The Securities and Exchange Commission is seeking to collaborate with the Ministry of Mines and Steel Development to address some of the challenges faced by the solid minerals sector through the Commodities Exchanges. This was stated by Director General of the SEC, Mr. Lamido Yuguda during a meeting with the Minister of State for Solid Mineral, Dr. Uchechukwu Ogah, in Abuja weekend.
Yuguda disclosed that the core function of a Commodity Exchange is to create markets by providing a setting where multiple buyers and sellers can trade commodity-linked contracts thereby reducing the costs associated with finding a buyer or seller to whom to transact. Other benefits of a Commodity Exchange include, improved quality, standardization, traceability (tracking the source of every solid mineral), price discovery, price risk management, accepted dispute resolution procedures and facilitating provision of commodity financing.
He said in the last couple of years however, Nigeria has been confronted by significant threats which include, structural fiscal challenges underlined by heavy reliance on crude oil for revenue, youth unemployment and increasing insecurity. This worrisome situation he said, has been exacerbated by the Covid-19 pandemic.
According to the SEC Boss, “In bid to address these challenges, the Federal Government is aggressively growing its agricultural and solid minerals sectors as a catalyst for economic growth and diversification. To complement government efforts and deepen the capital market, the Commission set up a market-wide technical committee to undertake a holistic assessment of the existing framework of the Nigeria Commodity Ecosystem.
“The Committee grouped its recommendations in phases: in the first phase, the objective is to ensure food sufficiency and security, price discovery and market development while in the second phase, focus would include developing strong trades in export commodities. The third phase should see the introduction of solid minerals, energy and derivatives while the last phase should be geared towards ensuring strong international presence in the local exchanges.
“In furtherance of this objective, the Commission is actively promoting the development of the commodities market especially in areas of Nigeria’s comparative advantage such as solid minerals and agriculture.
Yuguda stated that the Commission is currently implementing the 10 year Nigerian capital market master plan which was launched in 2015. It aims to: position the capital market to play a pivotal role in the emergence of Nigeria as a top 20 global economy; have a highly competitive market that engenders best practice, innovation and efficiency; and operate a capital market that combines all the elements needed to actualize Nigeria’s developmental aspirations.
In his remarks, the Minister of State in the Ministry, Dr. Uchechukwu Ogah, described solid minerals as a thing of the future and expressed the belief that in the near future it could assist greatly in the development of the economy of the country.
He said, “ We are moving away from oil because we believe that mineral is a thing of the future and the President has done a lot in initiating projects that are helping us to explore some of the few minerals that are of high value in the country.
“Apart from that, the President has equally initiated what we call Presidential Artisanal Gold Mining initiative which led to the presentation of the first locally mined artisanal miner’s gold bar to Mr. President. The proposal is that we are looking at a good policy where these golds would be explored, produced and if possible refined in Nigeria so that we can use it to shore-up our reserve and to ensure that the depreciation on our Naira is controlled when we have a good number of raw resources to shore-up our reserve.
“So we believe that there is a lot we can do together that will be mutually beneficial to both parties and our country. I believe that both of us can work purposefully to grow the sector collectively for the interest of the nation”. Ogah described the sector as a huge one that could help the country grow its, economy, as well as shore-up its external reserve and commended the SEC on the collaborative offer.