*Great prospects in non-oil economy
*Solid minerals earned N400bn in 2015
By YINKA KOLAWOLE
Nigeria is expected to generate 1000 mega watts of electricity from coal by year 2020 to supplement other sources of energy currently in use in the country.
Dr. Kayode Fayemi, Minister of Solid Minerals Development, disclosed this at an Economic Summit organised by the New Telegraph newspapers with the theme, “Nigeria: Beyond the Oil Economy”, in Lagos last week.
Also, the diversification of the nation’s economy has been yielding positive results, with the country earning about N400 billion from solid minerals in 2015, according to the Central Bank of Nigeria (CBN).
Fayemi noted that a significant opportunity exists for power generation from coal exploration in the country. He said the Ministry of Solid Minerals Development is collaborating Ministry of Power, Works and Housing to ensure that huge coal deposit in the country is explored to meet some of its energy needs.
“Coal production started in Nigeria in 1902 and it was the main energy source for our country until 1960, and coal is in about 19 states of the federation stretching for about 800 kilometres. Coal exploration offers a significant opportunity for power generation and one of the efforts that we are making now in partnership with the Ministry of Power, Works and Housing is ensuring that coal forms a significant part of the energy needs. I know there are people who are worried about climate change and the implication of coal on that. But even coal can achieve clean coal environmental standard and we believe that about 1000 mega watts of electricity can be generated from coal by the year 2020. And these are plants that are going to be sited near the areas where the reserves are, across the country.”
Speaking on “Digging Deeper for New Wealth: Opportunities from Solid Mineral Resources”, Fayemi remarked that some reforms arising from Nigerian Mining and Minerals Act 2007 have created a platform for a robust private-sector-led mining industry in the country.
“The mining sector has been with us since 1902. From the early operations of the geological surveys emerged entities such as the Nigerian Mining Corporation, Nigeria Coal Corporation and the National Steel Company. And during this period, mining was a major contributor to Nigeria’s revenue base and was a leading employer of skilled and unskilled labour. But we then lost it, we forgot all about mining, and the Indigenisation Decree, particularly in 1972, contributed to the demise of mining in the country. Because that’s when most of the expertise that we had in mining, which was essentially foreign, mostly British, left the scene, and we lost our tracks as far as mining was concerned. But following some reforms which started in 1999, which essentially crystallised around the Nigerian Mining and Minerals Act 2007, Nigeria is once again on the path to providing a transparent and workable regulatory and policy environment for more robust private-sector led mining.”
Banks don’t understand mining
The minister however noted that one of the major challenges confronting the mining sector is finance, asserting that the banking industry does not understand mining. “Less than one percent of the loan that is on offer in the banking sector goes to mining. In fact, our banking industry does not understand mining at all. Apart from the Bank of Industry (BoI) that has now started some work in this regard, only 2 banks in this country have mining desks – Stanbic IBTC and First City Monument Bank (FCMB). On becoming minister, I had to go the Bankers Committee to talk to all bank MDs, courtesy of the CBN governor, to encourage them to set up mining desks in their banks and also get involved in similar interventions schemes which exist in agricultural sector but does exist in mining yet, it will come. We are determined to have funding structures that can support genuine mining, and over the course of the next 6 months a lot more will be heard of what we are doing in this sector. But banks are also showing interests because they see that it is a priority area for the government,” he stated.
Great prospects for non-oil economy
Meanwhile, the CBN Governor, Godwin Emefiele, also declared at the event that the N400 billion earned from solid minerals in 2015 underscores the great prospects of the nation’s non-oil economy.
In his keynote address on “Returning Nigeria to the Boom Days: Prospect of a Non-Oil Economy”, Emefiele who was represented by CBN’s Deputy Governor, Economic Policy, Dr. Sarah Alade, noted that although the challenge of diversification of the Nigerian economy is daunting, it is by no means insurmountable.
“The prospects are great with the potentials in the agricultural, solid minerals and the creative industry sectors. The country is endowed with abundant arable land capable of supporting all- year-round production of a wide variety of both cash and food crops, livestock and forestry. By its geographical location along the coast of the Atlantic Ocean, and myriads of water-ways, it has huge potentials for fish production to meet domestic need and surplus for exports in a global fish market valued at $144 billion in 2014. In the solid minerals sub-sector, there are at least 44 known mineral assets notably gold, iron ore, barite, bitumen lead, zinc, tin and coal which have been identified for commercial exploration. Solid minerals contributed an estimated N400 billion to the economy in 2015.
“Nigeria’s creative industry driven by Nollywood, produces about 50 movies per week, second only to India’s Bollywood and ahead of Hollywood, and currently provides employment for over one million people (excluding pirates). This makes it Nigeria’s largest employer after agriculture. In 2013, the creative industry contributed 1.4 per cent to GDP and was rated the third most valuable film industry in the world, generating revenue of N1.72 trillion. The Nigerian film industry has a global audience of several millions in over 178 countries. In recognition of the industry as a leading non-oil sector in Nigeria, the World Bank in 2010 provided a grant of $20 million to boost growth and employment under its Growth and Employment in States (GEMS) project. From the foregoing, it is evident that we are not short in potentials to transform the economy through the non-oil sector. The task of returning the non-oil economy to its glory days is possible but would require the creative energies of all stakeholders; government at all levels, the private sector, press and indeed, the citizenry. It is noteworthy that, government, particularly at the centre recognises the need to and has committed to diversifying the economy away from oil.
“The banking sector is the “lifewire” of economic activity in any economy. The sector mobilises resources from the surplus and lends to the deficit segment and thereby, efficiently channeling savings into investment. This helps to mobilise and pool savings from a large number of investors to achieve growth. An efficient banking system also eases the exchange of goods and services by providing efficient payment and settlement services. Thus, it influences savings rates, investment decisions, technological innovation, and consequently, enhance long-run growth.
“The banking system is the major instrument of government’s monetary strategy from which all the other organs in the economy take their financing tone. In recognition of the above, the CBN as the apex regulator in the financial system has remained focused on creating and sustaining a stable macroeconomic environment and building a vibrant, safe and sound banking system that is capable of supporting the diversification drive of the economy,” he stated.
Emefiele reiterated CBN’s commitment to its developmental mandate with intervention programmes across various sectors but with strong focus on the real sector. “The key objectives of the interventions include: providing enabling policy environment for increased lending to priority sectors; improving access to affordable and long term funds to fast-track real sector development; de-risking lending to encourage financial institutions to finance priority sectors; incentivising borrowers to encourage timely repayment; enhancing job creation and promoting the diversification of the economic base.”