YA’U: No Better Time Than Now To Fully Diversify Economy
Y. Z. YA’U, author and executive director of the Centre for Information Technology and Development (CITAD), Kano is on the Board of Publish What You Pay, an organisation that campaigns for transparency and accountability in the extractive industry sector. He had previously lectured in Telecommunication and Information Technology at Bayero University, Kano. He told The Guardian ‘s GBENGA AKINFENWA that the way to begin diversification rests on commitment to solid policies.
How rich and vast is Nigeria’s extractive industry – solid minerals?
NIGERIA is enormously rich in solid minerals. Every state of the country is blessed with a large range of solid minerals in commercial quantities. Around 2005, a survey by the Federal ministry of Solid Minerals found that there were 44 different types of minerals discovered in 500 locations across the country. Gold is found in many states such as Niger, Zamfara, Kwara, Kebbi among others. There is an estimated over 10 million tonnes of lead and zinc across eight states of the federation.
In 2008 the ministry identified 34 of these as of economic importance. Of the lot, about 13 are being actually mined, processed and marketed. They include coal, gold, dolomite, kaolin, baryte, limestone, feldspar, glass sand, iron ore, lead-zinc, tin and its associated minerals among other others. The ministry decided to prioritize seven of these as of strategic importance. It is conceivable that there also other minerals in vast commercial quantities that have not be mineralized. There have been talks that the country has huge deposits of uranium, which has been tapped.
That sector was neglected for decades as the Federal Government never paid much attention to it. How soon can it be revived, assuming government gets serious with it; and what are the steps to take?
Government has for decades neglected solid minerals, like every other sector of the economy, to hinge the economy on the extraction of oil. In spite of the rich mineral resources, today solid minerals sector does not contribute up to 1% of our national GDP. Yet solid mineral extraction is what built economies like South Africa.
The neglect of the sector can be seen from the fact that government itself does not make many efforts to tap revenue from the solid mineral sector.
In an audit of the sector by NEITI for the year 2011, it reported that in spite of the various gold mining activities in the country include in Zamfara where it led to the death of hundreds of people, there was no record to show that Gold was exported outside the country. It similarly found huge disparities between the records of the CBN and Customs in terms of the number of companies and volumes of minerals exported out of the country. Clearly all attention is focused on the oil sector that no effort is made increase revenue from the solid mineral sector.
To revise the sector, government first has to fully and firmly commit itself to the diversification of the economy. Within this commitment, government can then develop a strategy for the solid mineral sector. It can start with a review of the National Minerals and Metals Policy.
Given that for the medium term the solid mineral sector will continue to be pre-dominated by artisanal mining, it must come up with a concrete agenda for organizing them and providing them support in the form of training, access to technology, funds, and price guarantee as well as properly regulated markets. In connection with this, the Solid Minerals Development Fund should be quickly operationalized with clear transparent and non-bureaucratic guidelines for accessing the fund. Third, government must decide which of these minerals will be locally processed for local consumption and those for value addition before export and develop the necessary industries.
The reform processes started by the Obasanjo regime should be consolidated by both the review of the policies and laws and the enforcement of the exciting laws. One of the elements in this direction would be to streamline the buying and export processes such that government will know what is being mined and exported. The reform must have at its centre the mainstreaming of transparency, accountability and community participation. A regime of full disclosure by miners as well as exporters must be instituted. There must also be a regulated pricing system. The current system of arbitrary pricing is not conducive for the development of the mining sector.
A fourth element is an active reclamation and remediation programme across different abandoned mine sites. The current situation in which miners simply abandoned sites in spite of the law that says they must restore sites before leaving serves as disincentive for communities to allow miners to come to their communities. Each time I go to Jos, I feel the sense of injustice done to our people and environment by miners who got rich and left the environment degraded and the people poor.
A serious reclamation and remediation programme will thus not only serve to restore the environment but also as an incentive for communities that their land with not be laid waste when the minerals deposits have been exhausted, and coupled with strict adherence to the community development clauses of the law, communities would be willing to embrace miners.
Mining laws and the constitution still favour the FG having substantial interest and control over solid minerals. What is the best global practice, in terms of participation in exploring and exploiting solid minerals?
Sometimes the best global practices are not really what we need. What we need is developing policies and practices that respond to our specific condition and our development trajectory. Here is a country that is rich in mineral resources, that is ravaged by unemployment and poverty and a major name in the world of de-industrialization. So what do you to address these problems that occur simultaneously? What role should solid minerals play in addressing these? I should think that it has three important roles which would determine the sort of policy regime we should have in place. First of all, mining should be used to generate employment.
With employment of course you are also addressing poverty. Mining should also provide the basis for re-industrialization. It provides the raw materials for metal related industries. The mining sector in Nigeria is characterized by the preponderance of artisan miners. We must therefore start by organizing artisanal mining even as we also bigger players to be in the field (there are enough incentives for them to come at the moment).
The current law does recognize this but the implementers are not doing anything in this direction. For instance, the Small Scale and Artisanal Mining Department of the Ministry which has responsibility for organizing artisan miners is a mere bureaucracy that has no link with artisanal miners in the communities.
In fact instead of seeing them as its constituency, it tends to see them as the illegal miners who are de facto criminalized. We have at the moment no capacity to police illegal mining and the best we can hope is to incentive cooperative mining, thus bringing individuals into a regulated framework of cooperative mining which is what the law has intended. The Department has not moved to organized them into cooperatives as the law envisaged
Once the artisanal mining is reorganized to achieve maximum output it then feed the relevant industry rather than allowing mineral theft to be draining the country of its resources. In this, government should then work with investors to set up relevant value chain industries. The metal industry is a necessity for the economy to both modernize and diversify.
In this case, we must return to rethink both Ajaokuta and Delta steel companies as well as the other steel rolling mills in the country. The government must have an agenda for the development of the metal industry. The key elements for doing that include of course the urgent need to address current lack of the needed infrastructure of roads, rail and power. Without electricity, no industry can survive profitably and without good transportation network, both raw materials and finished products cannot be evacuated, and no sensible investor with plough his or her money in such a situation. This means that this government must quickly address the power sector as well as paying attention to roads and rail development.
The current constitutional provision places mining in the hands of the federal government. I think that should be changed. If state governments are the vehicles for the development of their domain, then they should have the power to assess and use these resources. In a way this sounds like resource control. It is. Communities and must the engineers of their souls. They must have access to the decision making processes in the tapping and utilization of resources in where they live.
Solid mineral theft is the order of the day as seen all over the place. What informs the activities of illegal miners digging for precious metals all over the place?
There are four reasons for the solid mineral theft in the country. The first is that there is poor enforcement of the existing laws. For instance the provision for disclosure requires that mineral title subsists, the holder shall Prepare and submit to the Mines Inspectorate Department detailed half yearly report of all exploration and mining operations in the mineral title area. This will enable government to know what is mined but this is not being enforced. There is also no discloser or transparency at the level of buying and selling, including export. This thus brings me to the second reason, which is the deficiency in the existing laws.
Illegal miners could still sell their products since there is finger printing of mineral deposits in the country. The third is corruption, which allows various sector agents to look their other way as solid minerals taken away illegally or even join to take part in the theft. Finally there is the issue that mining host communities lack knowledge of both mineral deposit formations and the laws governing the mining of minerals in their domains. This makes it possible for people to come to a community illegally mine areas and leave with their finds without registration.
Crude oil theft robs government of huge revenues. At the upstream Nigeria is said not to have the technology to monitor exact figures of oil production. Is there the expertise to ensure that solid minerals are well tracked, to cut wastage and theft?
I think we lack the political will and the commitment to track solid mineral thefts like we lack same for oil theft. Relevant technologies for tracking oil theft such as finger printing are available. There have been extensive researches in these areas by our universities. We have well trained professionals. Our artisanal miners are well experienced in the identification of minerals and so the country can draw from these to have the necessary expertise to track minerals exploration and its movement.
However, due to corruption and lack of vigilance on the part of both people and even local governments, theft of mineral resources is a common feature of our mining industry. I went to an advocacy to a local government in Zamfara State while we were working on the lead poisoning issue and I was surprised that the local government administration did not know the provision of the Mineral Act which empowers communities to negotiate development pact with miners before they could be granted licenses. At the level of the relevant enforcement agencies either due to corruption or simply because of lack of patriotism, many unwholesome practices against the law take place. Oversight agencies do not do their work as a result of which we can have the type of disaster that occurred in Zamfara under our noses.
We need government to ensure the enforcement of the laws. But it must also review the laws to address lapses that selfish people capitalize to engage in illegal mining and the theft of minerals. We must have properly designated and regulated minerals buying centres and that both sellers and buyers must be registered. Minerals for export out of the country must show valid certificate of properly documented transaction as fully done in accordance with law along with payments for relevant taxes. This will not only avail government with improved revenue but also ensures that mineral theft through the illegal export of minerals is curbed.
Local expertise is necessary because at the end of the day, government may have to open up the sector for foreign investors. What can government do in the next four years in that regard?
I think there are a number of things that government can do in the next few years to open up the sector. The first is to immediately review of the Nigeria Minerals and Mining Act, 2011 with a view to removing some of the ambiguities and shortcomings contained therein. For instance, Section 96 (1) should be amended to provide for transparency in the granting of registration as “Minerals Buying Centre” so as to ensure that government is able to collect all royalty from the sale of minerals. Secondly, the Mining Act and the National Policy on Minerals to incorporate principles and processes of the NEITI in the mining sub-sector of the extractive industry. Third, there should be enforcement of all existing regulations and laws, because this will ensure not the collection of revenue but also that mining is done within the overall development interest of the country.
Fourthly, government needs to stimulate the establishment of new mineral processing industries as well as the expansion of new ones. Exporting minerals without adding values does not allow the country to get the full range of benefit it should get from mining. Moreover, creating relevant industries will mean the creation of jobs. The licensing processing should be simplified and made more transparent. These are all at the level of operation.
In terms of making the sector attractive to foreign investment, the government needs to do a more comprehensive mineral mapping study with convincing data that is needed. A lot of the studies now available are impressionistic and to not give investors the confidence to come. Some State and even federal agencies make declaration of the fabulous minerals deposits in their domains without concrete data. It must also tackle the issue of corruption and collusion between government officials and illegal miners.
Jos is a typical example of how mining activities have ruined the soil and topography of locations where solid minerals are extracted. What steps should be taken to make remediation part and parcel of exploration activities?
The Mining Act has excellent provisions to deal with issues of land and soil degradation. First, there is the Mines Environmental Compliance Department with responsibility over monitoring and enforcement of compliance with environmental and health and safety standards in mining activities.
This is responsible suggesting what action companies should take should their operation resulting in degrading the environment. Section 19(1) of the Nigerian Minerals and Mining Act, 2007 also makes provision for the establishing in each state of the federation the Mineral Resources and Environmental Committee whose functions shall include considering issues affecting compensation and take necessary recommendations to the Minister.
This means that if we are proactive, we are able to quickly identify any environmental or health hazards that mining in any specific location presents before it gets out of hand. The provision also makes commitment to compel companies to carry out remediation activities. The law also provides for the establishment of the Environmental Protection and Rehabilitation Fund to be funded by contributions by mineral title holders on a yearly basis for the “purpose of guaranteeing the environmental obligations of Holders of Minerals title. This fund is to be used in financing remediation activities.
As of now the fund is not functional. So how problem is not so much about how to quickly identify or deal with the negative consequences of mining. It is about the lack of political will to enforce the law.
Is NEITI properly suited to monitor solid minerals?
I think in as far as the law is concerned; NEITI is properly suited to monitor solid minerals in the country. The problem is that the current capacity of NEITI makes it a small organization. It also needs to recruit the necessary professionals to carry out its mandate. But we must understand it is organization that was set up to look both at what happened in the past and what is happening in the present. In this sense, it had a backlog of assignments to carry out. It took it long to carry out outstanding audits of the oil sector, even as of now, it is probably up to date to 2013 in terms of the audit.
This audit itself is learning process for NEITI. It had no precedence to fall on. It has to invest a very thing anew within the context of the country. It means that as it works, NEITI must need to look for new elements for consideration and incorporation in its audit. Its work is made more difficult by the fact that no one in the country knows the amount of oil being extracted as well as in being sold; this is compounded by both oil theft and illegal refinery.
Additionally, there are forces who do not want NEITI to succeed as well as those who did not understand what it is supposed to be doing. All this means that it has not only a lot of outstanding work to clear but also a very difficult terrain to work in. It therefore, rightly in my view, from its inception, decided to focus on the oil and gas sector. This unfortunately created the impression that either the solid mineral sector was not part of its remit or that it lacked the capacity to audit thee solid mineral sub-sector. Now that it is making process, it has commenced audit of the solid minerals sub-sector.
Do we need new laws and regulations on mining?
I think it is not new laws that we need. What we need is the review of the existing laws as well as the regulations. I have earlier made reference to some specific aspects of the Act that need to be reviewed. There is the need to mainstream both transparency and stakeholder participation in the processes of the mining sector. This includes for instance having civil society representation in the various organs that the law has established such has the Environmental Protection and Rehabilitation Fund, the Solid Minerals Development Fund, etc.
We need also to sensitize the citizens in the mining communities as well those engaged in the mining activities. This way, the communities would be better placed to monitor and protect the mineral resources in their communities as well as ensure that mining activities do not endanger their lives. It will also help government to tap the revenue that should accrue to it from mining activities.