Nigeria’s Mineral Wealth: A Key to Economic Diversification

Nigeria, renowned for its heavy dependence on oil exports, is presented with an opportunity to diversify its economy through the exploitation of mineral resources. According to experts, the country boasts over 40 mineral deposits spread across its 36 states. However, the mineral sector currently contributes less than 0.5% to the nation’s GDP.

As Africa’s most populous country with an estimated GDP of $395 billion, Nigeria needs to transition away from its outdated oil-based economic model. It is notable that the per capita income in Nigeria currently stands at $1,730 annually.

The value of Nigeria’s mineral deposits is estimated at $700 billion, and the mineral and mining sector has the potential to generate over $25 billion by 2025. However, the sector only yielded 193.59 billion Naira ($148 million) in 2021, as reported by the Nigeria Extractive Industries Transparency Initiative.

The mineral deposits in Nigeria consist of kaolinitic clay, gold, gypsum, iron ore, lead, zinc, phosphate, and tin, among others. It is estimated that the formal mining industry employs approximately 130,000 individuals.

Given the volatility of oil prices and the global shift towards cleaner energy sources, the need for economic diversification is evident. Mineral mining and processing are identified as crucial factors in achieving greater diversification. Countries such as Ghana and South Africa benefit from robust mining sectors that significantly contribute to their GDP and foreign exchange earnings.

Nigeria, abundant in natural resources, possesses over 40 million metric tonnes of talc deposits, 1 billion metric tonnes of gypsum deposits, and over 3 billion metric tonnes of iron ore deposits. Furthermore, the country holds proven reserves of 10 million metric tonnes of lead and zinc veins, along with over 7.5 million metric tonnes of baryte.

The mineral sector is governed by the Minerals and Mining Act of 2007. In September 2023, the government announced plans to establish the Nigerian Solid Minerals Corporation to provide funding to the mining sector and oversee the nation’s minerals. The corporation intends to focus on the extraction of gold, coal, iron ore, bitumen, lead, limestone, and baryte.

Despite the growing demand for minerals, the sector faces challenges in meeting local demands and capitalizing on its export potential. Obstacles such as inadequate infrastructure, complex regulatory frameworks, and widespread illegal mining activities present significant hurdles.

Efforts are being made to address these challenges, including the drafting of legislation to establish a state-backed mining company, the Nigerian Solid Minerals Corporation, and the creation of a specialized mines police force to combat illegal mining.

Nigeria has substantial potential to elevate the contribution of mining to its GDP through strategic reforms, promotion of investment, and value addition. The country must formalize the artisanal mining sector and create a favourable business environment in order to diversify away from oil and move towards a more sustainable economic future.