigeria Stock Exchange and others. This is a departure from the past, judging by the fact that in 2015, out of the meagre N1 billion allocated to the ministry, only N352 million was released.
BoI is not a novice in such involvement; with a track record of service, where it aligns with the thoughts of government in its bid at reducing poverty and end hunger through creation of jobs in every sector of the economy.
Through its interventions, the BoI on its own had pioneered funding in the mining activities just as similar funding arrangement managed by the Bank improved the entertainment sector, which is a leading industry in the promotion of the Nigerian culture and empowerment of thousands of its youths in the creative sector.
In his view, BoI’s boss said the Bank was convinced that the fund would step up a rapid development in the mining sector, reminding that BoI is a pioneer in funding mining activities where other banks were hesitant to invest.
It is therefore heartwarming to spot that the Bank of Industry has been consistently strengthened, and has over the years, earned for itself a reputation as one financial institution that government and Nigerians can depend upon as custodians of scarce but needed resources at the time the nation desperately require dependable firms of its like, to assist in delivery of development initiatives and promises of change.