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Mineral resource management for national cohesion and progress Part 3

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Oli workers

Today, however, a confluence of positive and negative incentives, adversity as well as opportunity, have found a government with the political will and the preparedness to do what is necessary.

Early on, President Muhammadu Buhari identified the solid minerals sector as one of the critical pillars of a more broadly based and diversified economy.

The Economic Recovery and Growth Plan (ERGP), which is the administration’s medium-term plan for 2017 – 2020, and its primary economic planning framework recognises the mining sector as one of Nigeria’s most promising growth sectors, and acknowledges that its contribution to GDP doubled from N52 billion in 2010 to N103 billion in 2015. It projects to grow the mining sector’s GDP from N103 billion (2015) to N141 billion (2020) at an average annual growth rate of 8.54 per cent (2017-2020).

As we begin to write a new chapter in the history of resource governance in Nigeria, for us in the mining sector, we are most gratified to be positioned as one of the frontiers of government’s diversification agenda. The Federal Ministry of Mines and Steel Development is guided in our efforts by a presidential mandate as follows:

Diversification of revenue sources: Address our economy’s strategic vulnerability to dependence on a mono-resource for sovereign revenue, which has led to fluctuating economic fortunes with periodic global shocks in the price of Crude oil.
Create employment: About 70% of Nigeria’s population is under 35 years of age.

Unemployment levels are high, in some cases approaching 30% – 50% in certain age and education categories. It is critical that we create two million jobs per annum to help absorb such manpower over the coming decade; mining can be an important part of the solution.

The mining sector is also tasked with contributing to addressing our perennial power deficit in Nigeria by leveraging our huge coal endowments to achieve a sustainable Diversification of our Energy Mix and achieve the FGN’s target of 10,000MW of electricity by 2019. The capital intensive nature of developing a gas supply network across the country makes coal-powered plants a viable alternative. Inland Gencos operating outside the Niger Delta can benefit from converting their gas-powered plants to coal due to challenges with gas supply.

We are conscious of the fact that we must be guided by the lessons learned at great cost in the oil and gas sector. We must ensure that we do not repeat the errors of the past. If indeed a curse of oil has been afflicting us, then we must usher in a new regime of ethical, transparent and productive natural resource governance in the mining sector as an opportunity to undo that curse for good. Instructed by the lessons of the oil era, there are four themes that we are emphasizing in our paradigm shift. They revolve around issues of transparency, accountability, participation and jurisdiction.

Our first successful assignment in our reform agenda was the release of a collaboratively formulated roadmap for the mining sector that was the product of exhaustive and inclusive deliberations involving representatives of every stakeholder group in the sector, subjected to a rigorous feedback/validation cycle including parleys with state governments and other industry stakeholders and only after broad-based consultation approved by the Federal Executive Council.

The wide-ranging participatory process of the framework’s development accounts for its broad acceptance. We now have an industry-wide consensus that provides a pathway for the sustainable turnaround and growth of the mining and metals sector, over the short, medium, and long term.

The constitution ordains the exclusive jurisdictional hegemony of the federal government over mining matters. The responsibility for licensing and regulating mining operations resides solely in the federal sphere. Accordingly, the very architecture of resource governance resulted in tensions between the federal government, particularly the Federal Ministry of Mines and Steel Development, state governments and communities and became the main hindrance to the development of the mining sector.

The structure of the sector was designed to relegate state governments, and offered no incentives to the states and local governments to support the growth of the industry. They have no direct access to royalties and taxes and thus, are excluded from optimally sharing revenue from the mining of resources in their respective jurisdictions.

Typically, state governments were sidelined or inadequately involved in the administration of mineral titles even though they bore the brunt of the impact of resource exploitation in the form of illegal mining activities, environmental degradation of their local communities, insecurity of mines, etc. One consequence of these ills has been the low investment in the sector largely as a reaction to the systemic hostility towards private mining operators by states.

These problems are connected to larger contentious subjects such as the proper location of fiscal domain and governmental jurisdiction in a federal system, resource rights and subsidiarity. These issues are valid, and we recognize that we cannot truly achieve sustainable growth without addressing them. This grossly limits the capacity of states to boost their internally generated revenue.

There is a broad consensus that this arrangement requires reform. A key objective would see the transfer of mines and minerals from the exclusive legislative list and therefore exclusive federal jurisdiction to the concurrent legislative list where states can exercise greater jurisdiction than is presently the case.

In the long term, fundamental legal, legislative and constitutional reforms are required to fix these problems.

These long-term solutions are in our roadmap and we wiall activate them at the appropriate time. However, in the immediate term, we have sought to leverage available administrative mechanisms that can instantly defuse the tension between the federal government and states, pending the enactment and institutionalisation of more sustainable solutions.

Since exclusive federal jurisdiction and the lack of transparency and accountability in the sector have caused disaffection between the federal government and states and communities, we have taken practical steps to address these two concerns. We have established two key oversight bodies mandated to hold our ministry accountable to following through with the provisions of the Roadmap – the Mining Implementation Strategy Team (MIST) and the National Council on Mining and Mineral Resources Development (NCMMRD).

State governments are represented on the MIST and every state commissioner in charge of the mining sector in the respective states, is a member of the NCMMRD.

• Dr. Fayemi delivered this paper at Federal University of Technology, Akure.


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Mineral Resources

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