EFFECT OF ECONOMIC DIVERSIFICATION THROUGH SOLID MINERALS AND ECONOMIC GROWTH IN NIGERIA FROM 1980-2015
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
An excursion into the country's economic history reveals that organized and commercial mining activities started in Nigeria long before the amalgamation of the two protectorates, which formed what is now Nigeria. Precisely, the commercial arm of the British colonial overlords: the Royal Niger Company (NRC) first engaged in mining in 1905, in consonance with the then colonial empire building philosophy of "trade following the flag". However, in order to provide legal backing to these activities, the secretary of State for the colonies had established the Minerals Survey Departments of Southern and Northern Protectorates in 1903 and 1904, respectively. It is from this date that the `timeline’ has been extended. The other types of activities worthy of note include the appointment of the first Inspector of Mines in 1908, and the creation of a single body for the entire country, namely the Geological Survey of Nigeria and the Mines Inspectorate Services in 1919 after the amalgamation of the two protectorates in 1914.
Between 1919 and 1946, nothing much happened, in terms of legislations. Rather, mining activities were conducted under ad-hoc guidelines, which were in 1946, codified into the first major legislation in the sector. This was the "Mineral Ordinance" of 1946. Furthermore, in the decade before independence, when coal mining had assumed some importance, the colonial government added the Coal Ordinance of 1950. These two pieces of legislations constituted a kind of watershed as the activities of the solid minerals sector were now orderly and had to be conducted under the rubric of the legislations. In this connection, the Vision 2010 Committee notes that "these laws vested ownership of all minerals in the British Crown and encouraged the development of solid minerals for exports only". It is necessary to note that between the 1950's and independence in 1960, nothing much occurred. Suffice it to note that other related legislations were the Explosives Act 1964, the Tin Act No.25 of 1967; and the Quarries Act 1969.
These addressed one aspect of the sector or the other as mining remained largely in the hands of foreign-owned companies. In addition, the government's attitude to the activities was that the private sector was better placed to handle the activities. A major loophole in the official attitude, perhaps because of the bias of the colonial masters, provisions for the restoration of ecology of the mining sites were largely absent. As a result, the areas that accommodated the main mining activities - Tin, Columbite and Coal - remained littered with mining pits which on the Jos Plateau for instance, have adversely affected the availability of land for other uses.
Furthermore, as part of government's initial posture of encouraging the private sector on the one hand; and continuing the policy inherited from the colonial overlords on the other, solid minerals mining remained essentially in private hands. It was not until the second development plan period (1970-74) that the government made concerted efforts to establish the Nigerian Mining Corporation (NMC) charged with the duty of direct participation in the solid minerals sector (FRN, 1975).
The direct intervention by the government was engendered by a combination of the exit of foreign companies engaged in mining as a result of the civil war, and the socialist posture of a strong interventionist government. Thus, there was the 1971 solid minerals policy, which divided the country into seven mineral zones for the purpose of "exploration for specific minerals". The specific aims of the policy were inter alia:
An intensive geological survey of the country's mineral wealth;
Proper exploitation of the known economically viable minerals;
Expansion of the Geological Survey and Mines offices, and
Relating the development of the country's mineral exploitation to
the national economy (Vision 2010, 1998:223).
While the implementation of these policies gave a boost to the solid minerals sector, it nevertheless; gradually entrenched the government in the sector. Consequently in this era of right-sizing the government, efforts are now geared to correcting the mistakes that were made in the 1970s. Some goods and services. At the pre-mining sector contribution, there is a low level equilibrium. Ceteris paribus, increased earnings of foreign exchange from the solid minerals exports, by augmenting the country's stock of resources also raise its capacity to produce. The appreciation of the real exchange rate, thanks to additional foreign exchange. Were this to be the final state of affairs, there would be no problem. This is because this analysis has assumed away the impact of the injection of additional revenue on the traded and non-traded goods (T and NT) sectors, and the allusion to the Dutch Disease.
1.2 Statement of the Problem
Extractive sectors are generally capital intensive, have weak links to the rest of the economy, and, as a rule, do not generate much employment. Therefore, investments in these sectors and their expansion have a low impact on the growth and productivity of other industries leading to a high concentration of gross domestic product (GDP) and a low impact on job creation. The high level of export concentration makes these economies vulnerable to commodity price fluctuations that can result in abrupt contraction of public resources and/or create a negative spillover effect in the rest of the economy.
1.3 Objectives of the study
This research study has the following objectives:
- To determine the distribution of solid minerals by States in Nigeria.
- To determine the mineral groupings in Nigeria.
- To determine the extent to which solid minerals contribute to Nigeria’s GDP.
1.4 Research Questions
The research study will consider the following research questions
- What is the distribution of solid minerals by States in Nigeria?
- What are the mineral groupings in Nigeria?
- To what extent do solid minerals contribute to Nigeria’s GDP?
1.5 Significance of the Study
This study analyses the rolling effect of economic diversification through solid minerals and economic growth in Nigeria from 1980-2015.
- The findings from this study would encourage the government to increase capital investment in solid mineral exploitation .
- The findings from this study would help prospective researchers in the area of the study
- The findings from this study would help the ministry to access the extent of solid mineral contribution to economic growth in Nigeria.
1.6 Scope of the study
This research work will be limited in scope to the economic diversification that took place in Nigeria through solid minerals and economic growth between 1980 and 2015. The research study will be limited to data obtained from the Nigerian National Archives on economic development, mineral resources and economic policies.
1.7 Limitation of the study
This research was limited to 2010 from 1980, five(5) years were not found which includes (2011-2015) accordingly.
Solid minerals were found in only 34 states instead of 36 states of the country (including FCT-Abuja) and the states not found were Lagos and Jigawa states
1.8 Definition of terms
The definition of terms stated below are adopted in this study
Rolling: is a moving by turning over and over on an axis, this happens in a steady and continuous way.
Effect: this is a change which is a result or consequence of an action or other cause.
Economic: the study of the use of scarce resources to satisfy unlimited human wants, therefore, it is the science that explains the choice we make
Diversification: the action of making or becoming more diverse or varied
Solid mineral: a mineral is a naturally occurring substance that is solid and inorganic, representable by a chemical formula, usually abiogenic and has an ordered atomic structure.
Economic growth: it is the increase in output or production.
1.9 Organization of chapters
This research project consists of five chapters.
Chapter one addresses the background of study of the rolling effect of economic diversification through solid mineral and economic growth in Nigeria1980-2015. This chapter also analyzes the statement of problem, objective and significance of study, scope of study, limitation of study, research questions and hypotheses which help to provide answers to related problems in a later section of the study.
Chapter two is centered on the review of literature as related to the rolling effect of economic diversification through solid mineral and economic growth in Nigeria.
Chapter three describe the method of carrying out the project study which includes research design, population of the study sample and sampling technique, nature of date, method of data collection, model specification, statistical tools and validity/reliability of the instrument.
Chapter four presents the data collected and analyzed and the hypotheses tested using a relevant statistical tool.
Chapter five summarizes the study and draws conclusion from it, suggesting solutions to the related problems.
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