The Business Year

Dr. Kayode Fayemi

NIGERIA - Energy & Mining

The Hills Are Calling

Minister of Solid Minerals Development, Nigeria

Bio

Dr. Kayode Fayemi, the former Governor of Ekiti State, was born on February 9, 1965. He is a native of Isan-Ekiti in the Oye Local Government Area of Ekiti State, Nigeria. He attended King’s College, University of London, where he obtained his doctorate specializing in civil-military relations. His research and policy interests include democratization, constitutionalism, security sector governance, and regionalism in the global context. Dr. Kayode Fayemi has served on numerous boards, including the Governing Board of the Open Society Justice Institute, Baobab for Women’s Human Rights, African Security Sector Network, and on the Advisory Board of the Global Facilitation Network on Security Sector Reform, and on the Management Culture Board of the ECOWAS Secretariat.

"In Nigeria, investors have a tax holiday for five years."

What is you assessment of the solid minerals sector contribution to the country’s GDP and how do you expect it to evolve in the near future?

The mining sector is not a new sector; it is as old as Nigeria itself. Nigeria used to be one of the most prominent exporters of tin, columbite, and coal in the early 1900s. In the late 1950s to early 1960s, when we discovered hydrocarbons, mining fell down the priority list. It moved from around 4% of GDP pre-oil to what now passes for about 0.33% of GDP. The challenge for the new administration is to revive the sector and boost its contribution to Nigeria’s economic development. The way the president seeks to do that is by reorganizing the sector and ensuring that it serves both its domestic role in terms of industrial manufacturing, after which we then focus on its export potential. Import substitution is critical to Nigeria, and the president’s vision will enable us to achieve the twin objectives of job creation and revenue generation.

What strategies will you follow in the coming years to achieve import substitution in the mining sector?

Planning is central. One of the first things I did as Minister was to put in place a road map for the development of the sector, which lays out the short-, medium- and long-term objectives for the next 25 years. Mining does not yield quick results or immediate benefits; it requires long-term investment and foresight. If you look at the standard Fraser Index of Mining, Nigeria features in the lower rung of the ladder as a mining destination; however, when you look at the geology of the country and the rock formation, it sits almost exactly on the same plane as Ghana, Burkina Faso, and the Ivory Coast, and Nigeria is bigger than all of those. There are a range of mineral types; therefore, once we overcome the perception challenge, we then need to provide investors with the evidence. Data is the second challenge. Mining is a science and our geological data gives an indication of the resources that we have in bitumen, coal, iron ore, and so on. The previous governments have done work on the geological map, particularly the aerial map, but we need more in-depth exploration to give investors accurate information and we expect that data to be available in 18 months. In terms of regulation, we have one of the best mining codes in the world. The previous governments, starting with the Obasanjo administration, did a lot of work in that respect.

What types of incentives are provided for solid mineral investors?

In Nigeria, investors have a tax holiday for five years, allowing free importation of mining equipment and 100% ownership of the mining operation; however, law enforcement is key. We are looking to ensure an autonomous regulatory agency that would be exclusively focused on managing the regulatory functions of the Ministry. We believe that there is a wide range of opportunities to incorporate informal mining into the economy, help them to create cooperatives, and give them access to low-interest funding to improve their capacity and technology to exploit what is on their ancestral land. Smaller operators can also act as pathfinders.

What are the competitive advantages of Nigeria as a destination for solid minerals investment?

Our competitive advantage is first that Nigeria is pristine and almost a green field in mining. There are a lot of opportunities for exploring these green fields. So, we want to move from being a mineral nation to a mining nation. Two, Nigeria is a good destination for beneficiation and processing of proven reserves in bitumen, granite, marble, lead and zinc just to mention a few. So, investors interested in setting up smelters, cutting and polishing factories, and mineral processing plants have a lot to gain. We aim to replicate our success story in limestone processing and cement production. We are prepared to support companies ready to help add value to our mineral resources instead of just exporting them raw material; however, now we want professional cutters and polishers of marble that can be available to the local construction industry. These are the areas that we are focusing on. We look for success stories for inspiration such as that of the cement industry, which has developed into a net exporter. Nigeria was an importer of cement up until the early 2000s and today Nigerian companies are producing cement in other countries. That is just one mineral, but it shows the potential the sector holds.

You have been very much involved in female empowerment. What strategies should be followed to empower and unleash the potential of women in Africa?

As someone who worked on the policies and the manifesto of the party before we won the election, I know that we see women as a trigger for change. If you give women more advantages, the multiplier effect on communities is higher, because women by nature think beyond themselves. Women are more grounded, which is why when you look at our social investment program it is more directed at women. When you look at our cash transfer scheme, you will see that it is aimed at encouraging women to send their children to school to increase school enrollment and get an incentive on that basis. When I was governor, the bulk of the people that benefited from our social security program where we used to give NGN5,000 to elderly citizens, the bulk of them were women. Women were running our food banks in the streets and distributing the materials that we have, which is something that we are replicating under our social program now. It is not a favor to women, it is a benefit to us on a larger scale. Women have a way of managing things a lot better and have coping mechanisms that are a lot more sustainable in the long term.

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