The Federal Ministry of Mines and Steel Development has said it will invest N2.5 billion in development finance institutions (DFIs) as a pilot project to support small-scale miners to transit into more established miners.
The minister, Dr. Kayode Fayemi, who spoke at the sixth Sustainability in the Extractive Industries (SITEI) conference in Abuja, said the investment would help provide loans to the miners at a low interest rate.
He said DFIs would finalise modalities and ensure that potential beneficiaries have access to the money to boost their capacity to participate in the development of the sector.
“We are working with the Nigerian Stock Exchange (NSE) to introduce mining bonds. We are also working with the Sovereign Wealth Fund (SWF) to develop an investment vehicle for mining,” he said.
According to him, this would cost $500 million so that investors around the world can invest and support the industry, especially small-scale projects with long gestation period and the huge likelihood of success.
Fayemi, who stated that mining industry was not contributing what it should to the country’s Gross Domestic Product (GDP), said: “The bulk of the miners, about 80 per cent, are small-scale miners, many of which are illegal operators. Prior to the present administration, mining contributed 0.3 per cent GDP, but now, it has improved to about 0.5 per cent.”
He, therefore, said to create the environment that would attract international investment, investors coming into the business must be ready to meet international standards.
“You need verifiable geological data, and have knowledge of the nature and commercial viability of the minerals, in terms of quality and quantity. Geological prospecting is an international key element.”
He encouraged investors from the private sector to invest in the mining industry, pledging to support private sector initiatives that met the approved operational standards.
Fayemi, who said the Nigerian mining sector had the best incentives worldwide, with mining equipment importation attracting duty-free rates and a tax holiday for between three to five years for firms just setting up, said the ministry had resolved to make the sector less risky for those in commercial environments.
The minister said although the 10-year-old laws were in line with global standards, the ministry had not been able to effectively enforce them.
He added that all regulatory bodies would be collapsed into one central unit to build the sector as well as partner with Nigerian Customs Service (NCS) to discourage raw exportation of minerals, and re-establish the miner’s police to ensure law enforcement.
Besides, he lamented the dearth of mining desks in commercial banks across the country, except First City Monument Bank (FCMB) and Stanbic IBTC, noting that commercial banks would have mining desks in all their branches.