World Economy

Nigeria Switching to Minerals to Boost Growth

Nigeria Switching to  Minerals to Boost GrowthNigeria Switching to  Minerals to Boost Growth

After decades of neglect of Nigeria’s solid minerals sector, leaving it largely to private and unlicensed operators to prey on, the nation’s current economic challenges appear to be forcing the government and analysts to look in the direction of the sector in a bid to shore up the nation’s revenue profile and reduce mass unemployment.

This is even as observers contended that if accorded appropriate attention, the sector was capable of out-performing the oil sector in terms of revenue and employment generation. Those who subscribed to this argument based their take on two major factors: one, the sector boasts of multiple products compared with the oil sector, which is mono-product. Two, most of the solid minerals resources available in the country are export-driven, Nigeria’s official website thisdaylive reported.

Findings reveal that the country has over 40 solid minerals in commercial and exportable quantities. Of the over 40 minerals, coal, tin, lead, and columbite are among the ones that were mined in large scale in the country. Others like gold, talc, iron ore, gypsum, rock salt, bitumen, gemstone, coal, zinc and kaolin among others remain largely untapped.

Observers held that this partly explains why the sector has, over the years, under-performed in terms of contribution to the nation’s revenue base and gross domestic product even as legal framework is believed to constitute impediment in the way of optimally harnessing the vast resources in the sector.

The sector’s under-performance becomes more glaring when its contribution to the country’s GDP was put at 0.55%, compared with that of other African countries with less quantity and numbers of products as Nigeria. Records show that the sector contributes 40% of Botswana’s GDP, in South Africa it is 18% while it is 25% in Democratic Republic of Congo.

  Huge Potential

Though the sector presently contributes about 1% of the country’s GDP, observers described it as an untapped gold mine and pointed to countries like South Africa and Sierra Leone as proof of what can be benefitted from the sector adding that Nigeria’s endowments in the sector are “in commercial and exportable quantity, yet largely untapped.”

Two of the analysts who spoke to thisday, executive director of Corporate Finance, BGL Securities, Femi Ademola and Lagos-based economist with a foremost economy advocacy group, Rotimi Oyelere, agreed that the sector holds enormous potential.

According to Ademola, “I agree that the solid mineral sector has huge potential, not surety because it is yet to be exploited. However, it has huge potential to attract foreign investors because a lot of products in the sector are export-driven. Foreign investors want to be able to hedge their risk, with prospects of foreign exchange earnings from exports in the sector they can hedge their risks.”

Corroborating Ademola, Oyelere noted that, “Nigeria has about 40 solid mineral endowments in commercial and exportable quantity, so it follows to conclude that it has huge revenue potentials. Apart from that it can also help with job creation,” he stated.

  Creating Jobs

The minister of solid minerals resources, Kayode Fayemi, continued to harp on the money-spinning potential of the sector as well as its capacity to significantly impact employment generation in the country.

Fayemi noted that the country’s mining sector had the potential to contribute N5 trillion (about $25.3 billion) annually and significantly impact the prospects of creating thousands of job opportunities.

“Ironically, these natural endowments contribute less than 1% of the country’s GDP,” he pointed out.

Fayemi stated that the immediate plan of the current administration was to fast track investment drive in the sector. According to him, “Our immediate priority is to accelerate investor confidence in the mining markets, and get the sector growing and creating jobs.”