LAGOS: ANALYSTS are upbeat at the potential of the Nigeria mining sector’s contribution to economic growth. FNB Capital, the market watcher, said the prospects in the industry had put the current administration in good stead to diversify its economy, which is seen as over-dependent on oil.
“We are cautiously optimistic on the mining outlook. A success story within the industry would help to attract much-needed foreign investment and technical expertise into the sector,” FNB Capital said on Friday. The think-tank said there was good potential to increase government revenues since an estimated half of output was illegal.
“Also, we understand that legal mining entities mostly avoid paying royalties and taxes. We gather that this is due to the absence of a specific fiscal regime overseeing mining activities in Nigeria and to poor monitoring by the FGN (Federal Government of Nigeria).” This week, a mining conference was held in Abuja to focus on the development of solid minerals and the prevailing challenges in the industry.
The forum brought together stakeholders in both the public and private sectors. “The scope for growth is vast and, given the FGN’s focus on the mining sector, we think this industry is likely to expand rapidly over the next decade,” FNB Capital. Presently, in terms of investable mining sectors, the Fraser Institute, an independent Canadian public policy research organisation which conducts annual surveys of mining jurisdictions, ranks Nigeria at 114 out of 122 in its Mining Investment Attractiveness Index 2014.
Analysts were expecting progress. “We expect an improvement in Nigeria’s ranking over the next few years, not least because the new administration has identified mining as a priority,” he said. Mining contributes less than 1 percent of the country’s gross domestic gross product.