The Role of the Mining Sector on the Nigerian Economy

Nigeria is a country blessed with various resources ranging from fertile land, forest, rivers, crude oil, gold, etc. But the country’s lack of effort resulted in a sluggish improvement in the mining sector.

Nigeria is a country blessed with various resources ranging from population, fertile land, forest, rivers, iron ore, uranium, coal, barites, limestone, crude oil, lead-zinc, gold, etc. However, the country has about 44 solid mineral commodities that can be found in about 450 locations nationwide.

Seven of these minerals are considered strategic minerals by the Nigerian Ministry of Mines and Steel for accelerated development.

These are Gold, Coal, Barytes, Tantalite, Iron ore, Bitumen, and Lead/Zinc. Currently, the Nigerian government relies immoderately on crude oil, and this has resulted in very little concentration of government in mining activities and it contributes to slowing the sector’s growth.

The contribution of the mining sector as a percentage of GDP in Nigeria is only 0.33 percent. This shows sluggish improvement in the sector, as the domestic mining industry is underdeveloped, leading Nigeria to import some of the mineral commodities that it could produce within the country.

In the North-western part of Nigeria, there are abundant mineral resources such as Butyles, Kaolin, Marble and Salt, Gassiterite, Copper, Gemstone, Tantalite, Glass-Sand, Lead/Zinc, Pyrochinre, Tourmaline, Tentalime, Topaz, Graphite, Flosper, Asbestos, Amethyst, Kyanite, Aqua Marine, Superntinite, Mica, Rock Crystal, Sihnite, Sapphire, Ruby, Coal, Gypsum, Laterite, Limestone, Phosphate, Flakes, Clay, Potash, and Gold.

But most of such resources are left unexploited and negligence occurs throughout the mining sector where the government and individuals are more concerned about revenue from the oil and gas sector. In a country like Zambia, Mining accounts for 12% of the country´s GDP and more than 70% of total export value.

The sector is also a significant source of government revenue and formal employment, both directly and indirectly due to the massive investment made by the Zambian government and private sector.

Looking at the North-eastern region of the country also, there are precious natural resources such as Magnesite, Kaolin, Gypsum, Bentonite, Wolfram, Limestone, Coal, Lignite, Iron-ore, Cassiterite, Gold, Clay, Diatomite, Lead/Zinc, Soda Ash, etc. Sadly, with all these natural resources the Nigerian government has not put more emphasis on mining activities.

Many Nigerians are living below the poverty line as they unknowingly sleep on untapped mineral resources.

The mining sector has been experiencing an ongoing resurgence despite the negligence of the past decades, but still, Nigeria has so far not secured the growing benefits from these resources despite their potential as a major source of government revenue.

In South Africa the mining sector contributes 7.3 % to GDP, it attracts valuable foreign direct Investment and huge revenue to the government, almost a half million people are earning income from the sector due to the efforts made by the South African government in mining activities.

The North-central part of Nigeria has blessed with plentiful natural resources including Cassiterite, Clay, Marble, Dolomite, Lead/Zinc, Tantalite, Gold, Cole, Gypsum, Feldspar, Dolomite, Iron-ore, Talc, Kaolin, Columbite, Mica, Gold, Galena, Barite, Barytex, Chalcopyrite, Limestone, Sapphire, Tourmaline Quartz, Zireon, Bauxite, Bismuth, Betonite, Coal, Fluoride, Emeral, Granite, Gemstone, Molybdenite, Tin, Wolfram, Phrochlore, etc.

Despite all of these mineral resources, Mining at large-scale operations exists only in a few places, but the sector is dominated by artisanal and small-scale mining operations, mostly informal, working with unsophisticated methods and limited technical training.

In Ghana, the mining industry accounts for about 5 percent contribution to GDP and increases government revenue and employment prospects due to the commitment of the Ghanaian government to developing the mining sector.

In the South-west region of the country alone, there are many mineral resources such as Bitumen, Lignite, Phosphate, Marble, Clay Dolomite, Limestone, Gypsum, Gold, Iron-ore, Granite, Syenite, Feldspar, Kaolin, Oil/Gas, Glass-sand, Cassiterite, Barytex, Chalcopyrite, Barite, Amethyst, Gemstone, Limestone, Dimension stone, Talc, Coal, Tourmaline, Aquamarine, Tantalite, Clay, Silimonite, etc.

But despite the uncertainty, loss of oil revenue, and rising debt rates in Nigeria, the government has still depended immoderately on oil revenue and failed to diversify its economy. Mining is now a global phenomenon with various countries competing for exploration funds.

The dominant strategy of foreign competition indicates that mining companies and their investment funds will only go to those countries where the enabling environment will allow the private sector to flourish unhindered.

In Burkina, Faso mining is one of the most dynamic sectors that create employment in the country, the gold sub-sector’s contribution to GDP is 10.6 percent in 2018 as a result of Burkina Faso’s incentive policies implemented for the mining sector.

Moving to the South-east part of the country where has available of valuable natural resources such as Oil/Gas, Gold, Lead/Zinc, Limestone, Iron-ore, Lignite, Glass-sand, Clay, Gypsum, Phosphate, and salt, Coal, Marcasite, etc. Many solid mineral mining operations are carried out illegally in Nigeria. Gold and other valuable minerals are smuggled into neighboring countries from where the raw materials find their way to the Middle East.

Nigeria needs to plan and shift focus to mining as the oil value is shrinking in the Global market. The economy of Botswana is largely dependent upon mining. Diamond mining contributes 50 percent of government revenue mainly through its joint venture strategy with the private sector. The mining sector can be a major source of revenue and employment, especially in countries with numerous mineral resources such as Nigeria.

The South-South region of Nigeria is blessed with natural resources such as Uranium, Oil/Gas, Lignite, Limestone, Lead/Zinc, Clay, Manganese, Gypsum, Glass-sand, Marble, Iron-ore, Kaolin, Bitumen, Phosphate, Dolomite, Gold, Barite, Salt, etc.

Mining is primarily a source of mineral commodities that some African countries consider essential for revenue generation and improvement in the standard of living. Mining is seen as a stream of revenue for countries engaged in mining activities for economic development.

It offers job opportunities, sources of revenue, business opportunities, a trained workforce, increased GDP, and foreign-exchange sources. It is good for Nigeria to put more emphasis on mining due to the abundant mineral resources available in the country.

Unlike countries like Ghana and Burkina Faso, Nigeria does not have a well-developed large-scale mining industry, and the majority of the country’s gold mining is carried out by small-scale and artisanal miners. Out of 36 states in Nigeria and the capital territory, there is no single state without mineral resources.

The country is undoubtedly blessed with vast natural resources but Nigeria’s lack of capacity to develop the mining sector is what restrained the country from earning huge revenue from the mineral resources. Nigeria needs to rethink its development strategy because oil revenue failed to make the country economically buoyant.

The mining sector will help the country by ensuring an effective increase in the country’s economic growth that will in turn provide export value and jobs for the Nigerian increasing population. It is believed that several factors affect mining in Nigeria such as security, poor fiscal policy, lack of good transportation facilities, illegal mining, the old method of mining, poor investment in the mining sector, etc.

Therefore, the Nigerian government’s projection of growth for the country’s mining sector from the current 0.33 percent contribution to GDP to 3 percent by 2025 can only be achieved if the government does something tangible in improving the mining sector.

To improve the mining sector, there is a need for the government to reform laws and policies for mining, create safe working conditions for mining investment, build special centers and modern laboratories for mining activities, make a commitment to research and development, provide adequate finance, and infrastructure that attracts investment in the mining sector.

ABOUT THE AUTHOR: Muhammad Shehu Shuaibu

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