THE campaign that states should look inwards to improve their revenue intake seems to be yielding fruits going by the recent announcement by Kano to establish a Mineral Development Agency that will enable the state to effectively drive the development of the solid minerals sector for economic growth. Though coming late and its remit still unclear, this should signal a readiness by Kano and every other state to act responsibly. Nigeria’s states desperately need to diversify their economy and revenue sources. The 35 other state governments should implement similar policies to attract investment to the mining sector and boost job creation.
Sadly, the initiative is coming five years after the Federal Government’s offer to willing state governments to set up investment vehicles to apply for mining licences in partnership with investors. Rather than embrace this new initiative that could boost their revenue, the states, Kano inclusive, have remained indolent, opting to fold their arms, relying preponderantly on the Federation Account.
As public revenues shrink further however and unemployment continues to rise, the states need to act more decisively and very fast. Tokenism will not suffice; they should aggressively seek foreign and domestic investors as partners to participate actively in the exploitation and processing of solid minerals in their territories.
Nigeria is richly endowed with 44 identified mineral types found across the 36 states and the Federal Capital Territory. These include gold, bitumen, limestone, iron ore, coal, columbite and gemstones. However, oil has for the last five decades remained the country’s top foreign exchange earner while the country imports some of these mineral resources it has beneath its soil. The Minister of Mines and Steel Development, Olamilekan Adegbite, had lamented last month that the mining sector’s contribution to GDP had steadily declined from 5.6 percent in 1980 to about 0.33 percent today. This is significantly lower than other mineral-rich countries in West Africa.
Significantly, every state has exploitable solid minerals. Some like Kogi and Nasarawa have an edge in a wide diversity of mineral types. According to the Ministry of Mines and Steel Development, Nigeria’s bitumen deposit is the second largest in the world. Found in Ondo mostly, followed by Lagos, Ogun and Edo states, the country has 42.47 billion tonnes in proven reserves. Nigeria had, however, imported over five million metric tonnes of the commodity as of April 2019. A former Minister of Mines and Steel Development, Kayode Fayemi, stated in 2017 that about 80 percent of asphaltic materials, including bitumen, used for road construction in the country, was still being imported into the country while tonnes of bitumen lie fallow and untapped.
The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative, Orji Orji, hit the nail on the head when he described the situation as “abysmally embarrassing.” An earlier report by NEITI showed that solid mineral exports accounted for just N124 billion of Nigeria’s total exports of N24.2 trillion in 2019, representing just 0.51 percent of total export for the year.
Ironically, mining provides 41 percent of Ghana’s exports. South Africa’s mining industry contributed 22 percent to the country’s GDP and employed over 760,000 people. In Australia, the mining industry’s GDP increased by 4.9 percent in 2019-20 and totalled $202 billion. Australia’s Bureau of Statistics says mining is the country’s largest industry with a 10.4 percent share of the economy.
Apart from the indolence of the states, Nigeria’s warped and convoluted federal structure has not helped matters. The constitution states that mineral resources found anywhere within the federation belong to the entire country. This has prevented states from harnessing their resources on their own. In the United States where Nigeria borrowed its federal system, states are granted ownership of their resources. No wonder natural resources and mining contributed $122.6 billion to the economy of Texas in 2016 alone. Unfortunately, the recent constitution amendment in Nigeria turned out to be a mere jamboree, as bills that would have ensured a reversal of this anomaly were not even presented.
Although the warped federal system stifles growth at the sub-national level, the concession given to states to get licences and enter into agreements with technical partners to harness solid minerals should be heavily exploited. Kano and others should partner international mining firms in this regard. Nigeria’s state governors advertise their lack of vision by failing to fully exploit this window. True, some states have set up agencies and some even incorporated companies, but concrete action has been missing. Yet, they all suffer huge revenue shortfalls.
For several years, Kano, which has the largest number of local government areas in the country, has relied, like the 34 others (except Lagos) heavily on federal allocations. Unwisely, it has continued to scare off investors with its draconian unconstitutional religious laws being enforced by overzealous Hisbah officials. Unsurprisingly, neighbouring Kaduna State has since surpassed Kano in the area of internally generated revenue. Clearly, the Kano State Government needs to focus on improving its ease of doing business and creating an atmosphere conducive to investment.
Every state should harmonise artisanal mining activities in order to upgrade the method of extracting solid mineral and ultimately exploit the Federal Government’s Solid Mineral Intervention Fund.
Other states should move quickly to invest and creating an enabling environment for the mining sector to thrive. Mining contributes greatly to revenue, jobs and GDP of many American states. It grossed $9.1 billion in Nevada in 2020, $7 billion in Arizona and $6.1 billion in Texas. All Australia’s six states thrive on minerals, with Western Australia and Queensland accounting for almost half of the country’s 340 mines according to the Australian Federal Parliament.
With Nigeria tottering under the burden of local and foreign debts, a vibrant mining sector is invaluable to unyoke the nation from the need for ruinous loans and joblessness, especially now that oil subsidies running into trillions are being deducted from the Federation Account, reducing the states’ allocations and making it difficult to pay salaries. All 36 states should as a matter of urgency look to mining for survival, job creation and economic development.
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