BoI’s Big Boost For Solid Minerals Business

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Living up to its mandate as an enabler of business enterprises, the Bank of Industry has taken yet another big step with the actualisation of the Small Miners’ Fund, a revolving loan package to the tune of N5 billion.

The Bank, in partnership with the Ministry of Mines and Steel Development recently reached an agreement to give fillip to scattered and unregulated mining activities across the country. The agreement stipulated contribution of N2.5 billion each by the Ministry and the development bank.

Specifically, a certified artisanal miner, under the scheme, has the opportunity of accessing from N100,000 to N10 million; while a small scale miner can access between N10 million and N100 million.

The Minister of Mines and Steel Development, Dr. Kayode Fayemi said the fund will address challenges of insufficient funding and access to capital, which are major factors militating against artisanal and small scale miners who account for about 80 per cent of activities in the sector.

This gesture demonstrates the confidence reposed in the BoI, pursuant to its antecedents of experience and expertise in managing such funds to reflect its mandate as foremost development</a> This package makes the bank the custodian and manager of the fund where artisanal and small scale miners will benefit at a friendly interest rate of five (5) per cent.

"This agreement is a meeting of minds between the Ministry and BoI. We are in the first instance launching a N5 billion fund. With our ministry’s pilot contribution of N2.5 billion, BoI will match our contribution with another N2.5 billion.

"Consequently, with this agreement, the FMMSD appoints BoI as the custodian and manager of the Nigerian Artisanal and Small-Scale Miners (ASM) Financing Support Fund, for the purpose of financing artisanal and small scale mining projects involving industrial minerals, precious stones, precious metal (gold), dimension stone and such other strategic minerals in Nigeria as shall be approved by the ministry and BoI from time to time," Fayemi said.

The Minister disclosed that the fund will be available as term loans or working capital to be utilized for the purchase of requisite items of plant and machinery; payment for drilling, geological and other services related to mining business as may be required, among others.

He added that proper funding would help to integrate the artisanal and small scale miners into the formal sector, enhance their growth and development in a structured manner and spur productivity and job creation in the mining sector.

The Ministry had secured N30 billion from the mining sector component of the Natural Resources Development Fund from the Federal Government to tackle the challenges of funding in the sector. In addition, it got the World Bank’s nod for $150 million to aid the ministry’s Mineral Sector Support for Economic Diversification (MinDiver) program.

BoI is not a novice to such involvement; with a track record of service, where it aligns with the thoughts of government in its bid at reducing poverty and hunger through creation of jobs in every sector of the economy.

Through its interventions, the BoI had pioneered funding in the mining activities just as similar funding arrangement managed by the Bank improved the entertainment sector, thereby empowering thousands of Nigerian youths in the creative sector.

Mr Olukayode Pitan, the bank’s managing director, expressed confidence that the fund will step up a rapid development in the mining sector owing to BoI’s track record in funding mining activities where other banks were hesitant to invest.

Indeed the Bank of Industry has been consistently strengthened, and has over the years, earned for itself a reputation as one financial institution that government and Nigerians can depend upon as custodians of scarce but needed resources at the time the nation desperately require economic diversification and massive employment generation.

Policy makers agree that expertise and financial resources are major constraints in government’s attempt at diversifying the economy. Right from the start, President Muhammadu Buhari had intensified commitment to shift from near-total reliance on oil as major economic earning for nation’s sustenance.

The economic decline in the face of local production cuts witnessed by pipeline vandalism in the Niger Delta and global oil price fluctuations required a paradigm shift and re-structuring of policies and priorities.

Britain, France, India, Norway, including Austria, China, Denmark, Germany, Ireland and Japan have set out official deadlines for the elimination of gasoline cars to be replaced by non-emitting and environment friendly electric cars, starting as close as eight years away. The Netherlands, Portugal, Korea and Spain has followed suit. Although the United States does not set a central deadline, yet, some of its states have made pronouncements towards that target. With nations around the world fully embracing dumping fuel consuming automotives for electric cars, it is certain that the days of petroleum products as safe haven for oil-dependent nations are few.

This is indeed a wake-up call to oil-producing nations like Nigeria on the imperative of vigilance and need to provoke thoughtful alternatives to oil, considering the absence of strategic plans for economic survival in an oil-slump era.

As if it had foreknowledge of what to come, the Buhari Government had planned ab initio to embark on aggressive investment in agriculture and solid minerals, alongside its resolve to raise the bar on accountability and taxation as alternatives to oil in its economic diversification drive.

In response to the solid mineral sector challenges, earlier in the year, a three-day summit of industry experts, organised in Kaduna by Proedge Limited and the Kaduna Chamber of Commerce, Industry, Mines and Agriculture, brainstormed on how to harness the enormous investment opportunities in solid mineral resources and how to properly position the sector to attract investors.

It went further to identify four minerals adjudged to be world class in Nigeria, which include Bitumen, Coal, Gold, and Barite, estimated to be over 1 billion tons in reserve. This is massive!

But the lacklustre interest in the exploration of these resources have troubled stakeholders, most of whom blamed the inclusion of the mineral sector on the Exclusive List, a pointer that only the Federal Government has the mandate to prospect solid minerals wherever they may be found in the country; a factor many consider to be an hindrance to an all-inclusive investment and exploitation of the sector.

States in the north in particular, with huge minerals deposit, could accelerate economic diversification; create jobs and wealth through value addition but funding has largely hampered investment by vast number of artisanal and small scale miners.

Need for improved mining techniques different from the current crude, unprofitable and environmentally-hostile methods involving over 80 percent artisanal miners requires significant contemplation by the government. Again, there should be incentives in the form of grants, soft loans and financial support to small scale operators for profitable mining operations and competitive pricing.

Although funding was identified as a clog in the wheel, local banks were helpless in its exposure to solid minerals financing due to limited resources and skills. Therefore, the summit advocated the establishment of a Solid Mineral Development Bank, using part of the 13 percent Derivation Fund as seed capital in order to stimulate investment in the sector and prevent loss of revenues to illegal mining.