Friday, July 16, 2021 / 6:26 PM / SEC Nigeria / Header Image Credit: YouTube; Securities and Exchange Commission Nigeria
The Nigerian capital market has been described as a catalyst for the development of critical sectors of the economy, as it provides a platform for obtaining medium to long-term finance. The comment was made by Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, during a Webinar organized by the Securities and Exchange Commission (SEC) in collaboration with the Ministry of Solid Minerals Development with the theme, "Financing the Solid Minerals Sector through the Capital Market and the Critical Role of Commodity Exchanges".
Ahmed said the facilitation of funding and provision of structured market platforms such as the commodities exchanges portends significant addition for the mining and solid minerals sector, saying that the event and its theme are very relevant to the economy given the need to diversify and grow the economy and to enable the nation to achieve sustainable development in the post-COVID-19 pandemic.
According to Ahmed, "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 an 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. The mineral export guidelines by the Federal Government was formulated to address the need to keep accurately mineral trade data, ensure effective monitoring of the evacuation of export proceeds, optimize the collection of royalties, and facilitate the implementation of free shipment inspection policies of the Federal Government on each export transaction as this is international best practice in line with the Marrakesh Protocol of GATT 1994.
Ahmed said the initiative of employing the commodities exchange in this regard will encourage responsibility accounting and fairness to governance. This and other initiatives she stated, would 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, minimizing revenue leakages, and removing undue bottlenecks experienced with transactions by both exporters of minerals as well as our regulatory agencies.
"Identified as one of the frontiers of opportunity in the new economic reality, the Nigerian commodity trading ecosystem 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. 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.
"Streamlining the operations of the mining sector therefore through the commodities trading ecosystem and other initiatives will ensure proper regulation of solid minerals extracting industry in Nigeria. I am positive, that the outcome of this webinar and the strategic partnership between the mining sector and the capital market community will enhance the competitiveness of our new non-oil commodities and compliment the economic diversification of the Federal Government" She stated.
She assured of the unwavering support of the Federal Ministry of Finance, Budget, and National Planning to ensure the achievement of the overarching objective of the Federal Government to develop the mineral potentials of the country.
"The reality is that the nation stands to benefit more in an organized mining and solid mineral extractive industry and the capital market is here to contribute its quota.
"This webinar is a signal that with the appropriate collaboration amongst sectors, institutions, regulators, and operators, we can exceed our targets sooner rather than later and Nigeria will reap huge benefits from such forums.
In a welcome address, the Director-General of SEC, Mr. Lamido Yuguda said with over 44 minerals found across the federation, the solid minerals sector can be significantly instrumental in the ongoing quest to diversify the economy from its heavy reliance on crude oil.
Yuguda said it has 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 shipbuilding.
He said "We believe that the Nigerian Commodity trading system and indeed the capital market can be the transformational patronage to bring about these positive changes in the sector.
"With opportunities provided for better access to the marketing of produce, price discovery and valuable market information, a striving commodities trading ecosystem have the potential to foster inclusive mining prosperity by efficiently linking commodities to industries insufficient scale thereby promoting the output, creating jobs, improving living standards and unlocking the economic potentials of mining communities.
"It will also enhance financial inclusion of artisan miners, foster mineral production, stimulate exports, and ultimately engendered economic development amongst other benefits. Undoubtedly, greater connectivity of the mining sector and the commodities trading ecosystem will ensure that mineral commodities could be traded on transparent, efficient, and organized trading platform provided by commodity exchanges".
In a keynote address, Minister of State in the Ministry of Solid Minerals and Steel Development, Dr. Uchechukwu Ogah, described the webinar as timely because it is coming at a time that Mr. President has put all necessary machinery in place to revamp the sector for economic stability.
He however expressed disappointment that over 90% of the artisanal miners and small-scale operators' contribution to employment is still very low with a GDP contribution of 0.5%.
He said. "We eagerly want to change this through the implementation of the roadmap to contribute about 5% to GDP by 2025. Inadequate funding has been the bane of underdevelopment; it is on this premise that I welcome this partnership with the SEC".
Ogah said some of the expectations of the ministry are that for the exchange to create the vital nexus between demand and supply chain to enable investment to be demand-driven "We are requesting the facilitation of necessary infrastructure needed for proper and timely delivery of products; To mobilize private sector funding at comparative rates through the capital market. Like moving bonds, derivatives, futures, etc created to support the mining system," he stated.
The Minister while adding that the collaboration will be of immense benefit to the nation, enjoined all stakeholders to key into the partnership for sustainable development of the sector as that will bring Nigeria to the limelight as a major mining center of the world.