Informal mining, notoriously known as illegal mining, is, without doubt, having a devastating negative effect on solid mineral mining in Nigeria. Sadly, as reported by the Nigeria Extractive Industries Transparency Initiative (NEITI), this is, erroneously, what most people, including investors and policy makers, focus on when issues are raised about the nation’s mining industry. A study conducted by NEITI with support from the World Bank revealed that only about 20 per cent of the miners do legitimate business in the Nigerian mineral and mining sector, leaving almost 80 per cent to illegal and informal miners. The immediate past minister of mines and steel development, Dr Kayode Fayemi, revealed that the country lost about $9 billion over a period of two years, particularly on gold exportation.
Aside the loss of revenue to government, experts have lamented the loss of lives as was recorded in Zamfara and Niger states when over 700 adults and 28 children died as a result of unsafe mining practices in 2010 and 2015 respectively. Illegal mining has also led to degraded environments due to the absence of remediation processes, making affected environments prone to flooding and other environmental hazards, including the dire impact of climate change. It has also cost the Nigerian government huge sums of money in treatment, remediation and alternative means of mining. The most recent is the over N850 million allocated for treatment of victims, environmental remediation and teaching on safe mining practices in Zamfara State while Niger State still awaits government intervention.
This form of mining promotes poor social habits in host communities as it encourages child labour. It will be recalled that until the late 60s and early 70s, mining was the strength of the nation’s economy as it contributed as high as 10 per cent to the Gross Domestic Product (GDP) of the nation. However, the decline occasioned by the nationalisation policy of the government which led to the exit of global mining institutions left mining in the crude hands of illegal miners, ultimately leading to huge losses of revenue to the nation. Presently, it contributes less than 0.3 per cent to the GDP and has become a playground for illegal miners who carry out their nefarious activities with total disregard for the social, economic and environmental consequence on the host communities. Furthermore, as a result of poor information on mining, the country has continued to lose lives and huge revenues to illegal miners and poorly regulated mining activities which would have been better utilised to address other infrastructural challenges.
It has been found out that despite the gold being mined in various states of the federation, including Zamfara, Osun, Niger and Katsina among others, there is no record of gold mining in the books of the Federal Inland Revenue Service (FIRS). What this implies, in our opinion, is that prospectors, that is local and foreign miners, and even government workers, smuggle out the product, paying little or no taxes at all to the government. As we urge the authorities to address this unfortunate situation, we bring to mind the fact that most illegal mining businesses are owned by well-placed Nigerians who hide behind the activities of illegal miners to continue to steal the nation’s resources while denying host communities the benefits of the mineral resources in their lands.
Meanwhile, an international organisation, Global Rights, claims that artisanal mining makes up 80 per cent of mining concerns in Nigeria and is largely informal, meaning that government is not deriving any revenue from it and, at the same time, host communities are bearing the brunt of the environmental devastation and the infrastructural strain associated with it. The question to be asked is how to begin to build a fiscal framework for mining in Nigeria. There is the need to bring co-players to the table – ministries, governors and civil society organisations, (CSOs) among others – to talk about how to build a tenable regime. One other way is for government to incentivise the formalisation of the sector as it is.
There is no doubt that in addressing this fundamental failure of the economy, the Nigerian government must ensure effective creation and implementation of sectoral policies that are seen to be working. There is the need to incentivise the small and illegal miners such that they key into the benefits of safe mining so as to address issues of environmental degradation. Industry players who are seen to be corrupt must be named and shamed while ensuring they face the full wrath of the law.
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