During the 50th ‘Golden’ year anniversary of Nigeria, Philip
Emeagwali, one of the world’s best scientists, a Nigerian for that
matter, posed a question to our leaders in faraway Paris. He was
very clear that a time will come when Nigeria’s oil will either run
out or it will become very irrelevant in the scheme of things.
Though he ‘prophesied’ that it may happen by 2060, it seems his
prophesy has come to pass earlier than he predicted. As usual, to
our leaders, it is another academic exercise. The lesson inherent
therein was lost, and the paper must have gathered ten years of
dust in one office.
Nigeria has never learnt from history. Before oil was
discovered, the regions that made up Nigeria were doing well in
agriculture. Most companies set up then were all agro-allied
industries. The groundnut pyramid in the north, the cocoa house in
the southwest and the booming palm oil business in the Southeast
were all products of hard work and non-reliance on oil. The leaders
back then were very visionary. Therefore, it was expected that with
the discovery of oil at Oloibiri in the early 50s, it would have
complimented the giant strides made in the agro-allied sector, and
in fact use the enormous resources to consolidate and diversify the
economy. Alas! Oil became the bane of our development. The gains
and lessons Nigeria made was thrown out of the window because a new
bride has been discovered.
Today, Nigeria’s economy is classified strong or weak depending
on the price of oil in the international market. International oil
companies invaded Nigeria like vultures that have discovered
carcass; started exploring and drilling oil with little or no
regard for the environment. Host communities are treated like
people with leprosy while the expatriates are treated with much
respect and dignity.
Ken Saro Wiwa, a great old boy of my alma mater, the prestigious
Government College Umuahia, was killed because he advocated for
these oil companies to respect the environment and the sources of
livelihood of the poor residents of Ogoni. Funnily enough, in a
well-advertised fanfare, including the pomp and pageantry of which
our government is known for, Ogoni Clean Up was launched by the
Vice President Prof Yemi Osibajo in 2016. What has happened to the
so-called Clean up? Your guess is as good as mine. That is a story
for another day.
Today, oil prices fluctuate below the production price. The glut
in oil production around the world has again made it clear how
vulnerable the Nigerian economy is. The President has sent a bill
to the National Assembly asking that as much as 1.5 Trillion Naira
be reduced from the ambitious budget of about Ten Trillion Naira
for the present fiscal year. Even at that, it will be a miracle
akin to ‘feeding the five thousand with five loaves of bread and
two fishes’, for the budget to achieve up to 50% performance
considering the current oil price in the international market.
Nigeria as a nation squandered its massive oil profits through
corruption, white elephant projects and incompetence. Countries in
the United Arab Emirate (UAE) invested their oil windfall in
massive infrastructure, world class health care, education,
technology and tourism. Here, our oil windfall went into the hands
of a few; produced emergency billionaires and left the rest of the
citizens poorer. State governors who are sitting on solid goldmines
have jettisoned creativity and innovation because they go to Abuja
every month to receive allocations.
Oil is not the only resources underneath our soil. We have gold
in abundance, silver, tantalite, titanium, copper, iron, tin, zinc,
aluminum, lead. The list is endless. Even with the Covid-19
pandemic lock down directive from the government prompting
companies to restructure and close down around the world, as at the
3rd day of May, 2020, the prices of these precious metals in the
international market is amazing. Aluminum sells at $1,610.89 per
metric ton. Copper sells at $5,182.63 per metric ton. Iron as at
today sells for $88.66 per metric ton. Gold, the king of metals (my
opinion) sells at$1,722.40 per troy oz. Tin, zinc and lead are
selling at an international market price of $15,290.91, $1,903.63
and $1,637.00 respectively . This is from a layman’s understanding
of how the market works. Stakeholders in the industry will be more
familiar with many of these minerals in Nigeria and the enormous
returns Nigeria could make if the non-oil resources are properly
harnessed. According to a report published by Nigeria Extractive
Industry Transparency Initiative (NEITI), the solid mineral sector
contributed well over Four Hundred Billion Naira to the GDP in 12
years. The highest so far was in 2018 where the sector contributed
over Sixty Nine Billion to the GDP. This is a far cry from the
revenue which should be accruable to the Federal Government if
certain measures are put in place. This sector can compete
favourably with the oil and gas sector if government gives some
priority to this sector.
The government needs to create an enabling environment for and
boost investor confidence in this sector. One of the major ways
government can do this is by creating data on the reserve estimate.
Currently, investors spend a whole lot of money exploring or
prospecting for possible sites were these minerals are deposited.
It runs into millions of Naira to keep on exploring for sites with
commercial deposit of these solid minerals. This is unlike what
obtains in the oil and gas sector. There is adequate data for any
would-be investor in that sector to know where to channel
investment or resources because government has taken the pains of
exploration and harnessing the data. Currently, NNPC is exploring
for oil in the lake chad basin. This should be replicated in the
mining sector. If such data is provided it will make it easier for
financial institutions to provide financing for potential
investors. As stated earlier, it is very capital intensive to scout
for sites with mineral deposits in commercial quantity. Banks are
not interested in such wild goose chase. The financial institutions
have no serious appetite to invest in the mining sector. In fact,
commercial banks in Nigeria have no mining desk at all.
However, the Central Bank of Nigeria through the Bank of
Industry and the Ministry of Mines and Steel Development have
provided an intervention fund of Five Billion Naira under the
Artisanal and Small Scale Miners Financing Support Fund. Even
though this is a grossly inadequate, it is a step in the right
direction. However, government cannot provide all the funds needed
to adequately unlock this sector and make it profitable. This is
where the financial institutions come in.
There should be a platform where these minerals are traded. This
trading platform will have information of potential buyers or end
users, those in possession of these minerals in commercial quantity
and are willing to trade and the quality of the metal. This common
trading platform will provide a common marketing platform for all
investors to advertise, and ensure that the finest of these solid
minerals are traded because of competition. This platform will
provide some sort of employment because it will provide speculators
and middlemen.
Government must criminalize and punish all illegal miners for
two reasons. First of all, apart from serving as a deterrent to
other illegal miners, these illegal miners deprive the Federal
Government of a veritable means of income, which is a financial
crime. Secondly, it will boost investor confidence in that there
will be no proliferation of these solid minerals illegally in the
market. In 2018, EFCC arrested a Lebanese National travelling out
the country and who was in possession of about Two Million Dollars
($2,000,000.00) worth of gold at the Nnamdi Azikiwe International
Airport. This was well over Six Hundred Million Naira (N600,
000,000.00) being illegally taken out of our country.
Finally, the Federal Government will have to liberalize its grip
on solid minerals found deposited in states. The Nigerian Minerals
and Mining Act, 2007 must be taken a second look at. The Act
repealed the Minerals and Mining Act of 1999. The Act vests all
control of every property and minerals in Nigeria in the State
(Federal Government) and out rightly prohibits illegal exploration
and exploitation of minerals. According to the Act, all lands were
minerals have been found in commercial quantity shall from the
commencement of this Act be acquired by the Federal Government in
accordance with the Land Use Act. Furthermore, the Act provides
that the use of land for mining operations have superiority over
other uses of land and shall be considered as constituting an
overriding public interest in accordance with the Land Use Act.
Thus, it is my considered opinion that states wherein these
minerals are deposited should allowed to harness, supervise,
explore and have total control of these resources and pays certain
amount to the centre and royalties. This will boost the internally
generated revenue (IGR) of such state. State governments should be
transparent enough to go into private-public partnership (PPP) with
investors and not to allow politicians to hijack it. It must be
seen from a pure business transaction.
Though my opinion is not all encompassing, I believe that with
the right economic policies, industry guidelines, practice
directions and legislations backed with adequate political will for
implementation, the advantages inherent in adequate investment in
this non- oil sector is better experienced than imagined.
“How many oil wells will Nigeria have left in 50
years”?
Onuoha Chisom Franklin, Senior Partner,
Georgetown Solicitors
During the 50th ‘Golden’ year anniversary of Nigeria, Philip
Emeagwali, one of the world’s best scientists, a Nigerian for that
matter, posed a question to our leaders in faraway Paris. He was
very clear that a time will come when Nigeria’s oil will either run
out or it will become very irrelevant in the scheme of things.
Though he ‘prophesied’ that it may happen by 2060, it seems his
prophesy has come to pass earlier than he predicted. As usual, to
our leaders, it is another academic exercise. The lesson inherent
therein was lost, and the paper must have gathered ten years of
dust in one office.
Nigeria has never learnt from history. Before oil was
discovered, the regions that made up Nigeria were doing well in
agriculture. Most companies set up then were all agro-allied
industries. The groundnut pyramid in the north, the cocoa house in
the southwest and the booming palm oil business in the Southeast
were all products of hard work and non-reliance on oil. The leaders
back then were very visionary. Therefore, it was expected that with
the discovery of oil at Oloibiri in the early 50s, it would have
complimented the giant strides made in the agro-allied sector, and
in fact use the enormous resources to consolidate and diversify the
economy. Alas! Oil became the bane of our development. The gains
and lessons Nigeria made was thrown out of the window because a new
bride has been discovered.
Today, Nigeria’s economy is classified strong or weak depending
on the price of oil in the international market. International oil
companies invaded Nigeria like vultures that have discovered
carcass; started exploring and drilling oil with little or no
regard for the environment. Host communities are treated like
people with leprosy while the expatriates are treated with much
respect and dignity.
Ken Saro Wiwa, a great old boy of my alma mater, the prestigious
Government College Umuahia, was killed because he advocated for
these oil companies to respect the environment and the sources of
livelihood of the poor residents of Ogoni. Funnily enough, in a
well-advertised fanfare, including the pomp and pageantry of which
our government is known for, Ogoni Clean Up was launched by the
Vice President Prof Yemi Osibajo in 2016. What has happened to the
so-called Clean up? Your guess is as good as mine. That is a story
for another day.
Today, oil prices fluctuate below the production price. The glut
in oil production around the world has again made it clear how
vulnerable the Nigerian economy is. The President has sent a bill
to the National Assembly asking that as much as 1.5 Trillion Naira
be reduced from the ambitious budget of about Ten Trillion Naira
for the present fiscal year. Even at that, it will be a miracle
akin to ‘feeding the five thousand with five loaves of bread and
two fishes’, for the budget to achieve up to 50% performance
considering the current oil price in the international market.
Nigeria as a nation squandered its massive oil profits through
corruption, white elephant projects and incompetence. Countries in
the United Arab Emirate (UAE) invested their oil windfall in
massive infrastructure, world class health care, education,
technology and tourism. Here, our oil windfall went into the hands
of a few; produced emergency billionaires and left the rest of the
citizens poorer. State governors who are sitting on solid goldmines
have jettisoned creativity and innovation because they go to Abuja
every month to receive allocations.
Oil is not the only resources underneath our soil. We have gold
in abundance, silver, tantalite, titanium, copper, iron, tin, zinc,
aluminum, lead. The list is endless. Even with the Covid-19
pandemic lock down directive from the government prompting
companies to restructure and close down around the world, as at the
3rd day of May, 2020, the prices of these precious metals in the
international market is amazing. Aluminum sells at $1,610.89 per
metric ton. Copper sells at $5,182.63 per metric ton. Iron as at
today sells for $88.66 per metric ton. Gold, the king of metals (my
opinion) sells at$1,722.40 per troy oz. Tin, zinc and lead are
selling at an international market price of $15,290.91, $1,903.63
and $1,637.00 respectively . This is from a layman’s understanding
of how the market works. Stakeholders in the industry will be more
familiar with many of these minerals in Nigeria and the enormous
returns Nigeria could make if the non-oil resources are properly
harnessed. According to a report published by Nigeria Extractive
Industry Transparency Initiative (NEITI), the solid mineral sector
contributed well over Four Hundred Billion Naira to the GDP in 12
years. The highest so far was in 2018 where the sector contributed
over Sixty Nine Billion to the GDP. This is a far cry from the
revenue which should be accruable to the Federal Government if
certain measures are put in place. This sector can compete
favourably with the oil and gas sector if government gives some
priority to this sector.
The government needs to create an enabling environment for and
boost investor confidence in this sector. One of the major ways
government can do this is by creating data on the reserve estimate.
Currently, investors spend a whole lot of money exploring or
prospecting for possible sites were these minerals are deposited.
It runs into millions of Naira to keep on exploring for sites with
commercial deposit of these solid minerals. This is unlike what
obtains in the oil and gas sector. There is adequate data for any
would-be investor in that sector to know where to channel
investment or resources because government has taken the pains of
exploration and harnessing the data. Currently, NNPC is exploring
for oil in the lake chad basin. This should be replicated in the
mining sector. If such data is provided it will make it easier for
financial institutions to provide financing for potential
investors. As stated earlier, it is very capital intensive to scout
for sites with mineral deposits in commercial quantity. Banks are
not interested in such wild goose chase. The financial institutions
have no serious appetite to invest in the mining sector. In fact,
commercial banks in Nigeria have no mining desk at all.
However, the Central Bank of Nigeria through the Bank of
Industry and the Ministry of Mines and Steel Development have
provided an intervention fund of Five Billion Naira under the
Artisanal and Small Scale Miners Financing Support Fund. Even
though this is a grossly inadequate, it is a step in the right
direction. However, government cannot provide all the funds needed
to adequately unlock this sector and make it profitable. This is
where the financial institutions come in.
There should be a platform where these minerals are traded. This
trading platform will have information of potential buyers or end
users, those in possession of these minerals in commercial quantity
and are willing to trade and the quality of the metal. This common
trading platform will provide a common marketing platform for all
investors to advertise, and ensure that the finest of these solid
minerals are traded because of competition. This platform will
provide some sort of employment because it will provide speculators
and middlemen.
Government must criminalize and punish all illegal miners for
two reasons. First of all, apart from serving as a deterrent to
other illegal miners, these illegal miners deprive the Federal
Government of a veritable means of income, which is a financial
crime. Secondly, it will boost investor confidence in that there
will be no proliferation of these solid minerals illegally in the
market. In 2018, EFCC arrested a Lebanese National travelling out
the country and who was in possession of about Two Million Dollars
($2,000,000.00) worth of gold at the Nnamdi Azikiwe International
Airport. This was well over Six Hundred Million Naira (N600,
000,000.00) being illegally taken out of our country.
Finally, the Federal Government will have to liberalize its grip
on solid minerals found deposited in states. The Nigerian Minerals
and Mining Act, 2007 must be taken a second look at. The Act
repealed the Minerals and Mining Act of 1999. The Act vests all
control of every property and minerals in Nigeria in the State
(Federal Government) and out rightly prohibits illegal exploration
and exploitation of minerals. According to the Act, all lands were
minerals have been found in commercial quantity shall from the
commencement of this Act be acquired by the Federal Government in
accordance with the Land Use Act. Furthermore, the Act provides
that the use of land for mining operations have superiority over
other uses of land and shall be considered as constituting an
overriding public interest in accordance with the Land Use Act.
Thus, it is my considered opinion that states wherein these
minerals are deposited should allowed to harness, supervise,
explore and have total control of these resources and pays certain
amount to the centre and royalties. This will boost the internally
generated revenue (IGR) of such state. State governments should be
transparent enough to go into private-public partnership (PPP) with
investors and not to allow politicians to hijack it. It must be
seen from a pure business transaction.
Though my opinion is not all encompassing, I believe that with
the right economic policies, industry guidelines, practice
directions and legislations backed with adequate political will for
implementation, the advantages inherent in adequate investment in
this non- oil sector is better experienced than imagined.
“How many oil wells will Nigeria have left in 50
years”?
Onuoha Chisom Franklin, Senior Partner,
Georgetown Solicitors