There is more to Nigeria than oil

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The likes of John Kayode Fayemi (JKF) in Nigeria’s political space have shown that the game of politics, often described as murky, can actually be played with some touch of refinement and class. Here comes an erudite scholar and teacher; a journalist, a strategic thinker and politician who against all permutations emerged Governor of Ekiti State in 2011, bearing the flag of the Action Congress of Nigeria, ACN.

Beneath the veneer of gentility which JKF radiates, lies a strong-willed, highly focused and deeply principled personality; an activist who collaborated with others in the National Democratic Coalition (NADECO) to speak up for Nigerian democracy when it mattered most.

A native of Isan-Ekiti, Ekiti State, Nigeria, Fayemi holds degrees in History, Politics and International Relations from the Universities of Lagos and Ife. He also attended Kings College, University of London where he took a doctorate degree in War Studies.

The gentleman who grew up as a Catholic altar boy is today Nigeria’s Minister of Mines and Steel Development. In this interview, he speaks to The African Economy’s Chinedu Obike on the reforms and efforts of the present regime to revive and develop the sector in readiness for a critical role in Nigeria’s economic development.

Minister 7

Who’s Kayode Fayemi?
Public servant, former Governor, Minister of Mines and Steel Development, academic by profession, politician by vocation, Catholic – former altar boy, Ekiti indigene and a family man. That’s who he is.

The slogan of your Ministry is ‘On the Road to Shared Mining Prosperity’. How realistic is this?
Well, the slogan speaks to an aspirational goal. It’s the vision of the future: it’s what we want the sector to experience. It may not necessarily be what the situation currently is, in the sector and we have outlined the steps that will make that realistic. Within the short space of about 18 months that we’ve been here, we have started seeing the green shoots of progress. That is, if we go by figures from the National Bureau of Statistics which is the independent agency that monitors economic development. Mining is no longer in the doldrums. Of course, the journey is not going to be a sprint but we do have critical milestones that give us a sense of progress, or if you like, measurable outputs. I believe that the sector is beginning to experience a boost and we are very confident that the twin objectives the President gave us when we resumed here, with my colleague, will not be unachievable. Indeed, job creation and revenue generation in the sector are improving. In fact, activities in the sector are increasing at an exponential rate. To get to this aspiration, we are working on the mining environment, on the relationship between the Federal government, states and the host communities, improving on geological data, providing access to finance for small-scale miners who constitute the bulk of Nigerian miners now, enhancing the mining surveillance task force to protect investors in the sector and encouraging investors interested in value addition, processing and beneficiation to set up manufacturing hubs in Nigeria.

In other words, you are satisfied with the journey so far?
Well, the journey so far is not a linear journey; not a straight forward journey. But then, life is not straight forward; life is not linear. We are reasonably satisfied that we are making concrete and identifiable progress.

What are the issues addressed in the road map?
Well, the road map takes a very comprehensive view of what had happened in the sector before we got into office and let me say that it has really not been a blank slate in the sector. There were issues; there were steps that were taken before we got here. The question for us at the time we set up the independent panel to put the road map together, was how far have those issues gained traction and what progress were we able to make with them? How have we grown the contribution of mining to the GDP and how has mining become a key vehicle for diversification of the Nigerian revenue base and the Nigerian economy in general? Those were the issues and we saw gaps with the inadequacy of geological data and access to finance for the operators in the sector; we saw gaps with even the enforcement of the law and the regulatory arrangement in the sector. We also saw gaps with mining as a vehicle for manufacturing, processing, beneficiation and value addition; we saw gaps in the inadequate infrastructure undergirding mining. You can’t do mining without infrastructure because most of the mineral resources that the country has are in far flung places that are hard to reach ordinarily and we wanted to ensure that we work in partnership with our colleagues in the Ministry of Transportation and in the Ministry of Power, Works and Housing to link mining communities to road, rail and power infrastructures. But ultimately, we think mining ought to be about wealth creation to the many and not opportunity for the few. So, the roadmap also seeks to address the issue of illegal mining, particularly those who smuggle these resources outside the country without the state and the host communities benefiting in the appropriate manner they ought to.

We have also linked the roadmap to the African Mining Vision in ensuring that the resources exploited from our communities ultimately serve the interests of the people and the country at large. It should not serve the interest of the tiny elite or a mining clique or cabal that appropriate the resources of the people and use it against them. Ironically, 80% of the people involved in the sector are artisans and our vision is to empower them to become at least junior scale miners. Everybody will tell you that ‘oh mining is about bringing in the majors’, but then we also need to upscale the minors and junior players and those are the things that we saw as gaps; those are the issues that we are addressing. On geological data, we have not only put in place exploration processes to help us get in much more accurate sense of what is where, in what quantity and in what quality; is it commercially viable? Should we waste our time focusing on this or just leave it because if we don’t do that baseline study? We can’t even interest the average investors, be they local or international. So far, all we seem to be doing is just scratching the surface focusing on alluvial mining rather than deep mining that will ultimately produce the kind of results that will give us the wealth creation opportunities that a country like Nigeria requires.

So, we have put that in place; data is being generated and we are not just generating it, we are also automating it. For the first time, we are digitizing the information we have, both at the level of our geological survey agency and at the level of other relevant agencies in this ministry, the regulatory bodies, the mining cadastral office; the end result will enable you to sit anywhere in the world and access levels of information about the geological possibilities and processes in Nigeria.

In executing the road map, what challenges do you face?
Well, naturally, this is, for want of a better word, what you might regard as a dead sector before now. In fact, there was a perception when I was coming in here that I’ve been thrown into a dead end. You know Nigerians have their own perception of ministries and sectors and some said to me, ‘ oh what are you going to do in that sector? This is unfair’. But then the President sent me here and he was clear about what he wanted us to achieve. I think it will be remiss on my part not to give it my best shot.

What was responsible for the sector being perceived as a dead zone?
One was that oil had taken over. If you talk about mineral resources in our country, people will always believe that oil is the only thing; that oil and gas is the only thing Nigeria knows. Nigeria has never been seen, at least in the last 40 years, as a mining destination. It’s more often than not been seen as an oil and gas destination. So, we suffer from the tyranny of perception, a very low perception of what the sector can give; so we have to overcome that perception challenge.

What do you consider the most critical challenges facing the sector?
There is institutional weakness here. The entire sector has not really been paid adequate attention. I have officials who were de-motivated and de-moralized. When I came, I found them in a state of comatose, if you like, but in the last 18 months, the mood in this ministry has changed and the morale of the workers has significantly improved. The determination to get results is also something that they are all very committed to and the resources have also improved.

Though not exactly where we want it to be, the resources available to the sector, thanks to Mr. President and the Federal Executive Council, have improved significantly to the point that we can now put N5 billion($15m) aside for small-scale mining support. We want to do this at the lowest possible interest rate of five percent to improve access to finance; it’s a challenge that is being overcome. We also have the challenges of geological data and environmental degradation in the sector. We have abandoned mining sites; we had lead poisoning situation when we came in so we had to bring in professionals to assist us in introducing safer mining practices to ensure that our people won’t die unnecessarily from trying to eke out a living using banned materials for this processes. Challenges will always be there and we believe that we are making progress.

In your response to one of my questions, you used the words ‘doldrums’ and ‘dead zone’. If, indeed, mineral resources abound in all parts of the country, why was the ministry considered dead?
It was due to lack of attention; it wasn’t always like this. As a matter of fact, the Department of Petroleum was a department in the Ministry of Mineral Resources during the First Republic. When the late Alhaji Maitama Sule was the minister, it was known as the Ministry of Mines and Power and at the time, the Department of Petroleum Resources was in the ministry. When Alhaji Shettima Ali Monguno took over, that was the first time it was called the Ministry of Petroleum and Mineral Resources and up till the 1980s, we were still sharing that platform. In fact, when Prof. Jibril Aminu was minster during the Babangida era, he was still addressed as the Minister of Petroleum and Mineral Resources. It was under General Sani Abacha that the separation was made: Petroleum Resources on one hand and Solid Minerals on the other. Alhaji Kaloma Ali was put in as the first minister and that’s what we still have now. Mining was one of the key sectors in this country before independence because Nigeria was among the major producers of tin and columbite and the city of Jos is a product of mining. The Coal City was the capital of the Eastern Region at the time and majority of the people there worked in the Nigeria Coal Corporation; in fact, the Enugu Port-Harcourt rail line was constructed primarily to transport coal. So, how can you then say a sector like that is in doldrums? It was only after oil became a big deal in the early 70’s, after the Arab oil embargo, that we lost agriculture and lost mining. Now, we have a leader; a President who is determined to ensure that while we will not neglect petroleum resources, we must not abandon other forms of revenue generation.

The world is moving away from oil; China has just announced plans to join the train, too. Are you scared? Does that worry you?
Not necessarily. For me, the world should generally not just move away from oil, it should move away from depending on natural resources because ultimately, what will take the world out of its present challenges, is the establishment and strong implementation of knowledge economy and if you are going to really get involved in it, you cannot avoid mineral resources. Everybody is talking about banning petrol fuelled cars by 2020 and 2040 and what are they putting up as replacement? Battery-powered vehicles. Where does battery come from? Lead, lithium and what are those? Mineral resources, of course. So, I am not one of those who believe that we are going to move away from oil in the manner that people are describing it. Oil may not go back to 140 dollars per barrel, it may stay in the range of 50-60 dollars per barrel, as we have it now, but it will still be important to us. In order for us to build this sector and revive agriculture and manufacturing, we still need oil. We need the resources from oil to grow mining, manufacturing and agriculture.

As we talk about diversifying the economy, what measures are you putting in place to attract investors into the mining sector?
You know generally, this government is a business friendly government. I’m sure you are aware of all of the efforts of the President, particularly, the ones that are being supervised by the Vice President, in his capacity as the Chairman of the National Council on Privatization and in his capacity as the head of the Presidential Business Council on the ease of doing business. These are things that are strongly adhered to. The executive orders that have been produced are in line with government efforts to make the business environment in Nigeria conducive. Specifically, as they relate to mining and minerals, a new miner would enjoy in the first instance, a 3-year tax holiday to encourage the setting up of your company and this is renewable for another two years. You can own your company 100% without government forcing you to share it with others. In mining, we do encourage investors to give some consideration to the host communities, as it is in your best interest to give some equity so that they will take it as their own business as well, but this is purely advisory, not by compulsion. If you still want to run your company 100%, you have every right to so do; we allow you to also bring in the machinery duty free. These are things that you don’t find in other mining jurisdictions.

I’m aware that you recently applied for an Intervention Fund of 30billion naira and it was approved by the Presidency. Is it helping?
Oh, certainly it’s helping. The funds that we placed for artisanal miners, for example, in the Bank of Industry is from the intervention fund. If the president had not approved and the Federal Executive Council had not ratified that, it will never have happened in this sector. This is the very first time small-scale miners are receiving the type of support small-scale farmers have always received. You hear of that in agriculture, you hear of the Anchor borrowers scheme and all other things, but in this sector, this is the very first time that miners, people who are just digging with shovels and diggers in their backyards, have the opportunity to also benefit from government support and it means a lot to them.

As an artisanal miner, you can apply for as much as N10 million and for a small-scale miner, you can get up to N100million to either purchase or lease equipment or for operating capital. This is something that is a game changer for them but we are not just stopping at that; we are also supporting the big players like Dangote, Lafarge, BUA and that’s why you see them opening new plants all around the country.

We know that mining without authorization is economic sabotage. What are you doing to curb illegal mining?
Only last month, as part of our effort to curb it, I went to a particularly notorious site that had been taken over by illegal miners and I went with the National Security Adviser and the Governor of the state to one of the richest lead-zinc mines that we have in the country; about the richest in Africa in Plateau State and right now, the people who are mining without lease are being charged to court. So, we are serious about this, but there is no way I can cover the length and breadth of Nigeria, going around arresting people who are illegal miners; it will not work. We have to have an institutional approach to it. This is where our Mines Surveillance Task Force come into the picture. But we are also doing more; we are starting Back Duty Audit and bringing in revenue generation specialists to audit what is being paid into the coffers of government by individual or corporate miners. So, we are working on our part as the recipient of the royalty in conjunction with FIRS that receives taxes from our sector. We have a good mining law, relatively speaking, but enforcement has been a challenge; so one of the things the road map also focuses on is the establishment of a mega regulatory agency charged with mining licensing administration; the environmental compliance division, the mines inspectorate division, the artisanal and small scale miners division, the mineral trade, all in one spot, just the way you have the National Communications Commission. These are the steps that are being taken and we believe that they will yield results but then, mining is not one of those areas where you get what Nigerians love to call quick wins; you know when journalists come to you and ask what the low hanging fruits in your sector are, we need to do more in communicating, educating and explaining that mining is a long term sector. An average mining development programme takes 15 years, exploration could take so much as 5 years; setting up the plant, setting up a processing institution. In fact, it’s an immensely difficult operation but we are not discouraged.

As the influence of oil wanes and the economy diversifies, what future do you see for the solid minerals sector? Do you see it as a sector that Nigeria can depend on?
I don’t think the Nigerian economy should be dependent on any mono product; we ought to have learned our lessons; we made mistakes by depending solely on oil and gas but mining can contribute. In fact, the vision in the road map is that in the next 25 years, mining will go as high as 5% of the GDP and that will be significant. If you talk about an economy that is 500 billion dollars worth, we are saying that $50 billion should come from mining and that’s pretty significant.

In addition to Mines, you are also the Minister of Steel Development. What’s the state of the steel sector of this country?
Well, I will not describe the state of the steel sector as a happy one for me but that’s not to say that the sector is comatose. As a matter of fact, the steel sector is growing in leaps and bounds. But we could have done a lot better because the government got into steel as a priority since the 1960s. We started building the first integrated steel plant, the Ajaokuta steel plant in 1979 when President Shagari’s civilian administration came to power but it has not really functioned; several false starts and yet to produce what we could regard as progress. We are either caught up in litigation today or in unfulfilled promises tomorrow. The President actually made a pledge during his campaigns that he will bring Ajaokuta steel plant to reality. That’s one of the things giving me grey hairs in this ministry but I believe that we will crack it with the support we are getting from the President; very soon we will be able to put it together. We need the right expertise to achieve this and the good thing is that there is a lot of interest from virtually every part of the world. Once we start producing liquid steel, it will be a major trigger for manufacturing in this country and the next will be steel production with which we can manufacture and assemble cars and virtually everything. Right now, we consume about 7 million metric tons of steel in Nigeria and we do not even produce half of that; maybe 2.8million metric tons is what we produce amongst all our local operators and what do they do? They turn scrap to metal. Some of them are doing well and some are even selling aluminum ingots to Toyota in Japan; they are also producing for the West African market and they are trained. But you know! We are still spending 3.5 billion dollars of our hard earned foreign exchange on imported steel in this country.

You belong to the CHANGE administration of President Muhammadu Buhari. How soon do we expect a change in the affairs of Ajaokuta ?
Transaction Advisers are on board now and are working with us; they are reasonably confident that definitely, by 2018, there will be a good story to tell.

When you were appointed Minister of Mines and Steel Development, you had a dream. How far have you gone in realizing that dream?
Well, the dream is encapsulated in the road map; it’s not really my dream. I am a working tool for the change agenda. It’s the dream of the President of Nigeria. This is the dream he had and the dream upon which the Nigerian electorate put him into office; mine is to help him to fulfill that mandate and that is why I was sent here. Right now, there is a lot of activities picking up in this sector. There is a lot of coordination and collaboration with the states because we believe that we can’t do mining alone successfully. The Federal Government does not have any land anywhere in Nigeria, the land belongs to the states so we must cooperate and collaborate in a manner that the host communities, the states and indeed every part will benefit. Then the investor will have a relatively hitch- free environment to operate and I believe we are achieving that.

What message do you have for foreign investors?
That they should not miss this opportunity because it only comes once. This is the time to come; Nigeria is the destination for mining investment.

Before you round off, can you give us an update on your bitumen projections?
Well the bitumen project is on; we have just given two major concessions: one to the South West Bitumen Company as well as the Dangote Bitumen Operations. It’s not as if others have not had concessions in the past, but they have not been able to turn those concessions into reality. We added certain conditionalities to these recently awarded concessions and it is that within a period of 18months, they must put a processing plant there so that we can begin to tackle this ridiculous situation in which we import 80% of the bitumen we use for road construction in a country that has the third largest reserve of bitumen in the world. We are reasonably confident that soon we are going to have a wider concession bid thrown open to miners in the industry

At the commencement of this chat you mentioned some people who had occupied this office at one time or the other. Now, it’s your turn, how would you like to be remembered?
I think it’s self-aggrandizing for anyone to say I want to be remembered as this or that. As a student of history, I feel history is a good judge. I have a job to do. So, I leave it to the industry watchers and history to adjudge me.

 

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