By OBINNA EZUGWU
Having over the years, abandoned its gold deposits to criminal syndicates of illegal miners, both local and foreign, controlled by well connected elite living large in high end estates in Abuja, Nigeria’s federal government; beset by revenue shortfall on account struggling oil price in the international market, government has begun to pay attention. But in a way that has brought to focus, the historic injustice done to the people of the Niger Delta region, the region which holds its oil reserves, the commodity which has sustained it since the 1960s.
Oil was discovered in Nigeria, officially in 1956 at Oloibiri, in today’s Bayelsa State, four years before independence in 1960. Gradually, it took centre stage as Nigeria’s key revenue source, everything else was practically abandoned. Agriculture which hitherto was the mainstay of the economy soon took the back seat and never recovered.
During the Nigerian civil war of 1967-1970 the federal military government led by Gen. Yakubu Gowon (rtd), justified federal government’s take-over of the industry on the need to secure revenue to prosecute the war. But the end of the war in 1970 coincided with the period of oil boom. It was just too much money for the military government which then saw the oil as war booty, to ignore. It was easily money which came plenty.
The government lost interest in anything else and stuck to oil. Laws soon came to the effect that all minerals beneath the soil belong to the federal government. And in 1978 the Gen. Olusegun Obasanjo (rtd) government promulgated the Land Use Act ceding land ownership to state governments, as opposed to communities.
The federal government continued to explore the oil, which soon became, largely, the country’s reason for existence, accounting for more than 90 percent of its foreign exchange earnings. But the oil communities, mostly left with to environmental pollution and nothing much more, soon began to agitate against the government.
In the early 90s, the Ogoni, having suffered sufficient amount of pollution and with nothing else to show, began to push more aggressively for resource control, mostly through activism, as contained in the Ogoni Bill of Rights which basically called for the Ogoni to be allowed to use their resources to develop their land.
But the government, not willing to entertain any encroachment on its access to free flow of oil wealth, began to crack down on the activists. The climax came in November 1995 when the Gen. Sani Abacha led military junta killed nine Ogoni environmental activists, including Ken Saro-Wiwa, a move that generated condemnation from across the globe.
Following from the Ogoni example, other ethnic nationalities in the region, notably the Ijaw, the most populous group in the Delta, took up the agitation for greater resource control at a heavy price. In November 1999, the government of President Obasanjo ordered an armed forces invasion of Odi in Bayelsa State, during which thousands were massacred, with the army claiming its men were ambushed. But as then Minister of Defence, Gen. T. Y. Danjuma, allegedly hinted, it was to protect oil exploration activities.
Ten years later, in May 2009, the army invaded another Ijaw community, the Gbaramatu Kingdom in Delta State during a cultural festival and massacred an estimated 10 to 20 percent of the population, in further move to break the resistance of the people.
The agitations eventually yielded the 13 percent derivation to oil producing states, whose impact never really got to the communities. And without much done to better their lot, environmental pollution disrupting normal livelihood and no jobs available, a number of youths took to artisanal refining of crude to sell in the black market, but were quickly branded oil criminals and military onslaught unleashed against them; an onslaught which continues till this day.
However, while the Niger Delta continues to suffer this fate, “illegal” miners of gold, the most prominent of Nigeria’s largely untapped minerals deposits, 44 in all, including, iron ore, coal, tin and zinc, in more than 500 locations, mostly in the Northern part of the country, got away with their activities, even as it soon led to an upsurge of criminality and lead poisoning in the affected states of Kastina, Sokoto, Zamfara, Kebbi, Kaduna, Niger in the North, as well as Osun and Oyo in the Southwest, and inevitably, loss of revenue to the government.
Data from UN Comtrade for instance, estimates that between 2012 and 2018, 97 tonnes of gold valued at over $3 billion was illegally smuggled out of Nigeria, while from 2010 to 2016, there were more than 7,000 incidences of lead poisoning, resulting in 700 deaths related to gold mining activities in Zamfara and Kebbi alone.
Beset by revenue challenges however, the President Muhammadu Buhari government has begun to pay attention to the commodity. He has started out with the legalisation of the “illegal” artisanal miners, through the Presidential Artisanal Gold Mining Development Initiative (PAGMDI), in a move that has largely granted states with gold deposits the right to refine the gold and pay royalties to the federal government; the same privileges that have been denied the states and people of Niger Delta with oil refining.
“The President has succeeded in granting states in Northern Nigeria such as his home state of Katsina, Zamfara, and Kaduna as well as the Southwest state of Osun resource ownership, while deftly neglecting to alter the extractive laws surrounding the Niger Delta where oil is mined and not gold,” wrote Nubri Saatah, acting president of the Niger Delta Congress (NDC).
“This means that, while the gold-rich states can fully exploit and manage their gold resources while only paying tax, artisanal refiners in the Niger Delta will continue to be attacked by the military for engaging in artisanal crude refining. This is despite recent research by the Stakeholders Democracy Network (SDN) going as far as proving that the crude refined in the Niger Delta is cleaner compared to those imported.
“This very initiative of resource ownership has been echoed by different ethnic groups in the Niger Delta in recent years and has been conveniently ignored. Ironically, it was this same initiative when pursued fervently by the Niger Delta people that saw current members of this government such as Hamid Ali and Ibrahim Gambari playing active roles in the execution of Ken Saro-Wiwa, and the rationalisation of same to the world thereafter.”
First launched by the Buhari government in 2019, with Kebbi and Osun as pilot states, the PAGMI is a comprehensive artisanal and small-scale gold mining development programme aimed at fostering the formalization and integration of artisanal gold mining activities into the country’s legal, economic, and institutional framework.
The initiative, according to the government, is designed to address the structural and institutional factors such as rural poverty, lack of alternative livelihoods, and difficulties in meeting legal and regulatory requirements that tend to push artisanal gold mining operators deeper into the informal economy. The initiative is structured in such a way that the gold so refined, will be purchased by the Central Bank of Nigeria (CBN) for use as part of Nigeria’s external reserves.
At the official presentation of the first locally mined gold bars – refined according to the London Bullion Market Association (LBMA) – by the PAGMI fortnight ago on July 16 at the Aso Rock Presidential Villa, President Buhari said the programme could generate no fewer than 250,000 jobs and over $500 million annually in royalties and taxes to the Nigerian Government.
Describing the initiative as laudable, the president said it would support efforts at creation of jobs for Nigerians, diversifying the revenue base, and improving foreign exchange reserves.
‘‘With the implementation of the PAGDMI scheme which will result in the set-up of accredited gold buying centers across key mining areas, artisanal miners and SMEs engaged in mining will be able to capture the value of their work,” he said.
‘‘These operations will help in diversifying our revenue base. The sale of gold by artisanal miners and SMEs at accredited centers will help the government in realizing royalties and taxes from the sale of these assets. ‘These developments will also help in improving our foreign reserves by enabling the Central Bank of Nigeria to increase the amount of gold in its reserves.
‘‘These gold assets which will be purchased in Naira, will not only help to bolster our international reserves, it will also provide a hedge against inflation and other economic volatilities associated with foreign currencies that are held in our reserves.”
The president also said his administration would pay close attention to safety and environmental measures to protect workers and the environment, even as he highlighted the imperatives of having gold as alternative source of revenue in view of the current realities.
‘‘Covid-19 has also led to a 40 percent drop in crude oil prices. In Nigeria, the drop in crude oil prices has had a significant impact on government revenue, as well as on our foreign exchange earnings,” he said.
‘‘In responding to this challenge, it is therefore paramount that we strengthen our efforts at implementing policies and programs that will enable greater diversification of the Nigerian economy.
‘‘Enabling investment in the Solid Mineral sector is a key part of the government’s economic diversification program. Given our current estimated gold reserves of over 200m ounces, most of which have not been exploited, developing sustainable programmes that will catalyze increased investment in the extraction and refining of gold sourced from mines in Nigeria, is indeed vital.”
The PAGMDI has rekindled the conversation around resource control and true federalism, especially as it concerns the oil resources of the Niger Delta. And obviously, the people of the region would feel a renewed sense of injustice given that other regions and states are getting privileges that they have been denied and even punished for demanding.
“This now brings attention again to the illegal miners in the Niger Delta. If those mining gold illegally in the North can be given such privileges, those refining fuel in the Niger Delta should also be given same,” noted Dr. Vincent Nwani, Lead Consultant at Kavind Ltd.
“In the case of Niger Delta, soldiers are going into the creeks daily, killing the illegal refiners and burning their refineries. I hope that the government will also extend this kind of privilege to them. Sometimes, things start illegally, but when you give it legal backing, it is done better for the benefit of the people and the government.
“But like I said, both the ones in Niger Delta and the ones in the North are not the solution. The solution is to transform that industry to resemble what we have in Australia and South Africa. Mining is about the second biggest employer of labour in South Africa and third highest contributor to the country’s GDP. You cannot say they same thing about Nigeria, yet Nigeria is a country where we have 44 minerals and nine of have proven commercial quantity.”
Nigeria’s domestic mining industry is underdeveloped, leading to Nigeria having to import minerals that it could produce domestically. The mining sector, for example accounts for only 0.3 percent of the country’s GDP, compared to West African neighbours Ghana, where it contributes 38 percent of total corporate tax earnings, 27 percent of government revenue and approximately 6 percent of GDP. In 2011, the country produced 3.6 million ounces of gold, earning over $5billion in revenues. It also employs about 1.3 million people.
In 2018, Ghana produced 4.8 million ounces of gold, surpassing South Africa which produced 4.2 million ounces to emerge the continent’s largest producers.
In South Africa on the other hand, the sector contributed about 9 percent of GDP and 30 percent of merchandise exports. In 2018 mining, mostly gold, added R351billion to the country’s GDP, employing approximately 500,000 people.
In Nigeria, however, the absence of large scale mining, despite the existence of gold, lead, zinc, limestone and coal in proven commercial quantities, has ensured that the sector contributes next to nothing to GDP at 0.3 percent.
Earlier this year, the Nigerian Minister for Mines and Steel Development, Olamilekan Adegbite said he had set a target for the mining sector to contribute 3.0 percent of the nation’s GDP by 2025 as part of the efforts to contribute to the current administration’s diversification project.
He noted that Nigeria expects its mining sector to grow to 3.0 percent of GDP within the next five years from just 0.3 percent currently as the government seeks to diversify Africa’s largest economy away from its reliance on crude oil sales.
But analysts say the sector’s potential cannot be achieved by simply giving artisanal miners the license to operate.
“Reforming the mining industry in Nigeria should go farther than just empowering illegal miners under this framework. They should remove other constraints by putting up infrastructure like railway to connect mining sites to the industry they are supposed to serve,” Nwani noted.
“There are also bigger issues about the constitutional provision where mining is in the exclusive list. We still have to go back to that true federalism where natural resources are left under the control of the people and the states, such that state governments can begin to attract investors.
“Everywhere in the world where mining has transformed the economy, for instance, Australia and South Africa, is not the artisanal miners that did it. Mining is not an industry for SMEs because there are lots of investment that needs to be made, heavy technology and lots of national security issues and environmental issues around it.
“Illegal miners won’t have the resources to put into it to ensure that the environment is protected, risk is minimal and technology is good enough, even to mine other secondary minerals that will come from the primary mining. So, this is just a little effort coming a little late. The important thing is to completely reform the Nigerian mining sector so that it can be a win-win for everyone. And the starting point will be removing mining and mineral resources from the exclusive list.
“I remember that about four years ago, when the current governor of Ekiti State, Dr. Kayode Fayemi was Minister of Solid Minerals, he came up with a very beautiful document on mining roadmap in Nigeria.”