A recent report by professional services company KPMG has highlighted the challenges confronting Nigeria’s mining sector. According to the report, the existing fiscal frameworks, including tax policies, are not sufficiently appealing to attract much-needed investments, and they fail to consider the unique nature of the sector. As a result, the government’s efforts to revitalize the sector have yielded minimal success over the years.
The report emphasises that as of 2023, the sector’s contribution to the nation’s Gross Domestic Product (GDP) has remained below 1%, despite various policy initiatives aimed at its rejuvenation. It also underscores that the government released a revised growth and development roadmap for the sector in 2016, which included targets such as increasing the sector’s total contribution to Nigeria’s GDP to approximately 10% by 2026. In support of this objective, the government launched a N30 billion intervention fund to facilitate exploration and research in the sector. However, these efforts only resulted in minimal traction, with the sector contributing only 0.77% to the GDP in 2023 according to the National Bureau of Statistics (NBS).
KPMG’s report categorised the country’s mining sector based on key activities, underscoring the need for a harmonised fiscal framework for the taxation of mining operations to align with global best practices and attract foreign investors. It also underscored the urgency of revisiting and updating the Nigerian Minerals and Mining Act to ensure that its provisions are in line with current realities and global best practices.
Despite Nigeria’s extensive mineral resources spread across the country, the report notes that the government has identified seven strategic minerals for focused development due to their commercial value and potential to stimulate overall economic development. These priority minerals include coal, bitumen, limestone, iron ore, barites, gold, and lead/zinc.
The report’s findings underscore the need for the Nigerian government to address the shortcomings in the fiscal frameworks of the mining sector. It is critical to create policies that attract investment, align with global best practices, and cater to the unique nature of the sector. Failure to do so may continue to hinder the sector’s growth and contribution to the nation’s GDP.
In conclusion, the challenges identified in Nigeria’s mining sector highlight the need for comprehensive reform in fiscal frameworks and policies. By aligning these frameworks with global best practices and suitably incentivising investors, the sector can potentially unlock its full potential and significantly contribute to the nation’s economic growth and development.