FBNQuest Capital Tasks Government on Investment in Mining Sector
In the government quest to increase contributions of other non-oil sector as proportion of the gross domestic products, FBNQuest capital reckons that increase investment into the country’s mining sector could boost export earnings and support job creations, particularly in some areas where employment is limited.
In its note, FBNQuest capital while shining the spotlight on the mining sector using recently published State Disaggregated Mining and Quarrying Data series of the National Bureau of Statistics (NBS) made the call.
According to the data series, in 2018 Nigeria produced 56 million tons of solid minerals; limestone emerged as the mineral with the highest production, accounting for 49 percent of the total.
“Increased investment into Nigeria’s mining sector could boost export earnings and support job creation, particularly in some areas where employment is limited”, the firm stated.
The review of the report shows that granite and laterite accounted for 17 percent and 9 percent of the total minerals mined in 2018. Both are consider as core components utilised in the building and construction industry.
FBNQuest said’ “Given the increased activity in road construction last year, we expected a visible trickle-down effect on local mining of these minerals”.
Similar to 2017, Ogun State recorded the highest level of mining activities last year, representing 30 percent of the total, compared with Kogi which accounted for 27 percent and Cross River did 6 percent.
Read Also: “Borrow to transform Nigeria’s economy, investment firm tells FG”According to FBNQuest; there are a few states that have successfully identified their competitive advantage, including solid minerals. If state governments leverage on their comparative advantages, this would boost their internally generated revenue.
The firm observed that credit allocation to the mining sector remains relatively low across the banks as the sector is not generally favoured.
However, the analysts note that the World Bank has approved a US$150 million credit facility to enhance the contribution of the mining sector to the economy.
The funding is expected to improve data collection and infrastructure, and also strengthen the government agencies focused on the sector.
Gold, which accounted for less than 1percent of total minerals mined last year, is set to receive additional support from the private sector as the construction of the first gold refinery is underway and expected to be completed by second half of fiscal year 2019.
This refinery is located in Ogun State and is being built by an indigenous company.
Over the past eight years, the Nigerian Mining Cadastre Office has issued over 7,000 mining licenses. However, this has been reduced to 4,500 as some licenses were cancelled or expired.
To strengthen monitoring and exploration activities, the FGN has earmarked N14 billion for extensive mining data collection.
This should also assist with reducing illegal mining activities across the country.
In fourth quarter of fiscal year 2018, the sector accounted for just 0.2 percent of non-oil gross domestic products (GDP).
The solid minerals sector can easily become a large contributor to economic growth, provided that government initiatives geared towards boosting the sector and attracting investment are implemented effectively.
FBNQuest Capital tasks government on investment in mining sector
