Stories by Nkiruka Nnorom
INVESTMENT bankers have expressed concern over the ability of the Federal Government to raise the mining sector’s contribution to the Gross Domestic Product (GDP) by three percent by 2025.
The Minister for Mines and Steel Development, Olamilekan Adegbite had said that the ministry has set a target for the mining sector to contribute three percent of the nation’s GDP by 2025 as part of the efforts to contribute to the current administration’s diversification project. According to him, the sector has seen steady growth and is now poised to achieve exponential growth as investments in the sector begin to crystallize.
Adegbite had noted that investors can now wholly own projects without the government owning a stake. He also stated that investors would be encouraged to reach agreements with host communities on plans for community development to prevent hostilities from the host communities as frequently experienced by oil producers.
These policies, according to him, should encourage further investments in the sector and aid the plans to have 50 active mines in Nigeria by the end of his tenure in 2023.
However, analysts at CSL Securities said in a research note that several administrations had set similar targets in the past without backing it up with necessary action.
“Several administrations in the past had stated commitments to revitalize the mining sector given the huge potentials for revenue generation and diversification. However, these talks never led to any meaningful development within the sector.
“Several issues continue to constrain growth in the sector, including poor infrastructure, weak regulatory framework and institutions, lack of oversight, lack of best practices and lack of data. Furthermore, concerns over illegal mining, lack of protection for legal miners as well as dichotomy between federal and state governments have all contributed to constraining investments in the sector,” they said.
They stated that illegal miners in Zamfara routinely smuggled gold to neighbouring countries like Niger and Togo, saying that this has led to banditry in the state, forcing the federal government to impose a ban on any form of mining activities in the state.
“While mining as a business activity in Nigeria is carried out on artisanal basis, a few foreign investors have weathered the storm despite challenging conditions to make significant investments in the Nigerian mining sector. Some of these investors include Australia’s Symbol Mining who develop lead & zinc projects in Benue, Thor Explorations, a Canadian company which owns the Segilola gold project,” they added.