By Peter Osalor(Success In Your Business)

Nigeria, which contributes three percent of the world’s oil production, aspires to be among the world’s 20 richest countries come 2020.  While one would think the country plans to invest massively in its oil industry to achieve this feat, the government thinks otherwise and instead plans to invest in the solid mineral sector to spur economic growth and realize its 2020 aspirations.

But to develop the solid mineral sector, Nigeria will have to part with a fortune.  The country would require over 1.28 trillion Naira (US$10 billion) annual capital inflow and an over 10 percent annual growth rate for the next decade if her desire to develop the solid mineral potentials is to be realized.

Revitalising the mining setor is part of extended government efforts to rectify massive imbalances in the economy, and the solid mineral sector is seen as crucial to overcoming the historic dependence on oil and gas .

Mining activities suffered heavily because of the official neglect during more than three decades of political turmoil and civil war that shattered the Nigerian economy. The richly endowed nation boasts vast reserves of iron ore and coal, besides significant gold, uranium, gypsum, barite and tantalum deposits.

Over many years, a sharp decline in the production of Coal, Tin and Columbite weakened the mining sector and dragged its GDP contribution down to 0.5%. Together with a determined fall in global oil prices and decline in crude production due to surging violence in the Niger Delta region, it brought home catastrophe to Nigeria’s foreign exchange reserves.

Nigeria has in the past largely focused on the development of its oil industry while neglecting the solid mineral sector. However geological reports show that the country has a strong mining potential.  In total, accordingly Nigeria has some 34 known major mineral deposits distributed in locations across the country and offers considerable attraction for investors.

Underdevelopment of Nigerian mineral potentials would be a far-fetched dream for the country to be among the 20 largest economies in the next 12 years if it does not propel development in the solid mineral sector. Soon after he was sworn-in President Goodluck Jonathan made a remark while declaring open and delivering a Keynote address at the 49th Annual Conference of The Nigerian Association of Chambers, Industry, Mines and Agriculture (NACCIMA) in Abuja last year.

He pointed out that the theme of the conference ‘’Promotion and Development of Solid Minerals Exploration Exploitation- ‘’A Veritable Strategy  Towards Economic Diversification’’ does not only underscore the country’s high support to the non-oil export through trade and investment opportunities but it is also in line with the economic policy of this administration to diversify the economy from oil as encapsulated in various government policies and programmes including the 7- point Agenda, Vision 20 2020 and Millennium Development Goals. 

Recently the World Bank on Tuesday February 2 announced that it would release $80 million additional financing grant for the development of the mining sector in Nigeria by July this year. The amount would make it a total of $120 million for the development of the sector.

 The present government under President Goodluck Jonathan is actively pursuing a micro-grants programme for the mining sector, and has succeeded partly at least in roping in, the Draft minerals mining regulation which was recently held in Abuja will help operators to have basic legal knowledge of how they will operate and thereby reduce the cases of illegal mining in the country, because 80% of the interest of the operators are captured in the regulation.

In the years since 1999, Abuja has rolled out significant incentives for existing and prospective investors in the mining sector. Fiscal adjustments include cutting down on capital gains and companies profits taxes,, increase in capital allowances, along with a three year tax holiday for new mining ventures.

Additional tax exemptions were introduced to bolster exports and encourage further exploration and prospecting in solid minerals. The country saw the establishment of its first diamond cutting and polishing centre in 2002. To reinforce the importance of mining as a poverty alleviation strategy, the Sustainable Management of Mineral Resources Project was initiated with World Bank assistance in 2004 to provide long-term, low interest loans to the sector. Through extensive disbursement of easy credit repayable over 35-year periods, Nigeria hopes to cut down on poverty in mining communities and achieve a diversified economy.