The recently published 4th Edition of the KPMG, Nigeria Mining Sector Report illuminates the obstacles confronting investors in the mining sector. According to the report, the current fiscal framework lacks appeal and neglects to consider the distinctive characteristics of the sector.
Despite a certain level of commitment from successive Federal Governments to rejuvenate the sector, progress has been minimal. The report underscores that the sector’s contributions to the nation’s Gross Domestic Product (GDP) have stagnated at under 1% as of 2023. This is a matter of concern as the mining sector holds the potential to significantly contribute to economic diversification and expansion.
In 2007, the Nigerian Minerals and Mining Act was established to establish a new national focus and strategy on mining. However, the report observes that these efforts only resulted in stunted growth in the sector. In order to address the key challenges identified in the sector and delineate strategies for rapid development, the Ministry of Mines and Steel Development issued a revised sector growth and development roadmap in 2016.
Despite these endeavors, the sector only contributed 0.77% to the GDP in 2023, according to the National Bureau of Statistics (NBS). This indicates the necessity for substantial reforms in the sector.
The report emphasizes the need for a thorough review of the fiscal framework for the taxation of mining operations in Nigeria. It proposes that the framework should be brought in line with global best practices to attract mining majors and foreign investors. Additionally, the revision of the Nigerian Minerals and Mining Act is long overdue, as some of its provisions may no longer be aligned with current realities.
Nigeria is blessed with over 44 different minerals occurring in over 500 locations across the country. The Federal Government has identified seven strategic minerals for focused development, including Coal, Bitumen, Limestone, Iron Ore, Barites, Gold, and Lead/Zinc, due to their commercial viability and capacity to accelerate overall economic development.
In summary, the report underscores the pressing need for reforms in the Nigerian mining sector. By re-evaluating the fiscal framework and updating the mining act, the government can create a more appealing environment for local and foreign investors, leading to the sustainable growth and development of the sector. The potential of the mining sector to significantly contribute to economic growth and diversification cannot be disregarded, and it is crucial to address the existing challenges to unlock its full potential.