Kayode Fayemi, Minister of Mines and Steel Development: Interview

Interview: Kayode Fayemi

How can the sector support the government’s diversification efforts?

KAYODE FAYEMI: Over the last three or four decades mining has not been a major focus of the government’s economic programme. However, mining has been a part of Nigeria for over a century and used to play a pivotal role in the economy until the discovery of oil. With the global downturn in oil prices, President Muhammadu Buhari has given mining new attention. Even if oil prices were to rise, it doesn’t lessen the necessity to develop other sectors of the economy, particularly the non-oil sectors. Mining is inevitably aching for investment because Nigeria is mineral-rich, but we are not a mining nation. I make a distinction between being rich in minerals and being a mining nation, as we have minerals and do not do much about them.

We have come to a point where we feel that mining has a critical role to play in the growth strategy of our country. Mining requires a lot more heavy lifting than oil, especially from ordinary people. In fact, 80% of people involved in mining in Nigeria are locals, and they are doing it on an informal basis. The government wants to ensure that we bring these people into the larger economy in a more integrated manner, rather than in a dispersed, uncoordinated way.

What are the key takeaways from the ministry’s “roadmap for growth and development”?

FAYEMI: Our roadmap focuses on reorganising the sector in a manner that is more predictable for the average investor. We have a law that is quite good, but enforcement has been a challenge. For anyone who wants to invest, what they always need is sanctity of contracts, predictability of economic environment and a clear regulatory framework. This way they know what they are getting every step of the way. In the short term, these are the initial steps that we are taking. In the medium term, we are looking towards actually making the regulatory agency independent from the ministry. Currently, the ministry is the one doing the regulating, licensing and inspecting, and we do not think this is necessarily the way to go.

What key elements do you feel need to be achieved to attract further exploration in the sector?

FAYEMI: This will come down to realising the importance of geophysical data, and how we present it. Mining is a science, and the investors will want to know concretely what we have and in what quantity we have it. They want to understand the accessibility of our minerals, and if it is commercially viable to attain them. It is not enough to say that we are mineral-rich; investors need the data to back up this statement. The companies themselves also are engaging in exploration activities, and the government has been giving them licences to do that.

However, they want to have an inclination of what is there prior to committing to a project. We want both local and international investors to have online access to geological surveys. Then they can bring in their own geologists, geochemists and physicists to come and do a proper analysis of what is available.

How can the country increase access to capital for domestic mining investors?

FAYEMI: Access to finance is important in a capital-intensive sector. Finance is not something that is easily available, because the financial markets in Nigeria do not quite understand mining. We need to start a process of educating the financial sector on this topic. One of the first tasks I had as minister was encouraging banks to set up mining desks at all the banks, which could assist them in communicating with experts. This way if an investor wanted to apply, the banks would have a geologist in-house that could accurately verify the validity of the loan. We have set up a mining investment fund that will encourage the average investor to put their money into the sector.