The Minister of Mines and Steel Development has said, lack of verifiable bussines plans, necessary collateral and some technical issues are responsible for artisinal miners inability to access the federal government’s N5 billion loan.
The Minister of Mines and Steel Development, Hon. Abubakar Bawa Bwari, said this while speaking recently at a dialogue meeting with chief executives of Nigerian banks and UNDP Country Director in Lagos.
He decry that the inaccessible to the loan and other form of financing through the capital markets and financial institutions is grossly affecting the financial turnaround of the sector.
He however said the sector growth and contributions to the nation’s Gross Domestic Products (GDP) would have increased if financial institutions do not look the other way.
He stressed that access to credit either from banks or capital markets had been low to meet the sector’s financing needs, adding that, institutional investors were also wary of investing in projects along the life cycle
He said: “We are prepared to build on the ACP-EU/UNDP/African Guarantee Fund program to operationalize the N5 billion fund that the Ministry established in collaboration with the Bank of Industry to support small and medium scale miners.
“Unfortunately, this scheme is not performing as expected due to the miners’ inability to provide the necessary collateral and inadequate business plans to support their applications and other technical reasons. We must find a middle way to solve this problem.
He noted that: “Without the financial sector, we simply cannot develop the sector to meet its true potential as the small and artisanal miners of development minerals who are looking to expand their operations do not have access to financing for capital equipment and operations.
“We need a shift in mind set among the financial institutions about the mining sector in general. Since we are here to unlock opportunities in the development minerals sub-sector, the first challenge we must tackle is for the financial institutions to recognise the value chain potentials of the development minerals sub-sector.
According to him, a major constraint identified in the roadmap was the underdeveloped financing and business environment for mining.
“Financing for other stages of the life cycle particularly exploration and production are limited. This is due to lack of bankable data for exploration and the lack of systematic understanding of mining’s potential. As a result, few banks have dedicated minerals and mining desks and teams.
He added: “Against this background, my ministry is keen to see the financing environment transformed to support the growth and development of the mining sector.
“This is in line with the ministry’s objective for mining to have a multiplier effect on the economy beyond direct royalty and tax receipts.
“This will be through the facilitation of mineral economic linkages, investment, and diversification. Promotion of side stream linkages such as the stock market and financial services to finance business development is central to this objective.
He stressed that the challenges required creativity and innovation to encourage participation along the value chain, starting with the upstream, which provides the anchor investment for the emergence of the value chain.
“Collectively we must address access to finance constraints faced by miners of development minerals and other minerals in general. We are extremely pleased with the ACP-EU development minerals intervention,” he said.
