The COVID-19 pandemic is a wake-up call that Nigeria needs to stop relying on oil to drive its economy.
This is the view of ARC. OLAMILEKAN ADEGBITE, Minister of Mines and Steel Development of Nigeria, who told audience members during a recent Nigeria Mining Week webinar session hosted in partnership with Mining Review Africa that the country needs to focus on building the country’s mining industry through downstream opportunities.
For decades, Nigeria has been predominately a mono-economy, relying heavily on oil revenue to fuel its economy. In fact, few remember that the country once had a thriving mining industry that dates back to the 1960s.
However, an intense global lockdown resulted in a low demand for oil, pushing the price down to record lows. As such, Nigeria’s economy took a hefty knock.
“The pandemic is a lesson that we can’t only rely on oil to fund our budget,” says Abegbite.
“The global clampdown on the movement of people and goods has made it crystal clear to us that we have to develop our manufacturing capacity. Many industries were unable to source spare parts and raw materials due to the international lockdown.”
According to Adegbite, COVID-19 has put a damper on the country’s aspirations for developing its mining sector.
“The government has done so much in the last four years to create an investor-friendly environment, which has piqued the interest of some minors and majors in the global mining industry.
“It’s just unfortunate that the pandemic struck at a time when the ministry had done a lot to revamp the sector. Like every other sector of the economy, the mining sector has not been immune to the adverse effect of the pandemic.
“The global lockdown, for instance, has precluded the import of equipment and machinery vital to mining.
“Then again, because many manufacturing and construction companies have halted production, the demand for some mined products has tapered off. All these have affected the ability of our sector to generate revenue as we had earlier projected.”
Pandemic forces rethink of economic strategy
However, Adegbite avers that the pandemic does have a silver lining. “From another perspective, this pandemic has also shown us how important it is to exploit our natural resources sustainably and treat the environment responsibly.
The pandemic restricts movement and has closed borders. Its effects on the economy means we need to accelerate our plans for economic diversification, employment and revenue generation for the country.
There’s no denying the fact that the pandemic has affected the mining community adversely, and we have spent this period re-strategising in order to hit the ground running when the pandemic is over.”
To a large extent, Adegbite says, Nigeria’s mining sector can turn the country’s economic fortunes around by creating downstream opportunities.
“We have been working on the downstream/beneficiation policy, having gone through stakeholder engagement and it is now sitting with the Federal Executive Council for final approval.
The policy essentially strengthens the regime for beneficiation locally; that is, to stop the exportation of raw mineral ores from Nigeria.
To this end, government is providing infrastructure to encourage investors to come into the country and participate in downstream opportunities. Government will provide road, rail and water transportation infrastructure as well as energy.
“The federal government is indeed thinking ahead of how we can truly decouple our economy from its addiction to oil. In this respect the mining industry has a key role to play and this will diversify our economy and reduce our dependence on oil. Nigeria is open for investors,” he concludes.