On September 3, 2023, Minister of Solid Minerals, Mr Dele Alake, said that the sector would contribute 50 percent to the gross domestic product (GDP) under his watch.

While unveiling his “Agenda for the Transformation of the Solid Minerals for International Competitiveness and Domestic Prosperity” in Abuja, Mr Alake also said that his ministry was determined to attract foreign investments and make Nigeria a solid minerals hub.

“The Ministry has to take the bull by the horns if the country must reap the harvest of the trillion dollars worth of minerals under the ground across the country. To achieve this laudable objective, there has to be a paradigm shift in the strategy by re-positioning the sector in terms of the human and capital factors that can drive its transformation,” he said.

He noted that the country would leverage abundant minerals, including gold, manganese, bitumen, lithium, iron ore, lead, zinc, limestone, uranium,  columbite, barite, kaolin, gemstones, coal, topaz and copper that were in massive proportions to attract investors into country.

But is Mr Alake’s 50 percent target realistic or just a wild goose chase? Perhaps, data should provide the needed answers.

What do data say?

Though Mr Alake did not say what the solid minerals sector contributes to the Nigerian economy during his address, checks on the Q1 2020- Q2 2023 GDP reports released by the National Bureau of Statistics (NBS) showed that mining contributed less than 1 percent to the economy (or GDP) in the last 12 quarters. Only in the 4th quarters of 2021 and 2022 did the sector contribute slightly above 1 percent. The solid minerals sector is made up of coal mining, metal ores as well as quarrying and other minerals. Nigeria has more than 30 minerals buried in the earth.

On annual bases, the mining or solid minerals sector contributed 1.65 percent to the economy in 2020, 2.41 percent in 2021, 3.18 percent in 2022 and 0.99 percent so far in the two quarters of 2023.

For ease of calculation, the NBS often lumps crude petroleum and natural gas with mining and quarrying, but the statistics body also disaggregates them to show the percentage distribution of each.

With the data above, the average contribution of the solid minerals sector in the last 14 quarters is 0.59, which is far less than 1 percent. On annual basis, average contribution of the solid minerals sector to the Nigerian GDP is 2.35 percent.

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The 50% wild goose chase

With an average annual contribution of 2.35 percent from 2020 to the second quarter of 2023, Mr Alake needs to expand economic activities in the solid minerals sector 21 times if he wants to hit the 50 percent target.

In dollar terms, 2.35 percent average annual GDP of the solid minerals sector amounts to $10.34 billion – out of Nigeria’s GDP of $440 billion.

Hence Mr Alake will need to move the size of this sector from $10.34 billion to over $217 billion to hit his 50 percent target. This also means that the solid minerals sector must grow 2,100 times to achieve that feat.

If Mr Alake plans to achieve that in four years, then he will need to drive the sector to grow by 525 percent annually to get to that point. This will make solid minerals the fastest growing sector in the world – a feat that is nearly impossible.

Should Mr Alake target the 50 percent contribution in eight years, then the sector must grow by 263 percent each year.

These are nearly impossible considering the recent negative growth of the sector.

“In real terms, the Mining and Quarrying sector grew by –12.16% (year-on-year) in the second quarter of 2023. Compared to the same quarter of 2022 and the first quarter of 2023, it was lower by 1.07% points and lower by 8.20% points respectively. Quarter- on- quarter, the growth rate recorded was -11.11% during the quarter,” the NBS said in the second quarter 2023 report.

It was not clear whether the negative contribution of this sector was driven by crude oil or solid minerals. However, the negative growth shows that getting this sector to contribute half of Nigeria’s GDP is an uphill task.

Easier said than done

There are many factors counting against Africa’s most populous nation in relation to the mining sector.

First, Nigeria’s mining sector is largely informal. Most activities of artisanal miners are informal and can hardly be recorded. Many activities are still happening illegally with powerful individuals involved. Army generals, traditional rulers, politicians and foreign companies (especially Chinese and Australian) have been indicted in the shady business.

“We need to formalise the sector,” former President of Miners Association  of Nigeria, Mr Shehu Sani, told Economy Post.

 However, Sani advised that “the country should pay less attention to illegal mining for now and more to formalising the artisanal miners.”

On September3, Mr Alake gave all miners marching orders to register with cooperatives or stop mining in any part of the country. This, according to experts, was a step in the right direction, noting, however, that it would amount to a mere threat if communities and traditional rulers were not carried along.

“If you do not carry communities along, people will “settle” traditional rulers and key stakeholders, and mine without government knowledge,” said a North-West Nigeria-based miner, Mr Muhammad Ciroma.

Secondly, investors do not yet recognise Nigeria as a solid minerals hub. Nigeria is only recognised as a crude oil hub unlike nations such as South Africa, China, Malaysia, among others.

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According to Investa.gov South Africa, the country’s mining industry is the fifth largest in the world in terms of GDP.

“The mining sector contributed R356bn or 7.3% to South Africa’s GDP and accounted for 25% of the country’s total export earnings. Platinum, coal and gold are the three largest mining exports,” it said in 2020.

While Nigeria’s solid minerals sector is valued a little over $10 billion, China’s metallic minerals and coal alone are worth 20 times more.

“In 2020, the total production value of metallic mineral and coal mining in China was nearly 218 billion U.S. dollars. This was an increase of over 15 percent compared to 2018, when Chinese mineral production had a value of approximately 184 billion U.S. dollars,” Statista said.

The Nigeria Extractive Industries Transparency Initiative (NEITI) 2017-2021 recent report said that China accounted for 95 percent and 88 percent of the total export volume and value respectively within the period. Other countries which made strong showings were Malaysia (4.64 percent), Korea (1.41 percent), Thailand (1.17 percent), and the UAE (1.11 percent).

Apart from poor infrastructure, poor doing business environment makes miners uncompetitive. Miners complain that they are hard hit by the Land Use Act if 1976, which makes land ownership difficult in several communities.

Similarly, communal clashes and unnecessary illegal taxes by touts and communities are also hurting a number of them, making expansion hard.

Another key issue is that Mr Alake is betting on commodities with volatile prices and demand. Commodity prices change over time and can slump in periods of global crisis or low demand.

“It is also interesting that we are targeting 50 percent GDP when commodity prices are quite volatile. Also, most of the minerals are sold at their raw state. What the minister should focus on is to ensure that those minerals are converted into semi-finished and finished products. Doing this will boost the value of the sector and make more meaningful economic impact,” said a Lagos-based economist, Ms Ebere Amadi.