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Stakeholders demand better funding for miners

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Solid Minerals Development Fund (SMDF) has decried the share of mining and quarrying in total bank credit, saying the sector accounts for an insignificant portion of the private sector credit.

According to the organisation, the sector is allocated only N11 billion out of several trillions of naira banks have lent to the private sector. It called for adequate funding to boost the performance of the sector.

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Speaking at a webinar, Executive Secretary of the Fund, Hajia Fatima Shinkafi, said mining is poorly funded, a situation that is partly responsible for its low contribution to the gross domestic product (GDP).

Shinkafi said there is an urgent need to de-risk the sector’s investment, provide it with long-term and concessionary funding.

“Miners need support with equity funding to unlock its potential. They also need guaranteed loans required for investments into mining-related activities.

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Mining projects have relatively timelines to monetisation (five years above from exploration to production). Currently, banks are only able to provide 4-5 year tenure loans.

“There is a need for players who can provide longer-term financing. Current financing options available are not suitable for the long-term and capital-intensive nature of mining investments. Bank loans have high-interest rates and short deferral periods. There is a need for concessionary/low-cost funding for mining investments.”

A senior associate at the Africa Finance Corporate, Abiola Osho, noted that there was a need for the financing system to beef up capacity and treat the sector especially.

Group Head, Solid Minerals and Metals (Large Enterprises Directorate), Bank of Industry, Olayinka Mubarak, said: “This is the time to think out of the box; the miners need to be ambitious. We cannot continue to do things the same way. You cannot talk about mining and not talk about finance.”

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