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Why Solid Minerals Sector Is Under- Performing – NEITI

Gold mining in Nigeri

Despite the abundance of solid minerals in the country, the country realised only N33.86 billion from the sector in 2013.

This figure is contained in the 2013 Solid Minerals, Oil and Gas Audit released by the Nigeria Extractive Industry Transparency Initiate, NEITI, in Abuja on Monday.

Out of 619 companies that made payments to the government in 2013, the audit was able to reconcile payments made by only 65 entities, representing just over 10 percent of the active players in the industry.

According to the NEITI report, the 65 companies were those that made payments of N2 milliom and above to six government revenue collecting agencies involved in the sector, including Federal Inland Revenue Service, FIRS, Mines Inspectorate Department, MID, and Mining Cadastral Office.

The report also showed that payments from the solid minerals sector were not well dispersed with cement manufacturing companies taking a clear lead.  For instance, five cement companies namely – Dangote, WAPCO, Ashaka, UNICEM and CCNN accounted for N30.47 billion of government revenue or about 93% of the reconciled payments

A breakdown of the revenue distribution showed construction companies contributing N1.98 billion and mining and quarry companies, N1.42 billion.

Also, in spite of the fact that every state in the country has huge deposits of solid minerals, only five states accounted for 72% of the total payments in 2013.

The states are: Ogun, 25%, kogi, 20%, FCT 14%, Cross River 9% and Oyo, 4 %.

The audit report noted a lack of clarity on legal and tax regime in the sector as an impediment to revenue generation. Others are inaccurate production data, absence of transfer to states and local government areas and failure to utilise suggestions contained in previous audit reports.

The report recommends among others, that government should develop procedures and systems to collect and verify production data declared by companies; review tax reporting system and put in place a sector-specific fiscal regime for the country, and that mineral exports should be properly taxed.

But Sani Shehu, President of the Miners Association of Nigeria, told icirnigeria.org that the cement companies are doing better than other categories in the solid minerals sector because it has access to funding.

“The cement companies are able to access funds at home and abroad because many of them also have foreign connection. There is a movement of offshore funds to support the cement industry in Nigeria. That is why cement is leading in the solid minerals sector. If the government supports other categories of mining, they will perform better than the cement companies, “he stated.