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Nigeria Moves to Halt Illegal Gold Exports as Mining’s Contribution to GDP Declines from 5.6% to 0.33%

Nigeria’s federal government has expressed concern over the significant decline in the contribution of the mining sector to Nigeria’s Gross Domestic Product (GDP) which fell from about 5.6 per cent

Olamilekan Adegbite

Nigeria’s federal government has expressed concern over the significant decline in the contribution of the mining sector to Nigeria’s Gross Domestic Product (GDP) which fell from about 5.6 per cent it used to be 42 years ago to the current 0.33 per cent.

Speaking at a workshop titled: “Improving Fiscal Transparency In Nigeria’s Mining Sector,” in Abuja, Minister of Mines and Steel Development, Mr Olamilekan Adegbite, stated that the government was doing everything to diversify the economy.

According to him, by so doing, the government aspires to capture economic linkages, create jobs and increase revenues.
“Unfortunately in Nigeria, despite the country’s resource potential and its past experience as a significant mineral producer of tin, columbite, and coal, the sector today has one of the lowest outputs in the Nigerian economy.

“The mining sector’s contribution to GDP had steadily declined from 5.6 per cent in 1980 to about 0.33 per cent, which is significantly lower than other mineral rich countries in the region,” he noted.

Adegbite posited that the country continues to struggle to become a significant player in most of the core global mining commodities. According to him, productivity from the Nigerian mining sector was still insufficient to meet local demands for key inputs from mining.

He listed insufficient geo-data and geological knowledge, weak governance, in particular weak capacity to implement and enforce the existing mining law and regulations and a very large, poorly regulated sector as some of the challenges.

The minister stressed that efforts were ongoing to make sure that the illegal exportation of Nigeria’s gold to Dubai was curbed.
“We do feel because all these are illegal activities, you cannot measure those things. Yes, our gold go out illegally. We’re making a lot of efforts to stop that, because our border is so vast,” he added.

He said Nigeria was working with other countries to strengthen regulation of stolen gold, explaining that the country must add value to its resources before exporting them, reason the ministry is training 45 persons to make jewellery.

Governor of Ekiti State, Dr. Kayode Fayemi, who was represented by his Special Adviser, Federal Matters, Mr. Makinde Araoye, explained that one of the major challenges confronting Nigeria was the operation of illegal miners.

Quoting reports, he pointed out that the Nigerian government may have lost trillions in revenue, owing to illegal practices and corrupt activities of companies operating in the mining sector in Nigeria.

“Many schemes through which some companies or miners have defrauded the Nigerian government include non-remittance of revenues, unlicensed mining and evasion of taxes, illegal practices, and incessant smuggling of solid minerals out of the country,” Fayemi stated.

“Worthy of mentioning as well is the fact that, often times, minerals are being mined for wrong purposes. For instance, the Zamfara State Governor, Bello Matawalle attributed the influx of firearms into the state to foreigners who use those weapons to pay for gold and other mineral deposits, and sought President Muhammadu Buhari’s help to tackle the menace of illegal mining in the state.

“The Minister of Mines and Steel, Adegbite, had said artisanal and small-scale operations constitute over 80 per cent of Nigeria mining, which make such illegal practice attractive,” he said.

In his remarks, the Executive Secretary, Nigeria Extractive Industries Transparency Initiative (NEITI), Dr. Ogbonnaya Orji, stated that mineral resource extraction has both positive and negative impacts on the people and the planet.

He opined that oftentimes, public discourse on resource extraction and governance tends to concentrate more on profits to companies and government revenue receipts to the detriment of its negative impacts.

To ensure fiscal justice and accountability in the application of such revenue, Orji stressed that NEITI believes that active citizens’ participation and oversight are critical.

“When NEITI conducted the first audit of the sector in 2007, the sector’s revenue flow to the federation was a paltry N8.9Billion. Compare this for example to the 2019 NEITI reports which recorded about N79.96 billion.

“A year on year comparison also shows improvement of the sector’s contribution to the GDP. The NBS records also confirmed these increases. For instance, the sector contributed 0.18 per cent to GDP in 2018, which rose to 0.26 per cent in 2019.

“Our latest audit of the sector which will be unveiled next week shows even higher figures. So, the solid minerals sector still witnesses low patronage, lack of openness, gender inequity etc. which we all need to work together to address,” Orji pointed out.

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