The quest for the diversification of the Nigerian economy towards activating other sources of revenue, given the country's vast human and natural resources and against the backdrop of the decline in oil revenue is currently on the upswing. One key sector which offers great potential in achieving diversification is the solid minerals sector. Consequently, the government of Nigeria has affirmed its commitment to the exploration and development of solid minerals and metals by approving a N30billion financial intervention, and prioritized for exploitation seven strategic minerals of vital importance to the economy, i.e., coal, bitumen, iron ore, barites, gold and lead/zinc which are available in ample qualities to sustain mining activities.1
The potential of the Mining sector to significantly contribute to Nigeria's economy cannot be over-emphasized. An attestation to this fact is the increase in the contribution of mining and quarrying to the nation's Gross Domestic Product (GDP) which now stands at 23.54% as at Q1 2018. 2 In addition to this, international investor interest in the sector continues to improve by the day with the federal government also recognizing the sector as a potential prime income generator away from oil. 3 Given the large mineral deposits in the country, Nigeria has the potential to be a market leader in the mining sector. The Roadmap for the Growth & Development of the Nigerian Mining Industry of 20164 highlights the potential for increase in the sector's contribution to GDP from 5% in 2015 to 10% by 2020, thus supporting forecasts that a concentrated exploration of Nigeria's solid minerals wealth may in the short term exceed her oil wealth. It is envisaged that this shift would translate to increased public and private sector investment, more employment creation for the citizenry and overall economic and financial stability for the economy.
The use of Incentives as a veritable tool in sustaining investors' interest has become increasingly recognized globally, as most countries of the world, irrespective of their stages of development, now employ a wide variety of inducements in pursuing their economic goals. The application of incentives now exists virtually in all sectors of the economy like industries, agriculture, manufacturing, petroleum, solid minerals, energy, tourism and others. There are different kinds of incentives; and the three basic categories are financial, fiscal, and regulatory which are variously employed by most governments. The financial incentives are public-support mechanisms in the form of grants or repayable subsidies. It is common with developed countries, while developing countries prefer fiscal incentives because of the fact that they are easily affordable in promoting investment and do not require up-front utilisation of government funds. 5 Regulatory incentives on the other hand are in the form of concessions, exemptions from labour or environmental standards and subsidized infrastructure which are also applicable in most countries.
This article presents an overview of the legal framework and various investment incentives available in Nigeria's solid minerals and mining sector as well as the challenges bedeviling the development of the sector.
2. STATUTORY REGULATIONS IN THE MINING SECTOR
The Nigerian Minerals and Mining Act6 (the "Act" or "Mining Act") is the principal legislation which regulates the Nigerian mining sector. The Act has made provisions in relation to licensing, ownership and control of minerals, and implementation. 7 There are other legislative and policy instruments which further regulates Nigeria's mining sector in addition to the primary legislation.
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* Olaniyi Fayomi, Associate, Dispute Resolution Department, SPA Ajibade & Co., Lagos Office.
1 C. Nwachukwu & C. Agom-eze "Mining in Nigeria – Regulation and Incentives" (2017) Aina Blankson News Letter/Journal; http://ainablankson.com/mining-in-nigeria-regulation-and-incentives/ (accessed 18th May 2018).
2 As recently reported by the Nigerian National Bureau of Statistics; http://nigerianstat.gov.ng/ ; http://nso.nigeria.opendataforafrica.org/gwqnrlg/gross-domestic-product (accessed 12th June 2018).
3 http://www.nigeriaminingweek.com/Nigeria-mining-minister-Kayode-Fayemi-determined-to-grow-local-mining-sector (accessed 17th May 2018).
4 Ministry of Mines and Steel Development Roadmap for the Growth & Development of the Nigerian Mining Industry August, 2016-Publication of the Ministry; http://www.minesandsteel.gov.ng/wp-content/uploads/2016/09/Nigeria_Mining_Growth_Roadmap_Final.pdf (accessed 12th June 2018).
5 Central Bank of Nigeria (CBN's) Fiscal Sector Division Occasional Paper No. 47 on "Fiscal Incentives in Nigeria: Lessons of Experience" September 2013; https://www.cbn.gov.ng/out/2015/rsd/ocp_47_fiscal%20incentives%20in%20nigeria_lessons%20of%20experience.pdf (accessed 12th June 2018).
6 No. 20, 2007.
7 Through the establishment of the Mining Cadaster office to centralise mineral title administration and overcome the hitherto arduous licensing regime, improve the framework for enhanced geoscience data collection across Nigeria, the establishment of control departments for Mines Environmental Compliance, and the recognition and establishment of a regime for Artisanal and Small Scale Mining.
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