Wasting wealth

The economic impact of informal gold mining is, however, limited by the reliance by operators on rudimentary equipment as well as inadequate safety measures. It is reported that gold miners in the informal sector operate mostly manually, using hand-held tools to extract gold, resulting both in low productivity and poor quality of the gold produced through this process.

Relative to the significantly higher revenues that could be realised from the commodity, which is highly prized in the international commodities market, the estimated $1 million daily earned by informal sector miners suggest that the country’s substantial gold deposits constitute no better than wasting wealth.

The revenues currently made from the sector not only fall far below its potential, they hardly benefit the country and the citizens. They represent, at best, unrealised wealth in terms of living standards in gold-bearing communities and contributions to the economy as a whole.

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In recent years, efforts have been made by government to more effectively regulate informal sector gold mining and properly organise operators to achieve higher productivity as well as more qualitative products. For instance, in 2019, the Presidential Artisanal Gold Mining Initiative (PAGMI) was launched with the aim of buying gold from artisanal miners under the National Purchase Programme and ensuring the remittance to government of resultant revenues.  The PAGMI supervises the direct purchase of gold from artisanal miners, processes such gold to export standards and sells at international market rates to the benefit of the Nigerian economy.

Building on this, the Minister of Solid Minerals Development, Dele Alake, announced in July, last year, that over 3,000 artisanal cooperatives had been registered to formalise the sector and track the flow of Nigeria’s gold. The challenge is for the ministry to ensure that this effort to bring the affected miners into the formal economy translates into easier access to loans and other financial services, qualitative training opportunities and modern, safer, more efficient operational tools that will enable the country benefit concretely from the latent wealth that its gold deposits imply.

Another serious problem with gold mining in the country is the high level of criminal activity in the sector. According to a report, “it is estimated that up to 95 per cent of gold in Nigeria is illegally mined, with significant revenue lost due to smuggling”. Armed groups are widely reported to be in control of unspecified number of mining sites where they purportedly offer protection to miners in exchange for payments which are then used to procure arms and perpetrate other illegalities.

Illegal gold mining has also been linked to banditry, terrorism, kidnapping and other activities that undermine security in local communities with deposits of the commodity. The inauguration of 2,200 Mines Marshals at the inception of this administration has been helpful but much more certainly needs to be done, particularly through the effective deployment of science and technology to properly monitor and protect mining sites and communities.

Other challenges which more efficient regulation in the sector will help to address include environmental degradation manifesting as deforestation, water contamination and land despoliation, as well as health risks, especially from the use of mercury for processing. All of these make gold a source of wealth depletion rather than wealth replenishment in Nigeria.