Last month, the Central Bank Nigeria (CBN) paid for and received an international standard but locally sourced 12.5kg gold bar worth N268 million, which was processed by artisanal miners in Nigeria for its reserves. As it is, the gold does not only belong to Nigeria’s external reserves, but with the Presidential Artisanal Gold Mining Initiative (PAGMI) unveiled by President Muhammadu Buhari while receiving the cheque, CBN would now be able to boost gold reserves with naira.
As widely reported, the operations would help in diversifying the country’s revenue base as the sale of gold by artisanal miners and SMEs at accredited centres would help the government realise royalties and taxes from the sale of these assets.
The gold assets, which will be purchased in naira, will not only help to bolster foreign reserves, it will also provide a hedge against inflation and other economic volatilities associated with foreign currencies that are held in the reserves. This, indeed, is another mind-blowing initiative that has been recorded by the Federal Government, especially putting into consideration the surge in CBN’s initiatives to make the country self-reliant in so many resource areas since the advent of this administration. Although the gold story is gradually slipping into oblivion in the usual Nigerian way, the resounding and phenomenal interest it generated with regard to the country’s unexplored solid mineral resources is quite symbolic with open-ended resonance.
As elated as the Federal Government might have been over the development, the N268 million realised from that singular effort remains minuscule compared to the huge resources lost to illegal miners over the years. The importance of gold mining and processing in the country should never be underestimated as the wealth buried underground can only be imagined for now. Little wonder the attraction recently compelled a mining firm to commit $78 million (N28.5 billion) into a gold mining project in the country.
Despite the state of the country’s economy, prospects of Nigeria attaining success in its mining sector remain bright as the gold project is expected improve leapfrogging the mining sector’s current 0.11 per cent GDP contribution to the economy to about five per cent by 2025 in line with the present administration’s economic revolution.
However, in spite of the perceived allure in that regard, there is still an incomplete feeling in the face of over 44 different types of solid minerals scattered across the country, untapped and left in the hands of illegal miners made up of locals and foreigners to devour with the connivance of political and traditional leaders in the country.
On the current feat, that gave rise to the launch of PAGMI, it is already estimated that improved gold mining operations in the country would generate no fewer than 250,000 jobs and over $500 million annually in royalties and taxes to the Federal Government. This should, however, not call for too much celebration as the government needs to wake to the responsibility of doing more in the area of solid minerals exploitation for revenue boost and job creation. So many reasons, ranging from legal to the mundane, have been adduced as being responsible for the country not being able to adequately enjoy the resources freely given by God.
The hitches, which we believe are easily surmountable by any serious government, include lack of enabling environment for mining operators; ambiguity of the Land Use Act vis-a-vis the Solid Mineral Department Act, 2007 as it relates to the ownership and control of resources. Although the current administration has demonstrated a more serious commitment to diversification, the complaints emanating from stakeholders in the mining sector still border much on the past order.
While most African countries without oil have made significant use of resources from solid minerals to develop their economies, the case of Nigeria is different as revenue to the Federation Account from mining has been on the downswing with each head at the Ministry of Mines and Steel Development lamenting over multiple frustrations. From estimation, the solid mineral resources in the country that are not recorded and not captured in revenue of government account for about 95 per cent of what is mined and exported.
The situation has become so frustrating that even the Federation Account Allocation Committee (FAAC) had complained over consistent dip in revenue flow from mines and steel sources, prompting the setting up of a committee to liaise with the ministry on strategies to improve revenue generation from the sector. From observation, the general lack of continuity in policies and implementation especially with regard to government projects and resources has also not done the country any good. While the country venerates the PAGMI project and subsequent expectations, we, however, advise that more of such should be extended to other profitable solid mineral resources, not just to boost revenue, but to give employment to the army of idle youths in the country.
Government should also not continue to look the other way, but ensure that revenue generated from artisanal miners’ activities are recorded and work out ways to block leakages from illegal mining accruals as blockage of such leakages and proper recording would boost the economy and encourage more people to go into mining. More urgent is the need to eliminate the activities of illegal miners and by dealing decisively with foreigners, who breach the country’s immigration laws to engage in illegal mining activities.