Alake advocates mineral fairness to keep away from debt lure

The Minister of Solid Minerals Development, Dr Oladele Alake, has urged mineral-rich African countries to use the proven mineral reserves of their countries as equity in joint ventures as an alternative to loans.

He also encouraged African leaders to stop accepting financial agreements that lead to chronic indebtedness and worsen the plight of their people.

According to a statement signed by the minister’s Special Assistant to the minister on Media, Segun Tomori, on Monday, Alake stated this while speaking at a Ministerial Roundtable on Powering Africa in Washington DC, USA.

He bemoaned the unwholesome pressure exerted on African governments by loan marketers, despite global concerns over the declining capacity of many countries to settle their debts.

He said, “It is an interesting paradox that in spite of their chronic indebtedness, African countries remain the target of institutional and private loan sharks marketing short and long-term credit to ministries, departments, and agencies.

“Indeed, in the first month after a minister is sworn into office, he or she is literally bombarded by these marketers promising above-the-table and under-the-table deals.”

Alake, who doubles as the chairman of the African Minerals Strategy Group, the body of ministers of mining and mineral development in Africa, canvassed an alternative to loans, which he defined as using proven mineral reserves as equity.

He explained, “In the mining sector, in-situ equity, where the verified value of unextracted mineral can be the equity of the owner in joint ventures, is a better financial arrangement than the road to chronic indebtedness.”

He said only loans that could be liquidated by the returns on the project should be accepted to save the people from poverty.

“I have criticised the predilection of Nigerian governments to sign the dotted lines of loan agreements on the flimsiest excuse, mostly with stiff conditions, which hurt the common people. Therefore, I believe African governments should exercise patriotic circumspection and due diligence before committing their sovereignty.”

Currently, Nigeria has a total debt of N87.91tn as of the end of September 2023, according to the Debt Management Office.

The breakdown of the debt showed that external debt stood at N31.98tn ($41.59bn) and domestic debt was N55.93tn.

The statement added that the minister’s presentation set the tone for his meetings with investors on the sidelines of the conference.

Also, in top-level talks with the delegation of the United States International Development Finance Corporation, he shared the vision of the Tinubu administration to reposition the sector to compete with others to attract investments.

According to Alake, the administration has focused on developing the critical minerals sector to diversify the economy from oil.

“There are certain things that we need to bolster that sector, and all the support we can get is crucial. First and foremost is critical big data, which is exploration. We are actively working to sanitise the sector, including establishing a new security architecture to secure the mining environment,” he said.

Speaking further at the parley with the Chief Operating Officer of the US IDFC, Agnes Dasewicz, and her team, Alake stated that Nigeria has an abundance of 44 critical minerals that exist in commercial quantities; emphasising ongoing reforms by the President Tinubu administration are poised to sanitise the sector and make it attractive to big players.

In her submission, Dasewicz lauded the renewed focus on solid minerals by Nigeria, stating her corporation’s interest in providing the required support to strengthen the mining sector value chain.

“We partner with private sector players to deliver financing to mining companies to help them really expand what they can do. Some of the focus sectors that we have are critical minerals and infrastructure; health and agriculture as well as energy. We would love to do more in the critical minerals sector, and we know there is a lot of potential in that regard, in Nigeria,” she added.

Tomori added that further engagement will continue between the minister’s team, comprising Solid Minerals Development Fund Executive Secretary, Fatima Shinkafi, other top ministry officials, and representatives of the US IDFC to execute areas of partnership.