Bank loans to mining sector in Q3 2023 surge by 296% — CBN
By Sodiq Adelakun
In a remarkable turn of events, Nigeria’s mining and quarrying sector has seen an unprecedented surge in bank loans in the third quarter of 2023.
According to the Central Bank of Nigeria’s (CBN) latest quarterly statistical bulletin, borrowing in the sector skyrocketed to an astonishing N12.76 billion.
This figure marks a 296 percent increase from the N3.22 billion reported in the previous quarter, signaling a strong demand for capital amidst wider economic headwinds.
The total debt of companies in the mining sector had jumped by 43 percent to N42.35 billion, a significant rise from N29.59 billion at the end of June.
This growth in financial commitment to the sector is particularly striking given the regulatory challenges faced during the same timeframe. In a sweeping move to clamp down on illegal mining operations, which have been linked to environmental harm and a rise in insecurity, no fewer than five Nigerian states imposed bans on mining activities.
Taraba State led the charge in June 2023, with Governor Agbu Kefas issuing Executive Order No. 3, which brought all mining activities to a standstill from June 23. Niger State followed suit in August under Governor Mohammed Umaru Bago’s orders, suspending all mining operations.
The trend continued into September, with Zamfara, Kebbi, and Enugu states all enacting similar prohibitions. The juxtaposition of the sector’s financial influx with the regulatory crackdowns highlights the complexities of Nigeria’s mining industry. The increased financial activity suggests a robust confidence in the sector’s prospects, despite the government’s stringent measures to curb illegal mining and its associated security challenges. The situation remains dynamic, with industry observers keenly watching how these developments will shape the future of mining in Nigeria.
These state-level interventions coincide with broader national security concerns. Previously, in 2022, the former Minister of Justice, Abubakar Malami, floated the idea of a nationwide mining ban as a strategy to undercut the financial pipelines fueling terrorist activities.
However, these measures have not been without controversy. The Miners Association of Nigeria (MAN) has criticised the state-imposed bans, arguing that such actions infringe on federal jurisdiction over mining and mineral resources.
The association’s grievances point to a contentious legal and regulatory landscape, which may further heighten the risk tendency of the mining sector.
The state bans, while aimed at curbing illegal mining and its associated security risks, also raise questions about the impact on legitimate enterprises and the broader economic implications for regions reliant on mining for revenue and employment.
