During a recent Media Engagement meeting held in Abuja, Nigerian Content Development & Monitoring Board (NCDMB) Executive Secretary, Engr. Simbi Wabote expressed his opposition towards the creation of multiple Local Content Boards.
According to him, “the NCDMB can modify its templates to suit other sectors. In our view, this is the prudent way to expand and entrench local Content regime in Nigeria.” The National Assembly plans to develop the extant Local Content Act 2010 to include other sectors of the economy for further domiciliation of contracts.
All signs now point to Nigeria strengthening its Local Content implementation and serving as an example in Local Content Policy for other African countries. Celebrating the successes of the Nigerian Oil and Gas Industry Content Development Act 9 years after its implementation, the industry now confronts new prospects of growth.
Nigeria – having just signed the African Continental Free Trade Agreement (AfCFTA) – is one of the latest African nations to join the entity of 54 African Union States that seek to reduce the economic barriers in pursuit of creating an Africa-wide customs union.
Engr. Wabote also perceives joining the entity as a source of benefits for local oil and gas service companies without threatening national sovereignty.
He said “if you take the population of Africa and the potential market and given the general level of development of countries, the sky is the limit for any manufacturer that makes the right investment, has the right quality and partnerships.”
A focus on shortening the contracting cycle, sectorial and market linkages and effective monitoring of local content delivery in the country has characterized Nigeria’s Local Content agenda in recent years.
Communicating the plan for further Nigerian Content development will be the priority at the 9th Practical Nigerian Content Forum. Engr. Simbi Wabote will join over 600 industry stakeholders at the four-day Practical Nigerian Content Forum on 2 – 5 December in Yenagoa, Bayelsa, Nigeria.
The Forum is recognised as the leading platform to engage government and industry players from across the value chain to maximise business opportunities and increase Nigerian Content implementation. Convene with senior government representatives and the entire oil and gas value chain to discuss the keys to unlocking the industry’s potential through Nigerian Content at the 9th Practical Nigerian Content Forum.
Small-scale gold mining in what is modern day Ghana can be traced as far back as the 15th century. It continues to be an important means of livelihood for many relatively low-income Ghanaians and is highly significant for the economy as a whole. In fact, its economic importance has increased dramatically in recent years.
Under Ghanaian law mining is “reserved for Ghanaians”. Despite this, over the last decade there’s been a notable development – the arrival of large numbers of foreign miners, particularly from China.
In 2006 small numbers of Chinese and other foreign miners came to Ghana to engage in gold mining. Then a hike in gold prices from 2008 onwards led to a veritable gold rush and the arrival of significant numbers of foreign miners. Most were working on an illicit and illegal basis. Foreign miners came from countries in West Africa, as well as Armenia and Russia. But the largest concentration was from China.
By 2013, the scale of Chinese citizens’ involvement in informal gold mining in Ghana was inviting increasingly hostile media coverage as well as outbreaks of violence. The government was finally forced to act. Then President John Mahama established an inter-ministerial task force to combat illegal small scale mining. The President was careful to include both by Ghanaians and non-Ghanaians. But the subtext was clear – this measure was primarily aimed at foreign miners.
By mid 2013 significant numbers of foreign nationals, the majority of whom were Chinese, had been arrested or deported. Many more left voluntarily. As a result the visible presence of foreign miners in small scale gold mining declined. But, as research we’ve been involved in over the past 15 years shows, there have been enduring legacies of this short, intensive period of foreign involvement.
Our research ranged from looking at conflict, collusion and corruption in small-scale gold mining, specifically in relation to Chinese miners and the state in Ghana. We also looked at the impact of China’s informal gold rush in Ghana as well as the militarisation and criminalisation of artisanal and small-scale gold mining.
Our findings revealed that the sector is rife with corruption. We also conclude that closing off foreign involvement in small-scale mining in the face of extremely low local investment and high unemployment is unlikely to work. Our view is that the government may have to shift its focus. Instead of trying to ban the activity, it should allow it, and accompany this with better regulation.
The mining sector
For many years, small-scale mining suffered benign neglect from the state which focused on large-scale mining. Local financial institutions also remained uninterested, and very little was done to advance production technology.
Small-scale mining was illegal until 1989 when a new law was passed to legalise and regularise the sector by introducing a licensing process. This was then consolidated in the Minerals and Mining Act in 2006 which enabled artisanal miners to apply for a concession of 25 acres maximum in designated areas through the Minerals Commission.
But it’s estimated that less than 30% of small-scale miners are formally registered. Most remain informal and illicit, known as “galamsey”.
Big changes happened at the beginning of the new millennium. Ghana’s small-scale mining got caught in the vortex of globalisation which led to increased movement of people across continents, easier movement of finance, technological migration and intensification of mining. A sector that had been deprived of investment for so long suddenly discovered new suitors.
Among them were miners and business people from Shanglin County in Guangxi Province of China, who were already familiar with small-scale gold mining in their home country. They had developed more advanced technology to increase gold production, and were able to obtain loans from Chinese banks to invest in the activity.
Conflict, collusion and corruption
In our research on conflict, collusion and corruption, we looked at how Ghanaian artisanal miners quickly seized the opportunity and entered into informal partnerships with the Chinese investors. Most partnerships were illegal because Ghana’s laws reserve small-scale mining for Ghanaians.
But there was one exception: foreign companies were allowed to act as “support service providers” to small-scale concession holders.
After the spike in the gold price in 2008, an astonishing illicit, free-for-all ensued. Both Ghanaian and Chinese miners engaged in both conflict and collaboration over access to gold. The situation was described as “out of control” and characterised by “a culture of impunity” at its height in 2012 and 2013.
Chinese miners, in particular, numbering tens of thousands, introduced mechanisation and new technology.
Looking at the impact of this period, we found that irregular migration into an informal sector had long‐lasting effects. Irrevocable changes happened in a short space of time.
One consequence of the developments was that the economic rewards became greater. Another was that inequality among Ghanaians involved in small‐scale mining also increased substantially. This included a gendered dimension, as women, children, and many young people were left to extract the “scraps” left after mechanised alluvial gold mining.
Another consequence was incalculable environmental damage to land and water bodies. Streams and rivers being diverted for mining purposes, and surface and ground water was polluted with hazardous chemicals, notably cyanide and mercury for gold processing.
The Ghana water company reported that between 2008 and 2018 there was a 50% loss of water available for treatment. It warned that if illegal mining was left unchecked, Ghana could be importing water in the next 10 years.
Already in some villages in the western and central regions of Ghana, residents have to travel to urban areas to buy sachet water for drinking and basic staples such as cassava to feed themselves due to mercury and diesel pollution of land and water resources.
The government’s taskforce has done little to stop the activity. Recent evidence of worsening water quality shows this. Ghana’s media also continues to report recurring arrests of illegal miners, both foreign and locals.
In our view, small-scale mining with foreign involvement is unlikely to stop. The state would do better by creating legislation for this mid-level group, which has claimed space for itself, and to regulate it.
In 2008, the American economy was collapsing. Like Nigeria, just after the emergence of Muhammadu Buhari as president in 2015, they (the U.S.) struggled with an economic contraction that developed into a recession. So, when the former U.S. President, Barack Obama, came on board in 2009, he met a shrinking economy, sufficient enough to handicap his success as the then new president of the world’s most powerful nation.
The Obama administration rescued the situation by injecting funds to failing companies (including banks) that were on the brink of bankruptcy.This financial bailout from the government did go a long way to cool down the heat of what might have led to pronounced inflation and increased unemployment as a result of the ripple effect of job loss.
In Nigeria, coming home, the rate of unemployment stands tall, and going by the food market survey, we cannot claim (just yet) that prices of commodities have fallen or are falling, as realities suggest the opposite.
Going forward, financial analystscommended Obama for restoring the U.S. economy and did praise him to have performed excellently beyond expectations when compared to the sitting president, Donald Trump, who is thought to be more financially grounded (courtesy of his celebrated business stint before his election) than a social activist and legal predisposed Barack Obama. Perhaps, Thomas Cook, the American hospitality company that collapsed recently wouldn’t have seen its grave under an Obama watch.
The case in Nigeria
While Nigeria struggles to avoid entering into another recession that seems unavoidable, going by stats from the second quarter of 2019; in this review, here is how SMEs can benefit from the CBN’s N200 billion loan facilitythat can be injected into their businesses to improve the overall economy by increasing SMEs’ capacity to expand, employ more labourand produce more to service the deficit.
The CBN’s peanut
In a bid to further stimulate the economy and patch up financial holes defacing the fabrics of the nose-diving economy, the CBN intervened with the Small and Medium Enterprises Credit Guarantee Scheme (SMECGS), dedicating N200 billion to the cause. SMEs, through their banks, can apply upon meeting listed eligibility criteria. In the SMECGS, qualified enterprises can access loan up to N100 million which can be in the form of Working Capital, Term Loans for refurbishment/equipment upgrade/expansion, overdrafts, etc.
Am I qualified?
With an exception to TRADE, the scheme caters for ventures such as Manufacturing, Agriculture Value Chain and Educational Institutions. However, the CBN leaves it open for its Managing Agents to include other ventures as may be specified. Although, the decision of the apex bank, to exclude traders, has been frowned at by many who feel such decision is a technical short circuit on the economy. With trade being a central market booster, many have queried why the CBN had ceremoniously clipped out this fundamental category of business unit.
Aside meeting the requirements listed by a participating bank; a borrower must also fulfill the criteria enumerated by the CBN such as the business must be owned and managed by a Nigerian private limited company, and must be registered under the Companies and Allied Matters Act of 1990. Reproduced below are other terms to be met:
• A legal business operated as a sole proprietorship;
• A start-up company with satisfactory cash flows indicating a Fixed Asset cover ratio of 100: 150;
• Have no non-performing or delinquent loans with any financial institution;
• Be a member of the Organized Private Sector Bodies/Associations such as Nigerian Association of Small & Medium Enterprises (NASME), the Manufacturers Association of Nigeria (MAN), etc.;
• Have a clear business plan;
• Provide up-to-date records on business operations, if any.
What you should know about the loan
Before SMEs go on to engage their bank on the development and terms, here is an overview as contained in the document published by the CBN.
All loan applications by SME promoters under the Scheme shall be made directly to the Participating Bank, and must be accompanied by the necessary documents as per normal loan processing requirement.
Applications received by Participating Banks upon recipient of necessary documents will be processed within 60 days.
As a borrower, banks may call for information which has not been sufficiently provided.
For a loan to be granted, Participating Banks must stand in as guarantors by submitting an application for guarantee which must be accompanied with an Offer Letters.
An SME as defined by the CBN
For the purpose of this scheme, and according to the CBN, a Small and Medium Scale Enterprise (SME) is an enterprise that has asset base (excluding land) of between N5million – N500 million and labour force of between 11 and 300.What this means is that an eligible business must worth between N5 million naira and N500 million when liquidated.
Understanding Participating Banks
By the term Participating Bank, the CBN has explained this to cover all Deposit Money Banks and Development Finance Institutions (DFIS). According to CBN, these banks will be in charge of approving loan requests under the scheme and shall grant credit facilities to qualified SME Promoters at prime lending rate. Furthermore, they will serve as CBN’s security agents monitoring activities of borrowers.
With CBN’s reservation for trade and with the asset base clause, one is left to wonder if the CBN meant good for the economy, given the level of hardship and financial constraints citizens are currently immersed in. If CBN will not review the scheme, it had better hold on to the facility as it is as good as non-existence.
By Ridwan Adelaja…