The 4th Edition of the KPMG, Nigeria Mining Sector Report has underscored the unattractive nature of the existing fiscal frameworks for potential investors in Nigeria’s mining sector. The report emphasises that the current framework does not take into account the unique characteristics of the sector, presenting a barrier to its growth and development.
Successive governments at the Federal level have shown dedication to revitalising the sector, although with minimal achievements. In 1999, a new national focus and strategy on mining emerged, leading to the enactment of the Nigerian Minerals and Mining Act (NMMA) in 2007, among other policy efforts.
Despite these efforts, the growth in the sector has been limited, with its contribution to the nation’s Gross Domestic Product (GDP) remaining at less than 1% as of 2023, as stated in the report.
The Ministry of Mines and Steel Development (MMSD) released a revised sector growth and development roadmap in 2016, aimed at addressing key challenges in the industry and outlining strategies for rapid development and utilisation of vital minerals and metals. One of the targets of this roadmap is to increase the sector’s total contribution to Nigeria’s GDP to about 10% by 2026. Furthermore, the government introduced a N30 billion intervention fund to facilitate exploration and research by multinational companies to open up the sector.
Despite these significant efforts, the sector only contributed 0.77% to the GDP in 2023, according to the National Bureau of Statistics (NBS). The report categorises the nation’s mining value chain into exploration and mining (upstream), processing and beneficiation (mid-stream), and marketing and stream subsectors. It points out that only the upstream and downstream of the sector have received the appropriate attention, while essential fiscal incentives for miners appear to be scattered across different legislation, necessitating harmonisation to provide clarity to operators.
KPMG highlighted the urgent need for the reformation of the fiscal framework for the taxation of mining operations to align with global best practices and attract major mining firms and foreign investors. The report also stressed the long overdue revision of the NMMA to ensure its provisions are in line with current realities and global best practices.
The report further noted that Nigeria is blessed with over 44 different minerals across its 36 states and the Federal Capital Territory, out of which the government has identified seven strategic minerals for focused development. These minerals include Coal, Bitumen, Limestone, Iron Ore, Barites, Gold, and Lead/Zinc due to their commercial potential and capacity to contribute to overall economic development through industrial linkages.
In conclusion, there is an urgent need for a comprehensive overhaul of Nigeria’s fiscal frameworks for the mining sector to make them more attractive to potential investors and in line with global best practices. Aligning these frameworks with the unique nature of the industry and current realities is crucial to unlocking the immense potential of the sector and accelerating Nigeria’s economic development.