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EFFECT OF MINING SUB-SECTOR ON EMPLOYMENT LEVEL IN NIGERIA (1996-2017)

  |  Feb 24, 2019 |  01:48 pm |  116
CHAPTER ONE
INTRODUCTION

1.1 Background of the Study
Mining is the extraction of mineral occurring naturally such as coal, ores, crude petroleum and natural gas. In view of their significance to the Nigerian economy and peculiarities, the compilation of statistics of petroleum and natural gas (which are coded as division 11 of the ISIC) is discussed separately from that of solid minerals. Mining is one of the oldest economic activities in Nigeria dating back to ancient times when man crudely exploited iron and clay, and perhaps other metals, for the production of his crude implements and utensils, etc. The early European explorers, mainly German, Spanish and British, located and mined tin, galena, gold, etc. for export to their home countries (Wapwera, 2005). Records show that organised exploration activities in Nigeria commenced in 1903 and 1904 when the Secretary of State for Colonies inaugurated mineral surveys of the Southern and Northern Protectorates respectively. The principal mineral occurrences discovered by the survey teams included lignite deposits at Asaba, lead-zinc ores at several locations, tin and columbite in the south-east, monazite, limestone and lead-zinc ores at Abakaliki district. Others were coal at Enugu, brine springs at Arufu and Awe, Galena in Jos area, iron ore deposits in Niger and Kwara districts and marble deposits in Jakura. Mining activity in controlled form, however, commenced in the country in 1915 with the production of coal at the Enugu mines (Merem, 2014).
Prior to the discovery of petroleum, Nigeria was impressively sustained by agriculture and few solid minerals known at the time, namely coal, tin, columbite and gold. Coal, for example, met fully the needs of our railway system and electricity supply while tin yielded substantial foreign exchange earnings for the nation. In addition, these minerals also offered employment opportunities. The downturn in the economy and the introduction of the Structural Adjustment Programme (SAP) necessitated a review of Government thinking. The result is the crystallisation of the concept of diversification of activities, and the promotion of privatization and commercialization. By the end of 1994, Government canvassed a private sector-led economic revival programme in solid minerals, agriculture and manufacturing as a means of diversifying the economy (Adedeji, 2014) . This programme recommended the establishment of a Ministry of Solid Minerals Development, the creation of which was subsequently announced by the Head of State in his 1995 Annual Budget Speech. Improved geological data over the years have revealed that Nigeria is endowed with numerous deposits of industrial, metallic and non-metallic minerals. There are about thirty-four [34] minerals that have been identified in the country, of which only 13 are being actually mined, processed and marketed (Fayemi, 2015). They are coal (which has an export potential of 15 million tonnes per annum valued at US$1billion), kaolin, baryte, limestone, dolomite, feldspar, glass sand, ganstones [haphazard], gold [in small quantities], iron ore, lead-zinc, tin and its associated minerals and recently gypsum. The remaining twenty-one [21] minerals, though in demand are untapped. The volumes of domestic trade deficit and foreign exchange losses resulting from this deficiency are colossal.
The availability of these minerals opens up opportunities in the following areas: exports and use in domestic industries for generation of foreign exchange and internal revenue, emergence of new industrial and downstream products, increased employment of Nigerians, particularly in the rural areas where the minerals are found (Solomon, 2012). The multiplier benefits to the citizenry are enormous. In fact, the solid minerals sector can very easily be the largest employment sector of the economy, since deposits abound in virtually every State of the Federation, technology transfer and development, development of infrastructure, especially in the rural areas roads, hospitals, rail, schools and housing (Haruna, 2011).
Prior to the creation of the new Ministry of Solid Minerals Development, enquiries and demands were being made for Nigerian solid minerals, especially coal. Since inception, orders to the tune of 15 million tonnes of coal have been received. When the necessary infrastructure is put in place and the abandoned mines reactivated and modernized, coal export can yield the nation about US$1 billion per annum (Dukiya, 2013). The high demand for Nigerian coal is attributed to its low sulphur and moderate ash content. In order to increase coal production to meet the demand, Government is encouraging private investment by offering various incentives including joint venture. The Nigerian Coal Corporation is being reinvigorated and equipped and some of its obsolete equipment replaced to enhance increased production. The Federal Government has embarked on formulation of well-articulated policy objectives and programmes, the implementation of which will avail the nation of the enormous opportunities offered by our mineral wealth. The focus of these programmes is the development of the solid mineral sector with a view to improving its economic importance relative to other sectors of the economy. They are also designed to facilitate favourable climate for foreign investors in all their ramifications. The creation of the Ministry of Solid Minerals Development and the restoration of the pride of place to the sub-sector is commendable. Employment is one of the most important social and economic issues in every country. As a result, measures of utilisation and non utilisation of labour are usually of considerable concern to researchers and policy makers. The stock of unemployment usually attracts smaller attention than the flow; that is, how the rate of unemployment is moving. It is not easy to measure the rate of unemployment because of the conceptual problems of defining who is employed, unemployed or underemployed. Employment refers to the number of people who either work for pay in cash or kind, work on their own account or are unpaid family workers (NBS, 2012).
In Nigeria, Iyoha (1978) opined that employment generation is a significant drive of the growth rate of GDP in Nigeria. However, in the Nigerian economy, most employment is in the informal sector. A large proportion of these people are under self-employment with very low income (Jodie and Ogunrinola, 2011). Individuals and firms were motivated to go into informal economy activities for survival purposes following the economic downturn experienced by the country. Structurally, the country shifted from the agricultural sector to the petroleum industry following the oil boom in 1973. This resulted in unemployment, as persons moved from the agricultural sector in search of opportunities that were none existent in the official sector, thereby increasing the number of shadow economy activities. Thus, most of the time, decent works are very hard to come by in the country. With the current administration's commitment to economic diversification, and its huge dependence on mining, the sector is not expected to only develop, but to contribute meaningfully to government coffers in taxes and other levies. Today the mining sector accounts for 0.3 per cent of national employment, 0.02 per cent of exports and about $1.40 billion of Nigeria's Gross Domestic Product. Nigeria, no doubt, is endowed with vast reserves of solid minerals, including, but not limited to, precious and base minerals, industrial minerals, energy minerals, and metals. The mining sector was a significant driver of industrialisation and development in Nigeria. For instance, the discovery of tin ore, its mining and processing, brought about the establishment of the first power plant, the establishment of steel plants and steel rolling mills. Nigeria was a major exporter of tin, columbite and coal in the 1960s to early 1970s. However, activities in this sector began to decline considerably by the mid-1970s when the Federal Government claimed ownership of the sector (mining fields), which led to the withdrawal of foreign investments and a drastic cut in production in the mining industries in the country. However, successive governments at the Federal level had demonstrated the commitment to revamp the sector. In 1999, for instance, a new national focus and strategy on mining evolved and this culminated in the enactment of the Nigerian Minerals and Mining Act (2007), among other policy moves. In October 2012, a roadmap for the development of the solid mineral and metals sector, based on a value chain approach, was approved by the government.
The 2016 roadmap highlighted the status and hindrances to the development of the mineral resources of Nigeria and proposes solutions to overcome such barriers. From the 0.33 per cent contribution to the country's GDP in 2015, the mining sector achieved significant growth in 2017 and also contributed immensely to the economy of the country. This was because as part of the Economic Recovery and Growth Plan (ERGP), the government prioritised the diversification of the country's revenue base, with mining playing a key role. The sector achieved a 300 per cent increase in revenue (royalties and fees) between 2015 and 2016, and as at July 2017, the sector had already surpassed the entire revenue of N2 billion generated for the whole of 2016.The sector also experienced the clamp down of illegal miners and mining sites, sanctioned about 313 sites over non-fulfillment of environmental obligations; collaboration by the federal minister and state government to reach all mining communities and moves to halt the export of non-processed mineral out of the country. This was necessary to help reposition the sector and grow the sector (Onwuemenyi, 2016).

1.2. Statement of the Problem
The low contribution of the mining sector to the Nation’s GDP has not always been the case as Nigeria once had a booming mining industry. Like the agricultural sector the discovery of oil resulted in the gradual neglect of the sector. Before the oil boom, Nigeria’s economy was largely sustained by agriculture and exploration of solid minerals (AllAfrica.com, 2015).
Unemployment has been one of the greatest challenges facing the Nigerian economy despite the continuous and substantial efforts by government that are growth driven in order to tackle the crisis. The effort of government at various levels has not yielded desired result as the problem of unemployment continues to persist in the country. A glance at the data of unemployment and output growth in Nigeria revealed a positive relationship suggesting the existence of jobless growth. This however negates the Okun’s (1962) law that an increase in output by 3% will reduce unemployment by 1% using the case of United States. An example of the Nigerian jobless growth is the strong real income growth that was recorded at a rate of 6% or 6.5% since 2005 whereas unemployment continue rise annually from 11.9% in 2005 to 19.7% and 24.7% in 2009 and 2013 respectively (Aganga, 2010; Ogunmade, 2013).

Many studies on Nigeria’s employment situation have been devoted to unemployment and its determinants and/or its impacts on economic growth (Adebayo and Ogunrinola, 2006; Oladeji, 1994; Omotor and Gbosi 2006). However, to our knowledge, not much research attention has been given to the estimation of employment elasticity with respect to economic growth in Nigeria. Nigerian economy has not supported employment generation especially decent employment. There has been a little growth in the agricultural sector. As there has been a shift of employment into agricultural sector. As of 2009, Nigerian labour force employment by sector was 70 percent in agriculture, 20 percent in services and 10 percent in industry. The oil industry, though a major contributor to foreign exchange earnings, employs less than one percent of the labour force (Sodipe and Ogunrinola, 2011). Given the large mineral deposits in the country, Nigeria has the potential to be a market leader in the mining sector. The Roadmap for the Growth & Development of the Nigerian Mining Industry of 2016 highlights the potential for increase in the sector’s contribution to GDP from 5% in 2015 to 10% by 2020, thus supporting forecasts that a concentrated exploration of Nigeria’s solid minerals wealth may in the short term exceed her oil wealth. It is envisaged that this shift would translate to increased public and private sector investment, more employment creation for the citizenry and overall economic and financial stability for the economy (Ministry of Mines and Steel Development, 2016). This research work hopes to bring out ways in which the effect of minning sub sectors on employment level in Nigeria can help tremendously in solving the problem.

1.3   Research Questions 
Based on the research study, the following questions will form the basis of the investigation.
What is the effect of minning sub sectors on employment level in Nigeria
In what ways can minning sub sectors be used to reduce unemployment? rate in Nigeria economy?
What measures are currently being used by the government to increase the level of employment and how effective are they? 

1.4 Objectives of the Study
The broad objective is to assess the effect of mining subsectors on employment level in Nigeria. The specific objectives are:

To examine the effect of minning sub sectors on employment level in Nigeria
To Find out ways minning sub sectors can be used to reduce unemployment rate in Nigeria economy
To Analyze measures used by the government for employment generation and their effectiveness in Nigeria economy.

1.5.   Research Hypothesis 
The following research hypotheses are tested in the study:
Hypothesis One 
Ho: minning sub sectors has no significant effect on employment level in Nigeria
H1: minning sub sectors has significant effect on employment level in Nigeria.

1.6. Significance of the study
The uniqueness of this study is that the outcome will assist in re-designing mining subsector in Nigeria in such a way to improve the activity that can lead to the increased employment of teeming unemployed youths and other resources. Specifically, the study will help in restructuring the tools of fiscal policy such as tax system and federal government capital expenditure in Nigeria with a view to diversify the economy, reduce the existing high inflation rate and also raising the living standard. 
This research work will be of tremendous advantage to the teeming unemployed youth that are directly suffering from lack of unemployment opportunities in Nigeria, this is because the findings of this will direct and focus their attention to possible area of employment opportunities.
This research work is very significant because it would still be useful to other students in higher institutions of learning and those in business school in particular in the sense that it will serve as a point of reference to students that may wish to write on related project topic in future. However, the findings of this research work will be of significance to those involved in macroeconomic policies facilitating employment generation. This is because the research work shall be bring to limelight both the problem of employment generation and their solutions.
Finally, the findings of this research work will also be important to the general public in the sense that it will help in reducing the problems of unemployment in general.

1.7. Scope and limitation of the Study   
This study aims at examining the effect of mining subsector on employment level in Nigeria (1996-2017). Data and information for this study shall be sourced from National Bureau of Statistics, CBN Statistical Bulletin, Books, internet, among others.
The researcher likely constraints in the course of this research will include; inadequate materials, finance, data sourcing or data inconsistence due to poor nature of information management in Nigeria. In spite of these foreseen problems, efforts are put in place to enhance the quality of this study.

1.8.   Organization of the Study
This study will be divided into five (5) chapters and each chapter for specific purpose to make the work easier. Chapter one is Introduction, chapter two which covers literature review, theoretical literature, empirical literature, theoretical framework and gaps in literature. Chapter Three entails the research methodology. Chapter Four focuses on empirical analysis, data presentation and presentation of the result. Chapter Five (5) is devoted for the summary of the study, the conclusion on the study, recommendations and suggestions for further study.

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