DE-RISKING THE NIGERIAN MINING SECTOR FOR SUSTAINABLE DEVELOPMENT
For a country that is rich in mineral resources, the Nigerian mining sector is a far cry from its potentials both in terms of quantity of output and contribution to Gross Domestic Product (GDP). According to the National Bureau of Statistics, the mining sector contributes a paltry 0.3% to the country’s GDP as mining operations has become largely informal and dominated by artisanal and small-scale miners. This may not be unconnected with weak regulatory framework, absence of geoscience data and lack of sufficient incentive to attract the volume of investment required to set the sector on a growth path. Therefore, it is not surprising that the sector has suffered a dearth of investment because of the challenges that have plagued the sector. Against the above background, this article seeks to allay the fears of potential investors in the mining sector by highlighting strategic policies and measures that have been put in place by the Nigerian government to de-risk the sector and make it attractive for both foreign and local investment.
RISK FACTORS AND COUNTERVAILING MEASURES
Though there are a few other risk factors inherent in mining operations in Nigerian, the focus here will be on 3 – regulatory, technical, and financial risks. An appreciation of these 3 key risk factors and the countervailing measures that are available in curtailing them will put an intending investor in an informed position in their attempt to explore and exploit the opportunities locked up in the sector.
REGULATORY RISK
The chaotic regulatory environment characterized by duplicity of institutional functions and inefficient bureaucracy resulted in prohibitive cost of obtaining mining licenses and subsequently carrying on mining operations.
In response to these regulatory challenges and the resultant investor apathy that greeted the sector, the Federal Government undertook a holistic reform of the sector starting with the enactment of a new law to regulate the sector.