Nigeria’s Vast Mineral Wealth and its Potential Economic Impact
Nigeria harbours a wealth of resources, boasting over 44 strategic solid minerals located in approximately 450 different areas across the country. This extensive array positions the nation to reduce its heavy dependence on oil as its primary source of income, and instead shift its focus towards the economic potential of its mining industry. This transition has the potential to lead to a substantial increase in employment opportunities and a decrease in foreign exchange spending. However, experts have emphasised that realising the full benefits of the mining sector will necessitate the government to address the various impediments currently hindering mining operations in Nigeria. They have further recommended specific initiatives that could aid in unlocking the sector’s potential, with the aim of contributing N284 billion in revenue and three per cent to the Gross Domestic Product (GDP) by 2025.
During its peak in the 1960s and 1970s, Nigeria’s mining sector played a pivotal role in propelling economic growth, accounting for approximately four to five per cent of the country’s Gross Domestic Product (GDP). At that time, Nigeria was a significant player in the global market for core mining commodities such as coal, tin, columbite, and gold. However, the discovery of oil in 1956 led to a substantial decrease in attention towards the mining sector, as focus shifted towards the newfound resource of oil. Since then, Nigeria has predominantly relied on the oil and gas sector, constituting around 40 per cent of the nominal GDP. Nevertheless, in light of declining oil prices and subsequent economic challenges, there has been a renewed drive to diversify the economy, with the mining sector being identified as a key player in this endeavour.
A Mining Roadmap was formulated in 2016 to propel growth and development in the Nigerian mining industry. This roadmap seeks to establish a globally competitive sector capable of making significant contributions to revenue and GDP, while also generating employment opportunities and advancing social and human security for Nigerians. The roadmap aims to elevate the sector’s contribution to GDP from 0.5 per cent to approximately three per cent by 2025, alongside a revenue target of N284 billion and the creation of about three million jobs.
A report by the multinational professional services firm, PricewaterhouseCoopers (PwC) Nigeria, underscored the necessity for substantial efforts to be undertaken to meet the targets set in the Mining Roadmap for 2025. The report also scrutinised various strategic minerals in the sector and underscored the importance of addressing challenges such as insecurity, smuggling, tax issues, and illegal mining in order to fully reap the benefits of the mining industry.
To further attract investment, generate revenues, and develop the local mining industry, the Federal Government has embarked on legal, regulatory, institutional, and fiscal reforms for the mining sector. These initiatives encompass the establishment and recent automation of a cadastral system for mineral title administration and the review of the Minerals and Mining Act, 2007, which aims to introduce regulations aligned with global best practices and create an enabling environment for both local and foreign investors.
The future of Nigeria’s mining sector holds substantial promise, and its revitalisation could serve as a key driver for economic growth and diversification. By surmounting the current obstacles that impede the industry and implementing effective policies and initiatives, Nigeria may unlock the vast potential of its mining sector and pave the way for a more sustainable and diversified economy.
