Nigeria’s mining law, fiscal incentives need rejig, says KPMG

There is an urgent need to revise the Nigerian Minerals and Mining Act (NMMA) and harmonise the fiscal incentives in the sector, KPMG has said.

The professional services firm said in its latest Nigerian Mining Sector Brief that the existing fiscal framework for investors in the mining sector “is not attractive enough and does not consider the peculiar nature of the sector, particularly, its long gestation period”.

“In addition, incentives for miners appear to be scattered in pieces of different and independent fiscal legislation, which urgently calls for harmonisation, to provide clarity to operators as to which should prevail (e.g., incentives in the NMMA and Companies Income Tax Act),” it said.

Typically, fiscal incentives should be codified into the relevant corporate tax law to avoid overlaps and/or inconsistencies, according to KPMG.

“Therefore, the federal government of Nigeria needs to revisit the entire fiscal framework for the taxation of mining operation, to bring it in alignment with global best practices to attract mining majors and foreign investors,” it said.

He said the revision of the NMMA “is long overdue, as some of the provisions may no longer be in tandem with current realities”.

KPMG pointed out that in 1999, a new national focus and strategy on mining evolved and culminated in the enactment of the NMMA in 2007, amongst other policy efforts.

“However, these efforts only led to a stunted growth in the sector, with the sector’s contributions to the nation’s Gross Domestic Product remaining at less than 1% as at 2023,” the firm said.

Nigeria is endowed with over 44 different minerals occurring in over 500 locations including gold, barite, bentonite, limestone, coal, bitumen, iron ore, tantalite/columbite, lead/zinc, barites, gemstones, granite, marble, gypsum, talc, iron ore, lead, lithium, nickel and silver, according to the report.

The government has designated coal, bitumen, limestone, iron ore, barites, gold and lead/zinc for focused development, due to the commerciality of the estimated deposits and their capacity to accelerate overall economic development through industrial linkages, KPMG said.