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From Oil Dependence to Mineral Prosperity: Nigeria’s Diversification Drive

By William Emmanuel Ukpoju
Nigeria, Africa’s largest economy by GDP, has long stood as a beacon of potential on the continent, driven in large part by its rich endowment of natural resources. Yet, despite being synonymous with oil for decades, the nation finds itself at a critical juncture, grappling with the need to chart a more stable and resilient economic course. The volatile nature of global oil markets has underscored the risks of over-reliance on a single commodity, prompting a strategic shift towards diversification.
Amidst this backdrop, Nigeria’s solid minerals sector appears as a compelling frontier, offering a glimpse into the nation’s untapped potential and the promise of economic transformation. This sector, characterized by a vast array of mineral resources ranging from gold and tin to iron ore and gemstones, holds the key to unlocking new avenues of growth and prosperity.
As Nigeria embarks on this journey of economic diversification, the solid minerals sector emerges as a focal point of exploration and opportunity. This article delves deep into the intricacies of Nigeria’s solid minerals landscape, examining its untapped potential, current challenges, and the pathways to harnessing its wealth for sustainable development.
Moreover, this article ventures beyond the present realities, envisioning a future where Nigeria’s solid minerals sector emerges as a cornerstone of economic resilience and prosperity. Drawing insights from key mining projects across the nation, The Valuechain highlights the transformative impact of strategic investments and innovative partnerships.

The development of the solid minerals sector offers a substantial opportunity for revenue generation. The Nigeria Extractive Industries Transparency Initiative (NEITI) estimates that the sector could generate billions of dollars annually if properly managed. For example, Nigeria’s gold reserves are estimated at over 200 million ounces, representing a potential revenue source worth several billion dollars at current market prices.
The untapped wealth beneath Nigeria’s soil presents an opportunity for the nation to build a more balanced and resilient economy. With the right strategies and commitments, the solid minerals sector can become a significant contributor to Nigeria’s prosperity and a beacon of its diversified economic future. The solid minerals sector holds immense potential to drive economic growth, industrialisation, and development. By harnessing this potential, Nigeria can diversify its economy, create jobs, generate revenue, and foster sustainable development. However, realising this potential requires concerted efforts from the government, private sector, and international partners. Through effective policy reforms, investment in infrastructure and technology, and sustainable mining practices, Nigeria can transform its solid minerals sector into a cornerstone of its economic diversification strategy.
According to the Nigeria Extractive Industries Transparency Initiative (NEITI), Nigeria earned a total sum of N193.59 billion from the solid minerals sector in 2021. This is the earnings from the sector since NEITI commenced the reconciliation of payments by companies and receipts by the government in the sector.
The figure shows an increase of N60.32 billion or 51.89% growth when compared to the 2020 revenue flows of N116.82 billion. This positive trend reflects a continuation of the upward positive trajectory observed in the sector over the past five years. This contribution, though a significant increase over past years, is still abysmal considering the potential of the sector to the Nigerian economy. The 2021 Solid Minerals report which is NEITI’s 12th, reviewed, ascertained, reconciled and reported all revenues and investment flows to and from the Government in the solid minerals sector. The report covered actual payments by 1,214 companies operating in the sector and receipts by three government agencies, the quantities of minerals that they produced, utilized and exported from the sector, reconciled the physical/financial transactions and undertook special verification on some processes. A breakdown of the revenues shows that the Federal Inland Revenue Service -FIRS collected the bulk of the revenue of N169.52billion, the Mining Cadastre Office generated N4.3Billion while the Mining Inspectorate Department generated a total of N3.62 billion. The report also observed a consistent year-on-year increase in revenue to the federation account from the solid minerals sector in the past fifteen years (2007-2021). It puts the total revenue that accrued to the government during these years to N818.04bn, which the report pointed out, is significantly low compared to the economic potential of the sector, noting that of the N6.62 trillion total government revenue in 2021, the solid minerals sector barely contributed 2.6%. On Production, the solid minerals report disclosed that the total volume of solid minerals used or sold in 2021 was 76.28 million tons with a royalty payment of N3.57 billion.
The minerals with the largest production volume in the year under review are Granite, Limestone, Laterite, Clay and Sand. Dangote Plc accounted for the highest production in the year under review with a total production of 28.8 million tons. Bua and Lafarge accounted for 8.4 and 4.3 million tons while Zeberced accounted for 3.3 million tons respectively. The NEITI report also pointed out that Ogun state recorded the highest production in the year under review, with a total of 17.5 million tons followed by Kogi state with 16.3 million tons and Edo with 8 million tons. The lowest production volume was recorded in Borno State with 25,500 tons.
On Export, the total minerals exported in 2021 was 142.54 million tons with a Free on Board (FOB) value of $101.29 million, showing an increase of 138.57% from the $42.46 million reported in 2020 report, the report stated. The solid minerals contribution to export value in 2021 was a meagre 0.24%. The First Patriot Nigeria Limited based in Ebonyi state accounted for 44.26% of the total export value. China was identified as the principal destination of Nigeria’s mineral exports, accounting for 97% and 88% of the export volume and value. Other destinations for Nigeria’s minerals include Malaysia, Korea, Thailand UAE.
On solid minerals contribution to the economy, the NEITI report revealed that the solid minerals sector contributed 0.63% to GDP. While there has been some improvement compared to previous years where it contributed 0.45% in 2020 and 0.26% in 2019, the sector has not yet reached its full potential in making a significant impact on the overall Nigerian economy. While there was an increase of 85% in the number of artisanal miners’ operators, from 1,273 in 2020 to 2,336 in 2021 across the 6 geo-political zones of the country, there are no commensurate data in the areas of production, royalty payments, exports, etc. to support this increase in operators. Employment data from the sector showed that the sector’s contribution to employment in 2021 was 25,618, with 596 expatriates while 25,022 were Nigerians.
Concerning gender, 92% of jobs were occupied by men, while women occupied 8%. The report recommended that the Federal Government should collaborate with relevant stakeholders to ensure that the Energy Transition Plan (ETP) is consciously implemented with the Energy Transition Minerals such as Cobalt, Lithium, Nickel, Copper, Graphite and Titanium beneficiated to increase revenue to government coffers and create employment opportunities for the teeming youths. The NEITI report also underscored the need to shift attention from oil to the development of the solid minerals sector in the face of dwindling oil revenue.

Some key mining projects in Nigeria
Harnessing solid minerals can spur industrialization by providing essential raw materials for local industries. For instance, iron ore can feed steel mills, while limestone is crucial for cement production. By processing these minerals domestically, Nigeria can add significant value, which not only boosts revenues but also reduces the dependency on imports. This value addition creates a ripple effect, stimulating other sectors of the economy. No doubt, the Ajaokuta Steel Complex in Kogi State is one of Nigeria’s most ambitious industrial projects. Despite facing numerous challenges over the years, including funding and management issues, the complex has the potential to transform Nigeria’s steel industry. Once operational, it can significantly boost local iron ore mining and steel production, creating jobs and reducing reliance on imported steel.
Equally, the Segilola Gold Project in Osun State is Nigeria’s first large-scale gold mine. With substantial gold reserves, the project demonstrates the viability of gold mining in Nigeria and sets a precedent for future ventures. The Eta-Zuma Group on the other hand is a Nigerian conglomerate with significant interests in coal mining. Its operations in Kogi and Enugu States contribute to local energy production, providing an alternative to hydroelectric power and helping diversify Nigeria’s energy mix. Coal mining also supports the development of coal-to-power projects, enhancing energy security.
Operated by Kogi Iron, the Agbaja Iron Ore Project is focused on developing the Agbaja iron ore deposit, which holds significant reserves. The project aims to produce steel for domestic and international markets, reducing Nigeria’s dependency on imported steel. The project is in the development stage, with ongoing feasibility studies and efforts to secure financing for full-scale production.
Uranium is another solid mineral with spread across Nigeria. Explorations have identified several areas with viable uranium deposits, and there is growing interest in developing these resources to diversify Nigeria’s energy mix. Nigeria holds significant uranium deposits, which have potential for energy production through nuclear power generation.
Nigeria’s bauxite deposits are found in the south-western region, particularly in Ekiti State. Bauxite is a primary ore for aluminium production, and its development can spur the growth of the aluminium industry in Nigeria. Similarly, Ebonyi State is rich in lead and zinc deposits. Mining activities have been ongoing for years, with several companies involved in extracting these valuable minerals. The lead and zinc mines contribute to Nigeria’s industrial and manufacturing sectors by supplying essential raw materials.
Barite is a critical mineral used in the oil and gas industry as a weighting agent in drilling mud. Nigeria’s Benue State is rich in barite deposits, which are being developed to meet the demands of the domestic and international oil and gas sectors. Additionally, limestone is a crucial raw material for cement production and Nigeria has extensive limestone deposits in Ogun and Cross River States, and other parts of the country which are being exploited to support the country’s booming construction industry. Companies like Dangote Cement and Lafarge operate large-scale limestone mines and cement plants in these regions. Even more, Nigeria is known for its high-quality gemstones, which include sapphires, tourmalines, and emeralds. Kaduna and Plateau States are the primary regions for gemstone mining, and they have been attracting both local and international interest.
Without a doubt, the solid minerals’ sector is labour-intensive and capable of creating millions of jobs across various skill levels. From mining engineers and geologists to labourers and administrative personnel, the sector can provide significant employment opportunities. This is particularly critical in Nigeria, where high unemployment rates, especially among the youth, pose a major socio-economic challenge. Additionally, mining activities necessitate the development of infrastructure such as roads, railways, and power supply. These infrastructural improvements have spill-over benefits, enhancing overall economic activity and connectivity. Improved infrastructure facilitates the movement of goods and services, thereby boosting trade and commerce.

Need for diversification
Nigeria’s heavy reliance on oil exports makes its economy extremely vulnerable to global oil price fluctuations. Sudden drops in oil prices can lead to significant revenue shortfalls, affecting government budgets and economic stability. This is a general phenomenon in the Nigerian economic structure; diversification will reduce this dependency and mitigate the risks associated with volatile oil markets. Diversifying the economy will further broaden the revenue base by reducing the fiscal deficits that arise from oil price shocks. This will make government finances more stable and less prone to the cyclical nature of the oil industry.
A diversified economy promotes balanced growth across various sectors, preventing over-reliance on any single industry or region. This creates a more resilient economic structure that is capable of withstanding external shocks. Additionally, diversification can promote economic activities in different regions of the country, thereby reducing regional disparities, especially in a country like Nigeria which depends on the Niger Delta region for oil revenue. This can lead to more equitable economic development and reduce tensions arising from uneven growth.
Engaging multiple sectors to drive the economy ensures that growth benefits a larger segment of the population. This inclusivity is vital for maintaining social stability and fostering national unity. Divesting can increase the range of products and services Nigeria exports, reducing its dependence on oil exports. This can improve the country’s trade balance and integrate Nigeria more effectively into the global economy. A diversified economy is more attractive to foreign investors who seek stability and growth opportunities in various sectors. This can lead to increased foreign direct investment (FDI), boosting economic growth and development.
Economic diversification is critical for Nigeria to achieve sustainable and inclusive growth. By reducing dependence on oil, creating jobs, promoting environmental sustainability, fostering innovation, and ensuring economic stability, diversification can transform Nigeria into a resilient and prosperous economy. The government, private sector, and other stakeholders must work collaboratively to implement policies and strategies that support diversification efforts, ultimately securing a better future for all Nigerians.

What the government must do
To ensure the diversification of Nigeria’s economy towards the extractive sector, the government must implement a comprehensive strategy that addresses key areas such as regulation, financing, infrastructure, human capital development, sustainability, market access, innovation, and investor confidence. While Nigeria has made strides in establishing a regulatory framework for the solid minerals sector, gaps and inconsistencies remain. Clear, stable, and investor-friendly policies are crucial for attracting investment. The government needs to streamline regulations and ensure that policies are consistently implemented.
Experts believe that the sector requires substantial investment in exploration, mining operations, and processing facilities. However, funding has been a significant bottleneck. Access to finance is limited, and many local banks are reluctant to invest in mining due to perceived risks. There is a need for innovative financing solutions, including public-private partnerships and international investment.
The lack of technical expertise and modern technology also hampers the sector’s growth. There is a need for capacity building through training programs and partnerships with international mining firms. Additionally, adopting advanced technologies can enhance efficiency and sustainability in mining operations.
Mining activities can have adverse environmental and social impacts, including land degradation, water pollution, and displacement of communities. It is essential to adopt sustainable mining practices and ensure that mining activities are conducted responsibly. This includes proper environmental impact assessments, rehabilitation of mined areas, and fair compensation for affected communities.
The Nigerian government should further streamline existing regulations to create a more transparent and efficient investment environment. Clear and consistent legal frameworks will help build investor confidence and ensure smoother operations within the extractive sector. Enhancing the capacity of regulatory bodies like the Ministry of Mines and Steel Development and the Nigerian Geological Survey Agency is crucial. These institutions need adequate funding and skilled personnel to effectively manage the sector.
Implementing stringent anti-corruption measures will also help ensure that transparency and ethical practices within the sector are strictly adhered to. Independent monitoring bodies should be established to oversee the operations and financial transactions of mining companies. In this vein, encouraging PPPs can leverage private sector expertise and investment such that the government can provide initial funding or offer incentives to attract private investors, fostering collaboration and shared risks. Consequently, offering tax breaks, subsidies, and duty exemptions on mining equipment can attract both local and international investors. These incentives will reduce the financial burden on companies and stimulate investment in the sector.
Establishing a dedicated mining development bank or fund similar to the Africa Energy Bank to provide long-term, low-interest financing for mining projects will go a long way. Also, encouraging commercial banks to create specialized financial products for the mining sector will help facilitate access to capital. Inaugurating specialized training programs and institutions to build a skilled workforce for the mining sector is essential. Collaborations with international mining companies and educational institutions to develop effective training curricula that will Invest in research and development will foster innovation and improve mining technologies.
Partnerships with global mining technology firms and research institutions can drive advancements in the sector. Most importantly, engaging local communities and ensuring they benefit from mining activities is crucial. This includes creating jobs, developing social infrastructure, and providing fair compensation for land and resources. Boosting local processing and value addition of minerals can create more economic benefits within Nigeria. Developing industries that use mined minerals as raw materials, such as steel manufacturing from iron ore, is key.
Facilitating access to international markets by negotiating favourable trade agreements and reducing export barriers is also very important because it will boost the sector. Developing marketing strategies to promote Nigerian minerals globally can help attract foreign buyers. Another key point is ensuring a stable political environment and upholding the rule of law is crucial for creating a favourable investment climate. Therefore, addressing security challenges, particularly in mining regions, will protect investments and ensure the safety of workers and communities. Investing in and adopting modern mining technologies will also improve efficiency and reduce environmental impact. This includes the use of drones for exploration, automated machinery, and advanced data analytics. Above all, strict enforcement of environmental regulations will ensure that mining activities do not cause long-term damage. This means that conducting thorough environmental impact assessments (EIAs) before approving projects is vital.
By implementing these strategies, Nigeria can create a robust and diversified economy anchored by a thriving extractive sector. This will not only reduce the country’s dependence on oil but also stimulate economic growth, create jobs, and improve living standards. A committed and coordinated effort by the government, in partnership with the private sector and international stakeholders, can unlock Nigeria’s vast mineral potential and secure a prosperous future.
In navigating the intricate terrain of Nigeria’s solid minerals sector, we have traversed a landscape teeming with promise and potential. From the gleaming reserves of gold to the foundational role of limestone, each mineral holds within it the seeds of economic transformation and prosperity. Yet, as we stand at the threshold of possibility, it is imperative to reflect not only on the achievements of the present but also on the imperatives of the future.
The journey towards economic diversification is fraught with challenges, yet it is also illuminated by the guiding beacon of opportunity. Through the lens of the Nigeria Extractive Industries Transparency Initiative (NEITI), we have witnessed the evolution of the sector, from its nascent stages to its burgeoning potential. We have analysed revenue flows, production volumes, and export trends, uncovering both the triumphs and the tribulations that characterize Nigeria’s mineral landscape.
However, our exploration does not end with the present realities; it extends into the realm of possibility, envisioning a future where Nigeria’s solid minerals sector stands as a bastion of resilience and prosperity. By embracing the principles of sustainable development, innovation, and inclusivity, we can unlock the full potential of Nigeria’s mineral wealth, ushering in an era of economic resurgence and shared prosperity.
The path to prosperity is not one travelled alone but rather one forged through collective endeavour and shared vision. It is incumbent upon present government, private sector actors, and international stakeholders to come together in a spirit of collaboration and partnership, to chart a course towards a future defined by resilience, inclusivity, and sustainable growth. The story of Nigeria’s solid minerals sector is not merely one of geological riches but of human potential unleashed. It is a story of resilience in the face of adversity, of innovation in the pursuit of progress, and of hope in the promise of a brighter tomorrow. As we bid farewell to this exploration, let us carry forward the lessons learned and the aspirations kindled, knowing that the journey towards economic diversification is not a destination but a continuous pursuit of possibility.