Post by Trade facilitator on Apr 18, 2016 19:43:58 GMT 1
WHAT can solid minerals, especially metals, contri-bute to the Federal Government’s quest to diversify the economy?
The potential of the solid minerals sector is so immense that I dare say that the country can survive comfortably with its solid minerals endowment alone. We are a blessed country when it comes to solid minerals and everyone can see that from one’s backyard to state. From a pragmatic perspective; of the 44 identified solid minerals endowment in Nigeria, at least 10 of these solid minerals in the metallic minerals category including manganese, copper, columbite, tin, tantalite, gold, lead, zinc, beryl, chrome and zirconium, alone can provide Nigeria with enormous foreign exchange earnings. These metals have accounted for at least 80 per cent of the export proceeds accruing from solid minerals in Nigeria. According to data from Central Bank of Nigeria (CBN), $1.742 trillion accrued to Nigeria as export proceeds from solid minerals between 2010 and last year. These figures were achieved without any serious government focus on the sector. When those individual companies and cooperatives whose solid minerals exports brought about this $1.742 trillion scale up their exports capacity by 10 times; it suffices to say that the proceeds accruable from solid minerals export would jump to $17.42 trillion. This would have come with taxes accruable to the Federal Government and creation of jobs along the solid minerals value chain as a result of the expansion. You can begin to imagine if we enlarge the net to capture the other solid minerals.
So, everything that the government has laid out as its targets- foreign exchange earnings and diversification, creation of jobs and widespread national development across the states are all embedded in the development of the solid minerals sector.
As an operator, what are the industry’s challenges?
There are many challenges that one faces as an operator in the industry, although these challenges vary according to the level of operations and the position on the value chain. But they are mostly linked together and you can sum them up under four basic headings- infrastructure, bankable geological data, standardisation and institutional finance. The poor infrastructure network in the country means high cost of transporting the metallic solid minerals from the remote mines to the nearest seaport, which makes it difficult for the exporters to compete in global markets especially in the areas of pricing and export volumes. The global markets operate amidst fierce competition; therefore the federal and state governments must invest to upgrade and expand our rail network across the six geopolitical zones.
Also, the absence of bankable geological data means that the industry cannot effectively utilise private sector opportunities including finance and foreign assistance as well as global trade agreements. Financial institutions cannot fund mining projects without knowing the reserves of the various mines in question. The federal and state governments might not be able to do most of these geological research; however, they are required to take responsibility for a chunk of the work especially since the Federal Government claims exclusive royalty collection from the mines operators. The government must come to the aid of the sector by way of underwriting exploration costs – there should be a mid-point. Government can use its other fiscal policies such as waivers, tax holiday, concession and guarantee among others to incentivise the development of geological data. We must work on standardisation if we are serious about competing globally, and this must be a national task, general standards that conform to global standards. The bulk of the solid minerals exported from Nigeria pass through procedures of inspection which are far below internationally accepted standard procedures. Therefore, exporters are underpaid and the government also loses revenue in the process.
In a development process, there is always the need to support the fledgling industry with amenable finance to support active private sector operators and drive the critical mass that could propel the industry forward overtime without any necessary government intervention. As it is now, we have almost zero access to institutional finance, particularly from the CBN, which makes it virtually impossible for the metallic solid minerals miners and exporters to access structured finance at single digit rates. For instance, it is all over the media that the CBN has a N220 billion MSMEDF intervention, N500 billion export stimulation facility and all such funds but unknown to the general public and even the Presidency that the CBN in reality has got the commercial banks to sign off guarantees that these intervention funds and loans must not go bad, failure of which the commercial banks’ deposits with the CBN will be drawn to the loans amount that go bad. Therefore in practice, the CBN has not really intervened. The CBN must assist the banks to cover some risks. The more important thing is to ensure there is a genuine verification process to ensure that funds are disbursed to active and operating solid minerals operators in line with each operator’s track records.
How can the government unleash the potential of the solid minerals industry?
Governments – at the centre and states – should rollout attractive business packages tailored specifically for the solid minerals sector. Incentives are a must for this sector to begin to contribute meaningfully to national development. When we talk about incentives, we don’t necessarily mean government should dole out money to the industry operators. We simply mean government policies for the sector should be reasonable, consistent and equitably fair with overriding objective of the nation’s development. For instance, what has happened to the Export Expansion Grant (EEG) incentive? The government through the Nigerian Export Promotion Council (NEPC) says the scheme has been suspended. But to metallic solid mineral exporters; we say government is unfair by the sudden repeal of this incentive. How can a handful of companies who abused the incentive block the chances of numerous other exporters? The greater number of exporters shouldn’t bear the consequences for actions of some unpatriotic few. Good citizens deserve a chance and equal opportunity.
The Minister of Solid Minerals Development has inaugurated a committee to develop a blueprint for the industry, what is your advice?
Since the sector has become a national economic priority; it suffices to say that all things pertaining to it should be public and inclusive. The print media has a role to play here: the general public only saw two names-chairman of the 17-man committee – Prof. Ibrahim Garba; co-chaired by Prof. Siyan Malomo. In our company’s capacity as member of the Miners Association of Nigeria, our contributions have been communicated to the President, Miners Association of Nigeria, Alhaji Sani. The committee should be able to convoke a quick, holistic stakeholders’ meeting or conference to harvest the diverse opinion base of the industry.
How has the foreign exchange squeeze affected operations in the mining sector?
I would say the foreign exchange policy of the CBN needs review in order to further stimulate exports. For our company and indeed every responsible exporter of solid minerals; we remain profitable so long as there is an exchange rate between the dollar and naira. The parallel market rates simply reflect the pressure on the naira; and only exporters are insulated from the consequences of the exchange rate volatility.
Against the backdrop of globalisation, what are the prospects of Nigerian exports in the global market?
We must reposition our products to compete favorably in the global commodity markets. It is not enough to be richly endowed; we must aggressively pursue value addition across the whole value chain -from products source to final end users.
What is AMEN’s role in the development of the solid minerals industry and the economy?
We are at the forefront of putting the Nigerian metallic solid minerals on the global markets. We strike an acceptable trade methodology between the miners and the foreign buyers. We create jobs -both formal and informal for the economy. We are constantly seeking ways to improve the quality of products we exchange for the much desired foreign currencies. It is the exporters that mainly finance the operations of artisanal miners through advance payments and grants. No commercial bank will directly finance any artisanal miner. With these, you will see that we are the backbone of the mining industry.
On access to finance, what are your experiences as individual exporters and as a group?
Exporters have always been left to fend for themselves. Most of the metallic solid minerals exporters have little or no commercial bank support for their operations. Access to finance is still one singular most debilitating factor affecting growth of exporters.
How can the government leverage on solid minerals to empower the citizenry?
The Federal Government and state governments should develop empowerment programmes tailored to grant loans, take-off grants to start-ups willing to operate in the various solid minerals categories. Pairing exporters with proven track records with such start-ups to act as mentors, will be invaluable. This will not only have multiplier effect on job creations but also help to create a new generation of entrepreneurs that can help to grow the Nigerian economy. If well exploited, government can create at least 200,000 jobs per annum through a well-crafted empower-ment programmes for start-ups in 10 of the commercially viable solid minerals.
Besides, existing mining and solid minerals export companies with year-on-year consistent and proven track records should be granted expansion facilities to scale up their operations. Such expansions would normally come with addition of more jobs.
Source: thenationonlineng.net/access-finance-major-drawback-exporters/
The potential of the solid minerals sector is so immense that I dare say that the country can survive comfortably with its solid minerals endowment alone. We are a blessed country when it comes to solid minerals and everyone can see that from one’s backyard to state. From a pragmatic perspective; of the 44 identified solid minerals endowment in Nigeria, at least 10 of these solid minerals in the metallic minerals category including manganese, copper, columbite, tin, tantalite, gold, lead, zinc, beryl, chrome and zirconium, alone can provide Nigeria with enormous foreign exchange earnings. These metals have accounted for at least 80 per cent of the export proceeds accruing from solid minerals in Nigeria. According to data from Central Bank of Nigeria (CBN), $1.742 trillion accrued to Nigeria as export proceeds from solid minerals between 2010 and last year. These figures were achieved without any serious government focus on the sector. When those individual companies and cooperatives whose solid minerals exports brought about this $1.742 trillion scale up their exports capacity by 10 times; it suffices to say that the proceeds accruable from solid minerals export would jump to $17.42 trillion. This would have come with taxes accruable to the Federal Government and creation of jobs along the solid minerals value chain as a result of the expansion. You can begin to imagine if we enlarge the net to capture the other solid minerals.
So, everything that the government has laid out as its targets- foreign exchange earnings and diversification, creation of jobs and widespread national development across the states are all embedded in the development of the solid minerals sector.
As an operator, what are the industry’s challenges?
There are many challenges that one faces as an operator in the industry, although these challenges vary according to the level of operations and the position on the value chain. But they are mostly linked together and you can sum them up under four basic headings- infrastructure, bankable geological data, standardisation and institutional finance. The poor infrastructure network in the country means high cost of transporting the metallic solid minerals from the remote mines to the nearest seaport, which makes it difficult for the exporters to compete in global markets especially in the areas of pricing and export volumes. The global markets operate amidst fierce competition; therefore the federal and state governments must invest to upgrade and expand our rail network across the six geopolitical zones.
Also, the absence of bankable geological data means that the industry cannot effectively utilise private sector opportunities including finance and foreign assistance as well as global trade agreements. Financial institutions cannot fund mining projects without knowing the reserves of the various mines in question. The federal and state governments might not be able to do most of these geological research; however, they are required to take responsibility for a chunk of the work especially since the Federal Government claims exclusive royalty collection from the mines operators. The government must come to the aid of the sector by way of underwriting exploration costs – there should be a mid-point. Government can use its other fiscal policies such as waivers, tax holiday, concession and guarantee among others to incentivise the development of geological data. We must work on standardisation if we are serious about competing globally, and this must be a national task, general standards that conform to global standards. The bulk of the solid minerals exported from Nigeria pass through procedures of inspection which are far below internationally accepted standard procedures. Therefore, exporters are underpaid and the government also loses revenue in the process.
In a development process, there is always the need to support the fledgling industry with amenable finance to support active private sector operators and drive the critical mass that could propel the industry forward overtime without any necessary government intervention. As it is now, we have almost zero access to institutional finance, particularly from the CBN, which makes it virtually impossible for the metallic solid minerals miners and exporters to access structured finance at single digit rates. For instance, it is all over the media that the CBN has a N220 billion MSMEDF intervention, N500 billion export stimulation facility and all such funds but unknown to the general public and even the Presidency that the CBN in reality has got the commercial banks to sign off guarantees that these intervention funds and loans must not go bad, failure of which the commercial banks’ deposits with the CBN will be drawn to the loans amount that go bad. Therefore in practice, the CBN has not really intervened. The CBN must assist the banks to cover some risks. The more important thing is to ensure there is a genuine verification process to ensure that funds are disbursed to active and operating solid minerals operators in line with each operator’s track records.
How can the government unleash the potential of the solid minerals industry?
Governments – at the centre and states – should rollout attractive business packages tailored specifically for the solid minerals sector. Incentives are a must for this sector to begin to contribute meaningfully to national development. When we talk about incentives, we don’t necessarily mean government should dole out money to the industry operators. We simply mean government policies for the sector should be reasonable, consistent and equitably fair with overriding objective of the nation’s development. For instance, what has happened to the Export Expansion Grant (EEG) incentive? The government through the Nigerian Export Promotion Council (NEPC) says the scheme has been suspended. But to metallic solid mineral exporters; we say government is unfair by the sudden repeal of this incentive. How can a handful of companies who abused the incentive block the chances of numerous other exporters? The greater number of exporters shouldn’t bear the consequences for actions of some unpatriotic few. Good citizens deserve a chance and equal opportunity.
The Minister of Solid Minerals Development has inaugurated a committee to develop a blueprint for the industry, what is your advice?
Since the sector has become a national economic priority; it suffices to say that all things pertaining to it should be public and inclusive. The print media has a role to play here: the general public only saw two names-chairman of the 17-man committee – Prof. Ibrahim Garba; co-chaired by Prof. Siyan Malomo. In our company’s capacity as member of the Miners Association of Nigeria, our contributions have been communicated to the President, Miners Association of Nigeria, Alhaji Sani. The committee should be able to convoke a quick, holistic stakeholders’ meeting or conference to harvest the diverse opinion base of the industry.
How has the foreign exchange squeeze affected operations in the mining sector?
I would say the foreign exchange policy of the CBN needs review in order to further stimulate exports. For our company and indeed every responsible exporter of solid minerals; we remain profitable so long as there is an exchange rate between the dollar and naira. The parallel market rates simply reflect the pressure on the naira; and only exporters are insulated from the consequences of the exchange rate volatility.
Against the backdrop of globalisation, what are the prospects of Nigerian exports in the global market?
We must reposition our products to compete favorably in the global commodity markets. It is not enough to be richly endowed; we must aggressively pursue value addition across the whole value chain -from products source to final end users.
What is AMEN’s role in the development of the solid minerals industry and the economy?
We are at the forefront of putting the Nigerian metallic solid minerals on the global markets. We strike an acceptable trade methodology between the miners and the foreign buyers. We create jobs -both formal and informal for the economy. We are constantly seeking ways to improve the quality of products we exchange for the much desired foreign currencies. It is the exporters that mainly finance the operations of artisanal miners through advance payments and grants. No commercial bank will directly finance any artisanal miner. With these, you will see that we are the backbone of the mining industry.
On access to finance, what are your experiences as individual exporters and as a group?
Exporters have always been left to fend for themselves. Most of the metallic solid minerals exporters have little or no commercial bank support for their operations. Access to finance is still one singular most debilitating factor affecting growth of exporters.
How can the government leverage on solid minerals to empower the citizenry?
The Federal Government and state governments should develop empowerment programmes tailored to grant loans, take-off grants to start-ups willing to operate in the various solid minerals categories. Pairing exporters with proven track records with such start-ups to act as mentors, will be invaluable. This will not only have multiplier effect on job creations but also help to create a new generation of entrepreneurs that can help to grow the Nigerian economy. If well exploited, government can create at least 200,000 jobs per annum through a well-crafted empower-ment programmes for start-ups in 10 of the commercially viable solid minerals.
Besides, existing mining and solid minerals export companies with year-on-year consistent and proven track records should be granted expansion facilities to scale up their operations. Such expansions would normally come with addition of more jobs.
Source: thenationonlineng.net/access-finance-major-drawback-exporters/
