Looking at Nigeria’s Mining Industry: A Comprehensive Overview
The Nigerian economy has encountered significant challenges since the decline in oil prices in 2014, resulting in a sharp decrease in GDP growth and a subsequent recession in 2016. Additionally, the COVID-19 pandemic has had a profound impact on various sectors of the economy in Nigeria.
The pandemic has led to a substantial economic downturn as a result of lower oil prices, production cutbacks, and disruptions in the supply chain. Consequently, the government has recognised the importance of economic diversification, particularly following the oil price decline caused by the pandemic earlier this year.
The mining sector has become a focal point for economic diversification, with the government prioritising incentives for investment in the industry. The Nigerian government has demonstrated its commitment to revitalising the mining sector by securing financial support from international entities such as the International Development Association (IDA) and The World Bank.
Nigeria has identified seven strategic minerals, including coal, bitumen, limestone, iron ore, barites, gold, lead, and zinc, for priority development in order to drive growth in the mining sector and diversify the economy away from crude oil. These minerals are located throughout the country and have not been fully explored due to various challenges.
The impact of COVID-19 on the mining industry has been significant, resulting in reduced mining operations, diminished demand, and commodity price volatility, leading to the closure of mines. Artisanal and small-scale miners, who constitute the majority of the mining workforce in Nigeria, have been severely affected, experiencing unemployment and restrictions on their activities.
Regulations governing the exploitation and exploration of solid minerals in Nigeria are established by the Nigerian Minerals and Mining Act 2008, which aims to regulate mineral properties and prevent unauthorised exploitation or exploration of minerals.
In order for the mining sector to make a substantial contribution to the growth and development of the Nigerian economy, it is imperative to address institutional, legislative, and operational obstacles. Emphasis should be placed on preventing revenue losses, continuing formalisation efforts for artisanal miners, improving mining infrastructure, and promoting sustainable mining practices.
The long-term success of the mining sector will necessitate effective data collection, strengthening of local content initiatives, and leveraging the Africa Continental Free Trade Area (AfCFTA) to enhance regional integration and expand market access.
Drawing from his 14 years of experience at PwC Nigeria, Habeeb Jaiyeola believes that addressing these challenges and implementing the recommendations could accelerate the growth of the Nigerian mining industry.
With the potential for economic growth through the diversification of the mining sector, Nigeria can progress towards a more sustainable and resilient economy.
