By Dr. Uchechukwu Ogah
A lot of people have been making inquiries regarding funding opportunities so as to further embrace opportunities open in the Mining sector. As a result, today’s piece centers on funding opportunities.
By statistics, a greater percentage of miners in Nigeria are Artisanal and Small-Scale Miners. And before now, such Artisanal and Small-Scale miners found funding opportunities limited due to, in part, they were not formalized and thus, the value-chain was not commercially-attractive to commercial banks. Again, high interest rates made funding opportunities limited as well.
This therefore, informed the latest drive by the Federal Government of Nigeria to formalize them so as to make the value-chain commercially-attractive. As a result, other sources of funding are open in order to encourage such categories of miners in Nigeria although, more sources are still being solicited:
(1) Bank of Industry (BOI)- The Ministry of Mines and Steel Development (MMSD) in partnership with BOI floated a 5Billion naira funding window for the Artisanal and Small-Scale operators in the sector at 5% interest rate unlike the prevailing rate of 25-30% interest rates charged by commercial banks. This fund is strategically designed to be a revolving loan for the needs of operators in this category.
Notwithstanding, 5 billion naira funding window equally had stringent conditions by the BOI which elicited public outcry by intended beneficiaries and following this, the MMSD set aside a portion of the fund to be accessed by operators upon providing a guarantor who may be a senior civil servant, parliamentarian, renowned traditional ruler or any of such Nigerian whose integrity is unquestionable.
The fund to be accessed under the above measure must not exceed N2 million per person at a time. All these are to ensure that operators at the lowest levels are able to improve their operations. It is also important to emphasize that accessing the fund is easier as a cooperative of miners, that is why Artisanal and Small-Scale miners are encouraged to key-into the formalization program and form cooperative societies, registered by the MMSD, in order to access the loans by BOI via the MMSD. Interested persons are encouraged to participate because accessing the funds is now easier and the interest rate is low.
(2) World Bank Loan to Federal Government of Nigeria (FGN) called the MinDiver Project- The FGN received a loan facility of about 100Million USD from the World Bank and some programs were outlined to assist all categories of players in the sector. The Fund is public fund and cannot be used for any other thing apart from what it is intended for strictly.
Under this project, the governance structures for mineral administration in Nigeria has been streamlined via process automation and generation of baseline information for policy formulation.
Online application processing and issuance of permits will soon be commissioned and the youths who are computer literate are encouraged to embrace the platform.
Equipment Leasing programs are being developed with original equipment manufacturers to enable easy access to operators whose capital cannot afford to own such equipment. Operators within a certain location can hire the equipment for a number of days at a minimal cost.
The project is also assessing some applications from mining companies with a view to supporting them in areas of working capital, equipment sourcing, processing and other value addition programs across the value chain.
It is my hope that this insight will assist tremendously. Have a beautiful weekend, my brethren! TO BE CONTINUED…
* Dr. Ogah is the Minister of State for Mines & Steel Development, Federal Republic of Nigeria.