COVID-19 Impedes FG's Economic Diversification Drive, Says Ahmed

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, yesterday attributed the federal government's inability to achieve economic diversification to a decline in revenue due to the challenges of the COVID-19 pandemic.

She described the Nigerian capital market as a key catalyst for the development of the critical sectors of the economy, saying it offers a credible platform for obtaining medium to long term finance.

Ahmed, who spoke during a webinar organised by the Securities and Exchange Commission (SEC) in collaboration with the Ministry of Solid Minerals Development, said the facilitation of funding and provision of structured market platforms such as the commodities exchanges portended a boost for the mining and solid minerals sector.

She said: “Given the economic challenges occasioned by the COVID-19 pandemic, the ongoing efforts of the federal government to achieve economic diversification has been affected by a decline in revenue, underlined by volatility in global oil prices, which is our main source of foreign exchange earnings.

“The mining sector is strategically based as alternative source for revenue generation in the economic diversification plan of the Federal Government of Nigeria. It also has the potential to create employment and develop rural settings for other benefits."

She stated that the mineral export guidelines by the federal government was formulated to address the need to keep accurate mineral trade data, ensure effective monitoring of the evacuation of export proceeds, to optimise the collection of royalties and facilitate the implementation of free shipment inspection policies of the federal government on each export transaction.

She added that this is international best practice in line with the Marrakesh Protocol of the General Agreement on Tariffs and Trade (GATT) 1994.

Ahmed said the initiative of employing the commodities exchange would encourage responsibility accounting and fairness to governance.

According to her, this and other initiatives will also facilitate the collection of all royalty and fees due to the government from the export of solid minerals sector, ensuring the integrity of the mining data, minimising revenue leakages and removing undue bottlenecks experienced with transactions by both exporters of minerals as well as the regulatory agencies.

She added that identified as one of the frontiers of opportunity in the new economic reality, the Nigerian commodity trading eco system serves as the core point which supports and accelerates the development of non-oil commodities, which will be complimentary by ongoing efforts to diversify the national economy.

Ahmed stated that inefficient linkages of buyers and sellers in sufficient schemes will possess the capacity to proffer solutions to some of the fundamental challenges inherent in the mining sector.

She added that streamlining the operations of the mining sector through the commodities trading ecosystem and through other initiatives will ensure proper regulation of solid minerals extracting industry in Nigeria.

She expressed optimism that the outcome of the webinar and the strategic partnership between the mining sector and the capital market community will enhance the competitiveness of new non-oil commodities and compliment the economic diversification of the federal government.

She assured investors of her ministry's support to ensure the achievement of the objective of the federal government to develop the mineral potential of the country.

Ahmed stated that the nation stands to benefit more in an organised mining and solid mineral extractive industry with the capital market ready to contribute its quota.

In a welcome address, the Director-General of SEC, Mr. Lamido Yuguda, said with over 44 minerals found nationwide, the solid minerals sector can be instrumental in the ongoing quest to diversify the economy from its heavy reliance on crude oil.

Yuguda said the sector had also been identified as a backbone of the investor value chain, which is an essential source of input for key industries such as construction, automobiles, electronics, aircraft and ship building.

He expressed the belief that the Nigerian commodity trading system and the capital market can be the transformational patronage to bring about this positive changes in the sector.

He said with opportunities provided for better access to marketing of produce, price discovery and valuable market information, a striving commodity trading ecosystem could foster inclusive mining prosperity by linking commodities to industries in sufficient scale thereby promoting the output, creating jobs, improving living standards and unlocking the economic potentials of mining communities.

In a keynote address, the Minister of State in the Ministry of Solid Minerals and Steel Development, Dr. Uchechukwu Ogah, described the webinar as timely because it’s coming at a time that President Muhammadu Buhari is striving to revamp the sector for economic stability.

He, however, expressed disappointment that over 90 per cent of the artisanal miners and small-scale operators’ contribution to employment is still low with Gross Domestic Product (GDP) contribution of 0.5 per cent.