Nigeria’s mining sector opens up

Government gets more revenue from mining activities despite challenges.

Mining remains a small contributor to the Nigerian economy, accounting for less than 1% of the country’s over US $400 billion GDP in 2012. The government appears to be a long way off its goal of 5% of GDP by 2015. However, the sector is becoming better organised and more information is becoming available. 

Strengthening the sector’s contribution would require addressing the legal and fiscal bottlenecks as recommended in the report. To ensure maximum revenue collection from mining activities in  the states, the report recommends that tax officers develop a comprehensive database of mining companies and routinely assess that the amounts paid by them are inline with their tax obligations.

Revenues steadily increase but remains small compared to whole economy

Nigeria’s 2012 EITI Solid Minerals report shows a 17% increase  in revenue compared to 2011.  Government revenue from mining activities reached US $203 million.

Increase in granite and limestone production by 50% and 20%, respectively, is the main reason for the change. While granite and limestone lead in production, they are used mostly for local consumption. The mining sector contributed only 0.02% of export earnings, with zinc and lead as the most important minerals.

Disclosure owners of mining companies will improve transparency

Who actually owns or controls mining companies in Nigeria has been partially revealed in the 2012 Solid Minerals report.  Actual names, level of ownership and nationality were disclosed as part of NEITI’s efforts to close the space for corruption, money laundering and tax evasion in the solid minerals  sector. Building on these efforts and transferring lessons learn to the oil and gas sector will strengthen transparency and improve governance of the country’s extractive resources. Although not required by Nigerian law, disclosure of the natural persons who own or exercise control of extractive companies is encouraged under the EITI Standard.

Getting a clearer picture remains a challenge

There are no large scale mining operations in Nigeria. Cement manufacturers and construction companies produce limestone and granite for their own use. Small scale mining, which accounts for  90% of activities in the sector is regulated by Artisanal and Small Scale Administration (ASMD). ASMD, along with the Nigeria Customs Services (NCS), did not provide payment information on mining activities for the 2012 report.

 

Nigeria has requested a three-month extension to the deadline of 31 December 2014 for publishing the 2012 oil and gas sector EITI Report. The EITI Board will discuss the request shortly based on the criteria set in Requirement 1.6.d of the EITI Standard. 

For more information on EITI in Nigeria, visit their homepage www.neiti.org.ng or the country page on eiti.org

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