Ni g e r i a n s a r e waking up to the reality of the biting recession which experts have blamed on Nigeria’s over-dependence on the importation of foreign products, the existence of wasteful and abuse-prone subsidies, the rapidly falling price of oil on the global stage, administrative poverty on the part of the political leadership as well as corruption. Today’s socio-economic quagmire is not a sudden happenstance.
Firstly, we must recognize that Nigeria’s import-dependent culture across nearly three decades has made the country vulnerable to sudden currency changes because the demand for imported products outweighs our exports. This has perpetually rooted Nigeria at the wrong end of every international bargain otherwise referred to as unfavourable balance of trade.
For however the imbalance, Nigeria inevitably continues to buy Dollars to facilitate foreign trade. Again, the control of the steady value of the Naira is decided by the spirals in the global oil market since Nigeria is a mono-commodity exporting nation preponderantly dependent on rents from oil. This means that Nigeria remains permanently helpless and more vulnerable to economic crises.
With respect to oil, Nigeria is being tossed in every direction: when the price of oil is high, a lot of export gains plus foreign investment in the oil sector increases in favour of Nigeria, thereby boosting the value of the Naira. Conversely, when oil prices dip, all of these gains disappear. Little wonder our financial crisis always coincides with low prices of oil globally – a phenomena that has mutated to the perennial.
However, as the recession continues to seethe, experts continually sing the chorus of diversification. A truthful parody is that the recession has provided some sort of insight and inspiration. Many experts are more emboldened than ever in the quest for ingenious harnessing of alternatives among Nigeria’s bounteous resources.
At last, the recession has grown an army of patriots spiked with chivalry and determined to take charge of the destiny of future generations, rather than let our wellbeing and future be externally decided. To this extent, a consortium of experts in mining converged to brain-storm on the value and prospects of mining as a viable sector of the economy.
The event tagged “Nigeria Mining Week” was convened to tackle sector reforms. It was hosted by the Ministry of Mines and Steel Development for the entirety of the mining ecosystem comprising of artisanal and small scale miners, junior mining operators, exploration companies, local and international investors, financial institutions, traders, solution providers as well as government bodies, to meet and discuss the current state of the market. This year’s edition was a private sector initiated partnership with the government which was put together by the Miners Association of Nigeria (MAN) in partnership with Spintelligent and PricewaterhouseCoopers (PwC) Nigeria.
The Minister of Mines and Steel Development, Kayode Fayemi, who was the special guest, was represented by Minister of State, Bawa Bwari. The fallouts from this mining kitchen have thrown up a lot of promising dimensions. All of which has put Nigeria’s mining industry on the path of recovery. In what can be considered a weighty policy statement, the government is being portrayed as leaning heavily on mining as an employment and wealth creation alternative to oil.
This much was disclosed by the Minister for mining and steel development, Kayode Fayemi when he told Reuters that, “Nigeria had made a “promising” nickel discovery and was looking for investors for a moribund steel plant, part of efforts to reduce reliance on oil exports.” “We are looking at a $500 million fund from their side which would primarily focus on exploration.”
To underline the intent of the government, Fayemi concluded that the ministry was also discussing with the stock market selling “corporate mining bonds” in partnership with mining and other investors. However, he gave no details or timeframe for either project. Similarly, the President MAN, Alhaji Sani Shehu, said: “The industry should know that with the renewed Government interest in mining development in Nigeria and the incentives such as tax holidays, removal of export duty for mining equipment and readiness of indigenous operators to partner with foreign investors, Nigeria is now a re-emerging mining nation worth exploring.” However, observers and experts are concerned about the level of pragmatism on the part of the government with respect to quality engagements, resource deployments, red tape and incrementalism as it affects results.
Evidently, even the Minister alluded to some of these concerns when he said, “This road¬map, according to the government, would provide a pathway for sustainable turnaround and growth of mining and met¬al sectors over the short, me¬dium and long term, adding that the conference would ad¬dress some of the priority areas of the document. There are quick-wins in the industry which we have al¬ready started achieving.
The debate continues on how we missed the opportunities in the past to leverage the vast resources to industrialize and become a great nation.” It is well documented that Nigeria has largely untapped deposits of 44 minerals, which include gold, iron ore, coal, tin and zinc, in more than 500 locations spread across Africa’s most populous nation. Among others, the Minister disclosed that the government is in advanced talks with its sovereign wealth fund and stock exchange to create a $500 million exploration fund and corporate mining bonds to attract investment to help accentuate the drive to attract foreign mining firms.
Currently, the only significant foreign investor in the sector, where 80 percent of mining is carried out on an artisanal basis, is Australia’s Kogi Iron. The vast resource deposits has propelled the government to earmark boosting the mining sector as priority as a slump in crude sales, which provide 70 percent of government revenues, has pushed Africa’s biggest economy into recession. But rather than a taciturn, the government via partnership with the private sector is determined to haul the mining back to sail. The Minister said PricewaterhouseCoopers is a pillar to lean on with respect to technicalities in the research and collation of ideas and data.
He acknowledged that PricewaterhouseCoopers is conducting an audit which began on Aug. 1 and would last 150 days, followed by a public bid process. The pivotal role of PwC was also echoed by the Advisory Partner, Cyril Azobu, who attested that, “the organizers are building on the success of the PwC Mining round table in November 2014, and are happy to be part of the Nigeria Mining Forum which held in November 2015, as well as the 2016 week-long event. Despite the negative statistics, several sectors are considered to hold huge opportunities for investment.
Based on PwC research, these are agriculture, downstream petroleum, retail, and ICT.” Even the signals from inside PwC are as enthusiastic as they are encouraging. The team is determined to keep moving forward. This view is very strong with Tola Ogundipe, the PwC Partner and Africa Assurance Leader emphasized that PwC are leading the march to launch Nigeria’s mining sector unto a pedestal of global attraction. This view is shared by his colleague, Habeeb Jaiyeola on the back of his experience as PwC’s Senior Partner, Energy and Head, Mining and Industry Business Development utilities.
Jaiyeola believes that PwC are driving activities that will make Nigeria and Nigeria’s believe and actualize her intrinsic potential beyond oil. Nigeria has the largest economy in Africa and the 22nd largest globally. Many experts have predicted that the economy has potential to rise through the world rankings to top 10 by 2050 with a projected GDP of $6.4 trillion, surpassing Germany, the United Kingdom, and France.
This cannot be achieved if the country continues to rely heavily on crude oil. To achieve diversification of the economy in the mining sector by harnessing massive gold deposits, produce steel locally, seal mutually beneficial deals with leading Australian, Chines and Indian mining companies, only a few prerequisites are needed.
The genuine political will from the government towards the provision and maintenance of efficient and superb road and rail infrastructure, import substitution of relevant machinery posed and the culture of transparent issuance of mining licenses from delegated regional offices across the country would be huge panacea. These will inevitably boost the economy, create employment, earn foreign exchange from exports and increase foreign investments.
