At a time most Nigerian banks are cautious and stringent in funding projects in key sectors of the economy, the promise by the Bank of Industry (BoI) to increase funding to the mining sector is a welcome development.
The Acting Managing Director of BoI, Mr. Waheed Olagunju, who disclosed this at the recent International Mining Investment Conference held in Abuja, said the bank’s decision to increase funding in the sector was part of its efforts to improve the mining sector’s contribution to the nation’s Gross Domestic Product (GDP), as well as diversify the economy and increase the revenue base of the country.
One of the core mandates of BoI is to give financial support to small and medium enterprises that have the capacity to add value to the socio-economic development of the country. The promise of increased funding of the mining sector could not have come at a more auspicious time than now that the Federal Government has signaled its determination to fully harness the mining sector for accelerated national development.
But the road to that goal appears paved with thorns following the reluctance of Deposit Money Banks (DMBs) to fund huge transactions in mining, oil and gas sectors. The banks have also complained that they are currently constrained by over N2.2trn bad loans already advanced to the oil and gas firms and the borrowers’ inability to service them.
This has hamstrung the banks’ ability to inject money into the mining sector. We think that the plan by BoI to fund mining will be a boost to the development of the solid mineral sector, currently under-utilized. President Muhammadu Buhari had last year charged senior officials of the Ministry of Mines and Steel to reverse the present under-utilisation of the nation’s solid mineral resources. The President indicated his government’s readiness to develop the sector.
In that regard, the additional funding from BoI will help government realise the objective of making the mining sector a veritable alternative revenue earner and reduce the nation’s present dependence on oil revenue. We urge the Federal Government and BoI to match words with action.
On its part, government should remove all obstacles that will hinder the exploitation of the solid mineral sub-sector, while the BoI should ensure that the increased funding is released promptly. It is worrisome that this vital sector is virtually in the hands of illegal operators across the country.
Sadly too, the National Mining Corporation (NMC), a core agency of the Ministry of Mines and Steel, is grossly undermanned and underfunded. A recent report revealed that the NMC does not have more than ten staff. This does not augur well for the agency that oversees mining.
With volatility in the price of crude oil in the international market, this is the right time to adequately fund the mining sector. Good enough, every state in the country can boast of having one or more solid minerals. This is the time to adequately exploit these minerals for the benefit of the nation.
In addition to increased funding by BoI, we urge the Federal Government to review the Land Use Act of 1978 which vested the authority over all lands on government. Besides, the Mineral and Mining Act No.34 of 1999 needs to be reviewed. The Act vests on the Federal Government the authority over all minerals, including petroleum and solid minerals. This means that this sector can only move at government’s slow pace, thereby denying states and small and medium enterprises with the requisite skills to make appreciable impact on the sector.
Beyond the BoI intervention, new funding from the private sector, including foreign investment inflow should be encouraged. The sector needs new thinking on how to sustain new investments.
If the government is able to address the challenges facing the sector, review the present land laws that hamper investments, the mining sector would be the much-sought after alternative to the oil sector, with capacity to generate revenue, stimulate the economy and create jobs.