The Ministry of Mines and Steel Development has signed a Memorandum of Understanding (MoU) with the Bank of Industry (BoI) for the management of a N5 billion fund in support of Artisanal and Small Scale Miners in the country.
Under the arrangement, the Ministry would contribute N2.5 billion which would be matched by another N2.5 billion by BoI.
A certified Artisanal Scale miner, under the scheme, can access between N100,000 and N10 million; while a Small Scale Miner can access between N10 million and N100 million.
The MoU was signed by the Minister of Mines and Steel Development, Dr. Kayode Fayemi, and the Managing Director/CEO of BoI, Mr. Olukayode Pitan, in Abuja on Tuesday. The event was witnessed by the Minister of State for Mines and Steel Development, Abubakar Bawa Bwari, Permanent Secretary of the Ministry, Mohammed Abass, and Chair of the board of the Solid Minerals Development Fund, Alhaji Uba Saida Malami.
Speaking at the event, Dr. Fayemi said the development is aimed at addressing the issue of insufficient funding and access to capital, which is a major factor militating against Artisanal and Small Scale miners who account for about 80 per cent of activities in the mining sector.
According to the Minister, BoI would serve as the custodian and manager of the fund, which would be given to the artisanal and small scale miners at 5 per cent interest.
Fayemi said: “This agreement is a meeting of minds between the FMMSD and the BoI. We are in the first instance launching a N5 billion fund. With our ministry’s pilot contribution of N2.5 billion, BoI will match our contribution with another N2.5 billion.
“Consequently, with this agreement, the FMMSD appoints BoI as the custodian and manager of the Nigerian Artisanal and Small-Scale Miners (ASM) Financing Support Fund, for the purpose of financing artisanal and small scale mining projects involving industrial minerals, precious stones, precious metal (gold), dimension stone and such other strategic minerals in Nigeria as shall be approved by the ministry and BoI from time to time.”
The Minister said the fund would be available in the form of term loans or working capital to be utilised for the purchase of requisite items of plant and machinery; payment for drilling, geological and other services related to mining business as may be required, among others.
He added that proper funding would help to integrate the Artisanal and Small Scale Miners into the formal sector, enhance their growth and development in a structured manner, and spur productivity and job creation in the mining sector.
Speaking further, the Minister said, “the single obligor limit of loans to be granted under the fund shall be from N100,000 to N10 million for Artisanal Small Scale Miners; and from N10 million to N100 million for Small Scale Miners.
“The loans would be made available to certified industry participants at a single digit interest rate of 5 per cent per annum, which is by far about the most attractive within our jurisdiction.
“In addressing the challenge of insufficient funding and lack of access to capital, the ministry secured approval for N30 billion (approx. $100 million) from the mining sector component of the Natural Resources Development Fund from the FGN.”
We also secured the World Bank’s approval for $150 million to support the ministry’s Mineral Sector Support for Economic Diversification (MinDiver) program.
“The Solid Minerals Development Fund (SMDF) is now spearheading the assembling of a $600M investment fund for the sector, working with entities such as the Nigerian Sovereign Investment Authority, the Nigeria Stock Exchange and others. This is a departure from the past, judging by the fact that in 2015, out of the meagre N1 billion allocated to the ministry, only N352 million was released.
“It is noteworthy that in addition to funding support from multilateral agencies, partnerships on technical cooperation have also been brokered or re-activated with several foreign governments. Existing technical partnerships have been operationalised with the governments of South Africa, China, Australia, Canada, the United Kingdom and the United States of America. Nigeria now takes the lead in regional efforts to develop mining, especially within the framework of the Africa Mining Vision”
The CEO of Bank of Industry, Mr Pitan in his response said the Bank was convinced that the fund would step up a rapid development in the mining sector, just as a similar funding arrangement administered by the BOI boosted the country’s movie sector.
He said BOI is a pioneer in the area of funding mining activities where other banks are reluctant to invest. He, however stated that the Fund is not an aid, but repayable by beneficiaries.
The Minister of State for Mines and Steel Development, Hon Abubakar Bawa Bwari, would head the Project Management Committee which includes BOI officials with expertise in Mining Finance and Project Supervision. The committee is charged with the responsibility of appraising, recommending, disbursing, implementing and monitoring the projects as well as recovering the loans and interests from the approved projects.