Nigeria’s Mining Sector: A Catalyst for Economic Growth
In the year 2023, Metal Ore Mining has emerged as the fastest-growing sector in the Nigerian economy, according to the latest data from the National Bureau of Statistics (NBS). Surpassing the technology and finance sectors, the metal ore sub-sector, inclusive of iron ore, gold, copper, and other minerals, exhibited substantial growth and garnered impressive investor attention to Nigeria’s rich geological assets.
Initial analysis of the data reveals that the metal ores sector rebounded from a slight contraction of 1.97% in the fourth quarter of 2022 to a remarkable real GDP growth rate of 65.56% in the second quarter of 2023. Additionally, the quarrying and other minerals sector also displayed noteworthy growth, increasing by 39.18% in the second quarter of 2023 compared to the same period in 2022. This sector encompasses materials such as stone, sand, and clay used for construction and manufacturing.
Despite the mining sector (excluding crude oil and coal mining) accounting for only 0.21% of GDP, the metal ore and quarrying sectors registered substantial GDP values, standing at N38.5 billion, N464.9 billion, and N1.9 trillion, respectively. These sectors have received significant attention under the Buhari administration, forming a key part of the economic diversification drive. With the objective of contributing up to 3% of GDP by 2023 as outlined in the government’s National Development Plan, the mining sector is targeted for significant growth.
To achieve this vision, the government has adopted five key strategies, including the establishment of an independent and well-resourced regulatory authority for the orderly development of the mining industry. Furthermore, plans are underway to revitalize Ajaokuta Steel Company Limited (ASCL) and the Nigerian Iron Ore and Mining Company (NIOMCO), and to develop a policy for artisanal and small-scale mining (ASM) as a part of a broad rural development strategy. Additionally, investments in increased infrastructure and leveraging the Natural Resources Development Fund are also on the agenda to support the development of the sector. The government also plans to create mining economic clusters with extensive backward and forward linkages, orientated around the minerals sector and the broader economy.
Moreover, the government aims to invest in research and development (R&D) and skills development to enhance local knowledge generation and improve sector competitiveness. However, the sector has faced challenges due to illegal mining activities, prompting the Economic and Financial Crimes Commission (EFCC) to announce plans to clamp down on illegal mining operations. Miners have also raised concerns about overregulation by state governments, warning about executive orders that either ban mining activities or attempt to regulate the sector.
In addition to the phenomenal growth in the mining sector, other sectors also exhibited significant progress. The financial institutions sector recorded a robust growth of 29.23% in the second quarter of 2023, while the waste management and remediation sector registered a notable growth of 20.56% during the same period. The telecommunications sector also achieved a respectable growth of 9.74% in the second quarter of 2023.
The impressive growth across these sectors not only reflects the stability and resilience of the Nigerian economy but also sets the stage for further economic development and diversification.
