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The plan to recover unpaid taxes and royalties from over 2,000 companies operating in the solid minerals sector by the Nigeria Extractive Industries Transparency Initiative (NEITI) is good news. With the government currently facing dire financial straits, the recovery of the taxes will substantially boost the revenue generation of the government. The move to recover the unpaid taxes is in consonance with the mandate of the NEITI, which includes to conduct a financial, physical and process audit that can assess and reconcile financial flows within the oil and gas industry as stipulated in the enabling Act 2007.
The exercise is being conducted by NEITI in collaboration with the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC). It is estimated that about N600 billion unpaid taxes and royalties would be recovered at the completion of the exercise. The agency has also the duty to confirm the outstanding liabilities due to the Federation Account from every licensed mining company through the respective government revenue agencies. It is encouraging that government is looking towards the solid minerals sector as a good source of revenue generation.
In fact, in the pre-independence years, the solid minerals sector contributed immensely to the economic development of the country. During that period, Nigeria was known for the production of coal as an energy source for electricity, railways and also for export. Nigeria also exported tin, columbite, lead and zinc, among other solid minerals. But currently, the mining sector’s contribution to the economy is minimal. Over 90 per cent of the solid mineral production is derived from industrial minerals and rocks. From 1.93 per cent contribution to the Gross Domestic Product (GDP) in 2012-2013, the mining sector share of GDP (excluding petroleum and natural gas) fell to 1.53 per cent in 2017-2018.
According to data from the Ministry of Mines and Steel, the sector at present contributes a paltry 0.33 per cent to the GDP. The Minister of Mines and Steel says that the Federal Government is targeting five per cent growth and contribution to the nation’s GDP from solid minerals. That is still very little compared to what the sector is contributing in selected African countries. For example, in Botswana, the sector’s contribution to its GDP is 38 per cent, 25 per cent in DR Congo, South Africa and Zambia, 18 per cent, and Ghana, seven per cent.
In spite of the huge deposit of solid minerals across the country, Nigeria could only make N496 billion from the sector in 13 years. The sector generated N79.96billion in 2019, while oil and gas generated N13.9trillion in the same year. However, Nigeria has continued to struggle to become a significant player in the core mining commodities. Therefore, beyond collecting taxes and royalties from mining companies in the country, much more should be done to fully exploit the solid minerals sector. Undoubtedly, Nigeria’s future prosperity beyond crude oil lies with the solid minerals. It is, therefore, in the best economic interest of the country for the government to harness the sector. Data from multiple sources confirm that Nigeria stands to earn over $50billion from the solid minerals annually. Currently, Nigeria is endowed with over 400 different solid minerals across the 36 states. These include gold, silver, gypsum, limestone, bitumen, coal, copper, kaolin, iron ore, and many others.
Nigeria has about three billion metric tonnes deposit of iron ore valued at over$1billion, and 2.23 trillion metric tonnes of limestones worth $1billion and one billion metric tonnes of gypsum worth about $250million. Optimal exploitation and utilisation of these minerals can create millions of jobs, especially at this time of rising unemployment. But this is only achievable if the necessary legal framework is put in place to harness the abundant resources. With this, Nigeria can grow the economy beyond oil.
We advise that the sector should be deregulated and removed from the exclusive legislative list. Doing so will enable the states to exploit and control solid mineral deposits in their domains. In 2019, the government promised to cede the control of solid mineral resources to the states. A committee was set up then to work out the details on how the states can key into the sector. Unfortunately, the committee’s report has not been released. There is need to aggressively diversify the economy so that the states can become self-sufficient without relying heavily on allocations from the federal government. Solid mineral resources is one of such avenues. This will stop illegal mining and refineries across the country.
Let the government address the barriers to effective development of the sector, which include inefficient geodata, weak governance and incapacity to implement and enforce the existing mining laws and regulations. Nigeria will earn so much money from solid minerals, if the sector is fully regulated.
