Fayemi, BOI activate first tranche of N30bn fund for small-scale miners

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The minister of mines and steel development, Kayode Fayemi, on Tuesday signed a Memorandum of Understanding (MoU) with the Bank of Industry (BOI), activating the mining sector component of the Natural Resources Development Fund to be utilized by artisanal and small-scale miners across Nigeria.

With the latest development, BOI will hold and manage the first tranche of N5 billion from the Nigerian Artisanal and Small-Scale Miners (ASM) Financing Support Fund.

“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 N2.5Billion, BOI will match our contribution with another N2.5Billion,” Fayemi said at the MoU signing ceremony.

This means that, with this agreement, the ministry has appointed BOI as the custodian and manager of the ASM financing support fund.

The purpose is to finance artisanal and small scale mining projects involving industrial minerals, precious stones, precious metal (gold), dimension stones and such other strategic minerals in Nigeria based on approvals by the ministry and BOI from time to time.

According to the minister, “the focus here is understandable considering that roughly 80 percent of all miners in Nigeria fall within the artisanal/small scale category.”

The fund will be available in the form of term loans or working capital to be utilized for the purchase of requisite items of plant and machinery, payment for drilling, geological and other services related to mining business.

It will also be used as working capital for the purchase of materials and other expenses ranging from N100,000 To N10,000,000 for artisanal miners, and from N10,000,000 to N100,000,000 for small scale miners.

“The loans would be made available to certified industry participants at a single digit interest rate of 5 percent per annum, which is by far about the most attractive within our jurisdiction,” the minister stated.

In addressing the challenge of insufficient funding and lack of access to capital, the ministry secured approval for N30 billion, approximately $100 million, from the mining sector component of the Natural Resources Development Fund set aside by the federal government.

An approval was also secured from the World Bank 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 to secure a $600 million investment fund for the sector, while working with entities such as the Nigerian Sovereign Investment Authority and the Nigeria Stock Exchange, among others.

This is a departure from the past, judging by the fact that in 2015, out of the meager N1 billion allocated to the ministry, only N352 million was released.

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 made possible with the governments of South Africa, China, Australia, Canada, the United Kingdom and the United States of America.

As a result of this, Nigeria now takes the lead in regional efforts to develop mining, especially within the framework of the Africa Mining Vision (AMV).

The (ASM) Financing Support Fund is a component of a broader programme, the Nigerian Artisanal and Small-Scale Miners Financing Support Scheme, which is designed to play a catalyzing role in unlocking funding to the mining sector.

It is also intended to provide alternative sources of finance for artisanal and small-scale miners, integrate the artisanal and small-scale miners into the formal sector, and enhance their growth and development in a structured manner in line with global best practices.

Additionally, the fund will spur productivity and job creation in the mining sector, facilitate value addition and promote the development of Nigeria’s solid mining resources in an environment friendly and sustainable way.

Apart from these, the fund will further attract investment capital into the mining sector, boost the contribution of the mining sector to Nigeria’s economic growth, and harness Nigeria’s mining potentials towards achieving economic diversification and exports.

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