The solid minerals sector has over the years been under-funded. Ruth Tene looks at the possibility of alternative source of funding to help develop the sector.
Poor funding has been the bane of the solid minerals sector, but the current enthusiasm of the Minister of Solid Minerals and Steel Development,Mohammed Sada, about the creation of the Solid Minerals Development Fund(SMDF) has been hailed by stakeholders as a step in the right direction of alternative funding.
The year looks gloomy in the sector with the appropriation of less than N4billion and the implementation of the subsidy removal.
While doubting that the N4billion is less than adequate for the development of the sector and accomplishment of its capital and recurrent projects, the subsidy removal further makes the appropriation grossly inadequate and reinforces the need for the World Bank alternate line of credit.
The Project Management Unit (PMU) of the World Bank which provides a line of credit for the sector would be rounding off its activities in May, as 2012 signals the end of its six-year project, except alternative arrangements are reached to further the development of the sector.
Obviously, the allocation of the less than N4 billion to the sector makes a mockery of government’s commitment to the sector.Sada had earlier admitted that while government was committed to increased funding options for the sector, “the sector still requires World Bank support to sustain the success achieved so far and take it to the level where it could create a bigger impact on economic development, job creation, and poverty alleviation.”
He had thanked the World Bank for the intervention fund which he said was critical to the success achieved so far in the sector, while speaking of the need to take the sector to the next level by putting the regulatory instrument to test with the aim of making adjustments where necessary.
LEADERSHIP sources revealed that government could request for additional and continual funding of the sector by the World Bank, while at the same time, creating the Solid Mineral Development Fund to further support the budgetary allocation, but so far, that has not been done.Meanwhile, the Task Team Leader, of the Sustainable Management of Mineral Resources Project, Ms. Ekaterina Mikhaylovak, has said that the World Bank was impressed with the ongoing efforts of the federal government to develop mining as another major line of income generating activity other than oil
Ekaterina, who was worried about government’s continual maintenance of projects already accomplished by the world Bank, recommended the outsourcing of some of its equipment and services to further create funding for the sector.
Sada had shortly after his reappointment in 2011, spoken about a two- tier allocation where funds were either accessed through the normal budgetary process or the constitutional provision made for natural resources fund, which used to be about 3 per cent, but has now been reduced to 1.68 per cent.
“I think the mistake started from my understanding right from the beginning when the Transformation Agenda was going on, the thinking was that because we are deregulating, we are selling off the assets so we do not need to fund certain activities which sometimes can cost you more than what you were doing before,”he said.
President of the Miners Association of Nigeria(MAN), Sani Shehu, would not comment as he saw the withdrawal of the oil subsidy as catastrophic not only to the miners, but to Nigerians as a whole.He however promised to speak after due consultation with other stakeholders.
Meanwhile, Chairman House Committee on Steel, Mohammed Asema Sadiq, while leading a team of the House on a working visit to the Nigerian Steel Raw Materials Exploration Agency (NSRMEA) in Kaduna recently stated that the National Assembly has consistently asked the federal government to raise funds from the excess crude to complete the abandoned Ajaokuta Steel Rolling Mill which is believed to constitute the heart of steel development in Nigeria.
He said that there was a common argument that the only way to fund a serious sector like the steel sector was through the budget rather than through fund raising and concessions which were not reliable.