Nigeria’s mining sector can further maintain sustainable growth through affordable funding, expediting the amendment to mining laws, regulations and policies, access to reliable geodata, provision of tax incentives and/or rebates, and enhancement of security measures to safeguard mining operations, says a report by KPMG.
According to the report, the sector has witnessed sustained growth as its contribution to Gross Domestic Product (GDP) increased by 327 percent in five years.
“Nigeria’s GDP grew by 3.52 percent (year-on-year) in the fourth quarter of 2022. The Nigerian mining sector also witnessed growth in its contribution to the Nation’s GDP,” KPMG said.
“The sector contributed 0.85 percent in 2022 and 0.63 percent in 2021, representing a 32 percent year on year growth over 2021. Interestingly, the Sector has witnessed sustained growth in the GDP over the last five years.”
The professional services company said Nigeria currently boasts of over 44 priced solid minerals in the mining space, with huge deposits scattered over different parts of the country. However, the contribution of this sector (with such huge potential) to the GDP of the country remains surprisingly abysmal.
“Evidently, the policies and strategies being employed by the current administration have been effective in reviving the Sector over the period,” KPMG said.
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“However, more efforts are required to set the sector on a faster growth trajectory, to compete with that of the oil and gas sector, as the main revenue earner for the country and facilitate our diversification agenda.”
According to KPMG, mining still embeds great potential to boost economic development, diversification and industrialisation. However, the realisation of these goals hinges on the FG’s continued political will to revamp the sector and avail it with the requisite machinery to function effectively.
“The FG’s commitment to sustainable growth in the Sector can be further demonstrated through the provision of accessible and affordable funding, expediting the amendment to mining laws, regulations and policies, access to reliable geodata, provision of tax incentives and/or rebates, and enhancement of security measures to safeguard mining operations,” KPMG said.
“Given the imminent change in administration by 29 May 2023, it is unlikely that much can still be accomplished by the current administration, except the pending Bill is given an accelerated hearing by the National Assembly and passed into law before the hand-over date.”
According to KPMG, the Federal Executive Council on April 5, 2023, approved a draft amendment of the Nigerian Minerals & Mining Act (“the Act”), 2007 – the principal legislation regulating the mining of solid minerals in Nigeria.
“The new bill (the Nigerian Minerals & Mining Bill 2023), has been sent to the National Assembly for initial review and is intended to replace the old law when enacted,” it said.
“Over time, key stakeholders in the mining sector have been clamouring for the amendment of the dated Act, which has been in effect for about 16 years. The Act is misaligned to current realities, and some of its provisions are potentially conflicting with those of the extant tax laws, thereby reducing the Sector’s attractiveness to potential investors.”
According to the professional service company, the plan for a new law is a welcome development. It is hopeful that the Bill would witness an accelerated review and enactment process to enable it to become law before the exit of the current administration on 29 May 2023, so that it does not become one of such bills presented to the National Assembly but abandoned midway through the legislative process
KPMG added that the incoming administration would have to build on the foundation laid by the current administration and the gains already realised to ensure that the established growth trajectory in the Sector is sustained.
“With steady and concerted efforts, the mining sector stands a chance of becoming the engine that will drive the Nigerian economy to prosperity in the near future,” it said.