Investment would facilitate industrialisation, generate more jobs and additional revenue.
The Ministry of Mines and Steel Development has appealed to banks in Nigeria to fund the solid minerals sector with a view to boosting the national economy.
Obiora Azubike, the Director of Artisanal and Small Scale Mining Department in the ministry, made the call on Sunday in Abuja.
He said that commercial banks in South Africa, Canada and Australia were funding mining operations in those countries, adding that the bulk of these countries’ Gross Domestic Product, GDP, were derived from mining.
Mr. Azubike said if banks could finance the mining sector in other countries, Nigerian banks should also participate in funding solid mineral sector in the country.
“In South Africa, banks are the key financiers of mining activities; even in Canada, they are supporting mining. But our banks are not funding mining sector, why,” he asked.
Mr. Azubike said this would facilitate industrialisation, generate more jobs and additional revenue.
The director said that the World Bank, through its Sustainable Management of Mineral Resources Project, had trained bankers on ways to interpret the feasibility studies in the mining sector.
He said that during the training, series of meetings were held between some commercial banks, including the Nigeria-Export Import Bank, on the possibility of granting loans to miners.
Mr. Azubuike said the ministry initially felt that the banks did not understand the mining mechanisms. He said it later become clear that the banks were only shying away from granting loans to miners because of the long gestation period of mining.
The director said that the ministry had invited bankers to its seminars and conferences to sensitise them on the need to extend credit facilities to miners. He said that most of the bankers complained that returns on mining were very slow and that recouping investments in the minerals sector might be somewhat difficult.
“They said that if the same money is invested in other sectors, the returns on investment will be guaranteed and faster,” he said.
He, however, observed that if miners were given bank loans at their high interest rates, it would be quite difficult for the beneficiary miners to have a breakthrough.
Mr. Azubike appealed to the banks to fund and support the development of mining operations in the country.
“Banks should look at the mining sector and support its development because if the sector is properly developed, it will be in the interest of everybody,” he said.
The director commended the World Bank for its $120 million mining development grant, adding that artisanal and small-scale miners got $10 million from the grant for their activities.
“The World Bank had actually committed money for the development of the mining sector. UNIDO is also doing something to assist the sector,” he said.
Mr. Azubike said that the Australian Government was also assisting the ministry in the training of its officers in new mining technologies.
He said that the Canadian government was currently sponsoring studies in some areas of the country’s mining sector via the World Bank.