Experts have decried the lack of revenue earnings formula, saying it is one of the major factors hampering growth in the Nigerian solid minerals sector.
This was the conclusion at the just concluded workshop on the theme; “Fiscal Transparency in Nigeria’s Solid Minerals Sector,” which was organised by Global Rights, a non-governmental organisation, in partnership with Nigeria Extractive Industries Transparency Initiative (NEITI).
Though revenue generation in the sector is said to have increased exponentially since the re-enactment of the Nigerian Minerals and Mining Act 2007, experts concluded that the movement is without motion.
They insisted that its growth has failed to translate to any meaningful development for the country’s citizens.
This “motion-less movement” is attributed to lack of a clear fiscal regime in the sector.
An independent researcher and development specialist and consultant, Dauda Garuba, said at the workshop that designing a fiscal framework that would enable a country maximise good profits is something that would require “trade-ins and trade-offs.”
He said: “As long as you want resources to provide development for your people, the company is also trying to do more exploration, make more investments and make more profits. To be able to get that balance, there must be trade in and trade offs”.
Mr Garuba further explained that extractives have micro and macro economic implications for both producing and consuming countries, and mining fiscals are said to deliver an average of 20 per cent.
“Thus, designing fiscal frameworks for extractive industry is complex for both trade-ins and trade-offs. Besides job and physical infrastructure, rents make the extractive sector attractive as a potential source of revenue,” he added.
The consultant said fiscal framework matters in any sector as it enables a country to do some financial modeling and also helps in the economy’s projection to get a good deal from investors.
According to him, designing a fiscal regime would put into consideration the non- renewability of every mineral in ensuring proceeds from solid minerals are used judiciously because “oil will not be there forever in Nigeria”.
He highlighted the fiscal issues in Nigeria to include the absence of a well defined fiscal regime, inaccurate and unreliable production data, revenue leakages, undue and unmerited tax incentives and subnational governments’ involvement.
NEITI’s Executive Secretary, Orji Ogbonnaya, said robust citizens’ participation in resource governance in solid minerals fosters accountability, fiscal justice and shared prosperity.
He said: “As you are aware, mineral resource extraction has both positive and negative impacts on the people and the planet. And oftentimes, public discourse on resource extraction and governance tends to concentrate more on profits to companies and government revenue receipts to the detriment of its negative impacts.
“At NEITI, we believe profit-making, taxes and royalties collections must not be elevated at the expense of vulnerable groups in the minerals-bearing communities,” he said.
Mr Ogbonnaya noted that beyond pushing sector-related information and data to the public, the organisation prides itself in ensuring transparency and stimulating citizens’ participation in the sector.
“We also work to stimulate and strengthen citizens’ participation in resource governance to push for accountability and policy reforms in the sector. We consider active citizens’ oversights across extractive sector value-chain as crucial and non-negotiable if we want to achieve fiscal justice and prudent applications of mineral revenues,” Mr Ogbonnaya added.
Also in his submission, the director, Technical, NEITI, Dieter Bassi, said the absence of a fiscal regime in the solid minerals sector has a far reaching effect on the economy.
Mr Bassi said the sector is confronted with non-exhaustive challenges that are hampering its development.
He said: “There is no specific fiscal regime for solid minerals in Nigeria, there are conflicts between the various actors, lack of interest from large scale investors due to security challenges, multiple taxation, and past government’s inconsistency”.
Other challenges, according to him, include; “Activities of artisanal small scale miners and middle men in the sector, lack of adequate beneficiation and value addition, and the need for increased government’s oversight of the sector by increased funding.
Abiodun Baiyewu, the Executive Director, Global Rights, in her opening remarks, said the workshop was planned to create enduring platforms for participatory governance in the solid minerals sector, advocate fiscal justice in the governance of the extractive sector and to amplify grassroot voices demanding for accountability.
She noted that despite the enormous potential of the sector, the sector is losing $9 billion dollars annually to illegal/unregulated mining, adding that the communities bear the brunt of the negative impacts.
She said: “With more than 40 minerals in commercial quantities thrown across the country paradoxically, the solid mineral sector contributes less than one per cent of our national GDP, this is worrisome.
“More than 80 per cent of the sector, particularly in artisanal mining, is unregulated and its revenue unaccounted for. We live with the environmental, security and socio-economic consequences of lax oversight and worst still our children will pay the price,” Ms Baiyewu said.
What Nigeria should do
While professing possible solutions to ensure fiscal justice in the sector, Mr Garuba enjoins the country to adopt the two types of methods for revenue generation in a mining sector.
He said: “There are two approaches to setting up fiscal regimes. The first is the general legislation, which provides a level playing field for all that are participating in mining. And whatever we have here is codified in law. It puts into consideration the reduction in administrative costs, political difficulties and investors’ perceived risks.
“The second is an imposition contract or case by case negotiation. This talks more about project specific information, information on fiscal regime/terms elsewhere and established rules on publication of negotiated outcomes.”
Mr Garuba said in designing a fiscal framework for the mining sector, there is no one-size-fit-it all, but “we should put into consideration how to move or adjust the figures to maximise government’s gain, securing early revenue, ensuring adequate incentives for exploration, strategic ownership, amongst others.”