Nigeria has introduced amendments to its mining law to bolster the underperforming sector, shifting regulatory powers from the federal to local governments. This aims to combat illegal mining and enhance domestic mineral production. Despite these amendments, significant challenges from the oil sector’s dominance and infrastructure issues may hinder the intended transformation of the mining landscape.
In November, Nigeria’s government introduced amendments to the Nigeria Minerals and Mining Act (NMMA), originally established in 2007, to invigorate the nation’s stagnant mining industry, which currently contributes a mere 0.3% to GDP. The revisions aim to decentralise authority over mineral rights, shifting responsibility from the federal government to local authorities, thereby empowering communities to combat illegal mining and bolster legal operations. The changes are part of a broader strategy to diversify the economy away from oil dependency.
Historically, Nigeria’s mining sector thrived pre-1970s before the oil boom overshadowed it. In the wake of the civil war, many mines were abandoned, and despite the 2007 law aimed at attracting foreign investment, illegal mining has proliferated, particularly in states such as Kaduna and Zamfara, impacting local communities and the environment. The ongoing trade of illegally mined gold for arms and safety concerns surrounding mining sites exacerbate these challenges.
The amended NMMA will enable states to generate more revenue from legal mining, thus incentivising local governance and compliance. However, challenges such as inadequate transport infrastructure, security issues, and the overshadowing presence of the oil sector still hinder mining’s growth potential. As the bill awaits parliamentary approval, its potential to effect transformational change remains in question, primarily due to Nigeria’s deeper structural economic issues.
Nigeria’s mining sector has been largely stagnant due to an outdated mining law that hasn’t been revised since 2007. With current mining output contributing only 0.3% to GDP and the nation heavily reliant on imports for minerals, there is an urgent need for reform. As the oil and gas industry dominates the economic landscape, the government strives to rebalance its economy by revitalising mining through significant legal amendments that aim to devolve regulatory power to local entities and combat widespread illegal mining.
The proposed changes to the Nigeria Minerals and Mining Act reflect a critical effort to stimulate the mining sector by empowering local governments and communities. As new responsibilities are transferred from the federal government to state and local levels, the hope is to address illegal mining and cultivate legitimate sector growth. Nonetheless, substantial challenges, including security and infrastructure, may continue to impede significant progress. Therefore, while the amendments are pivotal, they alone may not transform the mining industry without additional institutional and economic reforms.
Original Source: african.business