Gap Analysis of the Contracting Regime of Nigeria’s Mining Sector

Africa is rich in a variety of natural resources and Nigeria is no exception to that. In addition to its extensive oil reserves, there are deposits of about 44 different minerals in around 500 locations all over the country. However, since the oil boom in the 1970s, the minerals sector has been neglected, resulting in it being under-invested and dominated by indigenous small-scale firms that lack formalization. Consequentially, the sector currently accounts for less than 1 percent of the country’s GDP.

In an effort to tap the full potential of Nigeria’s mineral reserves and maximize domestic resource mobilization, the Nigerian government identified seven of its solid minerals as strategic to the economic and sustainable development of the sector. These are barite, gold, bitumen, iron ore, lead/zinc, coal, and limestone. Following this renewed focus on mineral occurrences, various policy reforms and programmes to increase investments in the sector have been implemented. The goal is to diversify Nigeria’s economy, making the country less dependent on oil alone.

Government’s increased efforts towards engendering a more profitable mining and mineral sector has in recent years yielded some results. Thus, between 2018 and 2020, the sector’s contribution to GDP has increased from about 200 billion naira to 600 billion naira. Irrespective of this progress, the contribution of the sector to GDP remains sub-optimal. For Nigeria to optimize revenue generation from the mining sector and become a relevant player in the global mining business, there is need for a thorough diagnosis of the challenges impeding the sector’s growth.

This paper, therefore, analyses the contracting regime of Nigeria’s mining sector with the objective of identifying the gaps that hinder an efficient and transparent contracting process as a sine qua non for a productive mining regime. For this study, a qualitative approach was adopted sourcing data from key stakeholder interviews, annual reports, academic and media publications. Additionally, the underlisted key legal, policy and regulatory frameworks were reviewed:

  1. Nigerian Minerals and Mining Act, 2007
  2. National Minerals and Metals Policy, 2008
  3. Minerals and Mining Regulations, 2011
  4. Roadmap for the Growth and Development of the Nigerian Mining Sector

Some key deficiencies in the current contracting regime of the country’s mining sector were identified, in response to which the study proposed recommendations for the Federal Government to consider.

Although various challenges persist in Nigeria’s mining sector, the modest growth recorded demonstrates a rather positive outlook, especially if the deficits outlined in this paper are addressed adequately. However, effective stakeholder collaboration, institutional efficiency, coordination, and deliberate financing are necessary if the mining sector is to become a relevant contributor to Nigeria’s GDP and a sustainable aspect of its economic development.

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