Central Bank of Nigeria (CBN) SupportedNational Sub-Structure

Private Sector Integrated Support Framework (PSISF)Development Model

For Real Sector Development

inNigeria

Anthill Concepts Limited8B Kayes Street

Zone OneAbuja

Executive SummaryThe present global socio-economic realities in the light the Nigerian import substitution model has placed the economy in a precarious situationOil rents together with the distributional, consumption oriented politics that developed around them have not only underdeveloped Nigeria but also emasculated the prospects for future prosperity. Recent reports show that the economy stands the risk of complete system collapse if the international oil price falls at below $30 per barrelThe NEEDS document and WORLD BANK reports identify the Solid Minerals and Agriculture Sub Sets as critical to National development and Mass employment .The NEEDS document states that the earnings from Solid Minerals can supersede that earnings from the Oil sectorThe national sub structure model using the Private Sector Integrated Support Framework( PSISF) is presented as an alternative to the perennial economic challenges afore-listed

Inherited Prosperity Created Prosperity

• Prosperity is derived from inherited natural resources

- Prosperity is limited if:

• Government is the central actor in the economy

- Resource revenue /allocation practices that fuel corruption

and allow unproductive policies and practices exist

• Prosperity results from increasing productivity in producing goods and services

- Prosperity is unlimited

• Companies are the central actors in the economy• Government’s role is to create the enabling conditions for productivity and foster private sector development

Sources of Prosperity

PSISF DRIVEN SUBSTRUCTURE MODEL

Overview of the Prevailing National Economic Structure

Agriculture though the largest contributor in the entire non oil sector is still

bogged down by poor data and low quality private sector investment

inadequate funding ,seasonal cropping, desertification dysfunctional land

ownership and tenure

The Solid Minerals (which has the capacity to do more) and indeed the

Manufacturing sectors contributes minimally to the GDP and is bogged

down with weak or non existent industry linkages, low demand and high

cost of local products, influx of cheap and sub standard goods, low access to

finance and high interest rates

Consequently, Nigeria's social safety net is very weak, it is estimated that 44

% of the urban residents are poor while 64% of the rural dwellers live below

the poverty line

• Establishment of demand critical human and social infrastructure on clear cut and defined private sector driven, project based finance models and partnerships

• Establishment of integrated processing facilities in contigual locations in Nigeria

• Effective utilisation of available power and development of demand driven of off grid power plants on available hydro /Gas potentials to drive energy needs of value added facilities

• Establishment of solid mineral projects for the production of strategic materials for Nigeria’s economic growth

• Establishment of Animal husbandry with a target of 50 million livestock across eleven states of Northern Nigeria

• Planting of energy, food and cash crops(jathropha cactus, rice, cow pea sorghum to create Major and Minor belts across 11 northern states

Off TakerComponent

(Infrastructure)

UpstreamComponent

(Power/Energy)

DownstreamComponent

(Solid Minerals/Agriculture)

The CBN Supported (PSISF) Driven National Sub Structure Model

•Integrated Agriculture dev models

•Drilling campaigns•Metals and Steel dev

•Infrastructure development•Roads•Rail•Inland water ways

•Animal husbandry•Bio-fuel•Integrated Mine Dev projects•Aqua culture

•Power and Energy•Transportation•Sustainable Housing projects

Project Based FinanceModels Bankable

FeasibilityStudies

Project Preparatory

FundsPublicPrivate

Partnerships

PSISF FRAMEWORK

Mass Employment opportunities

AndSustainable

Project Development

Sufficiency of Raw Materials

and Products

Increased GDPInfrastructure Dev

andNational Integration

Demand Driven Production models

In theReal Sector

Expected Outcome of (PSISF) Framework on the National Economy

Achievable Milestones of the (PSISF) National Sub Structure Model

• REPOSITIONING NIGERIA AS A PRODUCTION BASED ECONOMY

• CREATION OF NEW ECONOMIC CENTRES IN NIGERIA IN

COLLOBRATION WITH LOCAL AND INTERNATIONAL FINANCE AND

DEVELOPMENT AGENCIES

• ERADICATION POVERTY AND PURSUE A MASS EMPLOYMENT

PROGRAM THROUGH( PPP) ON MINERAL EXPLORATION AND

EXPLOITATION PROGRAMS WITH STATES AND LOCAL GOVERNMENT

COUNCILS

• DIVERSIFICATION THE ECONOMY FROM OIL TO NON OIL

PRODUCTS EVEN IN THE OIL PRODUCING AREAS

THE MINERALS METALS AND STEEL SUB- SET

Overview of the Minerals, Metals and Steel Sector• The threshold of industrialization is measured in terms of

steel consumption on a global average of 130 kilograms (per capita).

• Our Nations steel consumption average with its population of one hundred and forty million persons is 10 kilograms (per capita) which translates to approximately 1.5 million tons per annum

• To be rated among the 20 industrialized nations Nigeria must improve its steel consumption from its present 1.5 million tons per annum to 18 million tons per annum

• This could only be attainable if our local production capacity is improved through the integration of the Minerals, Metals and Steel into a definitive production, consumption and infrastructure development program.

A typical Mining Value Chain

Exploration(Prospecting, Discovery,

Evaluation)

Mine Planning & Development Mining

Processing(Extraction/Smelting &

Refining)

Market (Manufacturing Industries and other

consumers)

A TYPICAL MINERAL DEVELOPMENT PROCESS

A TYPICAL MINING PROJECT FUNDING CURVE

Sources of Mineral Resources Dev Funding

• Debt• Equity• Majors• Juniors• Venture Funds• Capital Market• Slush Funds• Multilateral/Donor Agencies• Mineral Development Funds (Government)

THE NIGERIAN MINERAL RESOURCES SITUATION

Nigeria’s Minerals/Metals Sector

CommercialOperations

Policy/Regulation CapacityBuilding

Downstream

Ajaokuta Steel Co. Ltd.

Delta Steel

Inland Rolling Mills

Aluminium Smelting Company of Nigeria

Upstream MMSD (Ministry of Mines & Steel Development)

Dept. of Mines

Inspectorate

Mining Cadastre

Office (MCO)

Mines Environmental

Compliance (MEC)

Artisanal & Small Scale Mining

Steel & Non-Ferrous

Metals Dept.

Met Inspectorate

& Raw Materials

Council of Nigerian Mining Engineers & Geologists (COMEG)

Nigerian Institute of Mining &

Geosciences (NIMG)

Metallurgical Training Institution

(MTI)

National Metallurgical

Development Centre (NMDC)

Nigeria Geological

Survey Agency (NGSA)

National Steel Raw Materials

Exploration Agency

(NSRMEA)

Nigeria Mining Corporation (NMC)

National Iron-ore Mining Company

(NIOMCO)

Nigerian Coal Corporation (NCC)

Artisanal & Small Scale Miners

Overview of the ComponentsUpstream Section(Commercial operations)i. Scrapping of the NMC/NCCii. Capacity of Niomcoiii. The super concentrate is not required for ASCL but DSCL which is presently sold, the

existing lines in NIOMCO can take the Iron ore to 64% fe which is what is required for steel production in ASCL .The Implication is that unless Itakpe can improve on its production or new mines are opened, Itakpe might not meet the requirements of ASCL on its present production capacity

Downstream Sectioniv. Low utilisation of the Engineering work and lime facilities in ASCLv. Privatisation of Inland rolling mills and AlscomPolicy/ Regulationvi. Lack of Technical and financial resources for effective monitoring of mines inspectorate,

artisanal mining and environmental compliancevii. Licensing issues with MCOCapacity Buildingviii. Lack of capacity of institutes like COMEG , NMDC ,MTI ix. Wrong placement of National Steel Raw Materials Exploration agency as a capacity Dev

Agency

SPECIFIC CHALLENGES OF THE SECTOR3 PRONG

Prong 1

Absence of definitive private sector driven

business projects that tie the development

mineral and natural resources to the

development support infrastructure:- power rail,

roads through a clearly defined value added chain

model

Prong 2

Absence of External Financial and Technical

Partnerships and Joint Ventures due to:

– Lack of defined exploration and project development

programs (risk, exploration and venture funds windows in

local finance institutions)

– Lack of proper definition and understanding of the “front

and “back ends” (exploration and exploitation) in the value

chain (infrastructure development)

Prong 3 ASCL/NIOMCO

Explanatory notes

Lack of understanding of the diversified industrial portfolio of ASCL

Ajaokuta project is actually the most diversified industrial development portfolio in the entire federal economic development program and is equipped with over 37 (thirty seven) industrial manufacturing and utilities sector

Explanatory notes contd.

Inappropriate back-end programs for raw materials due to:

– Lack of defined exploration and project development programs (risk, exploration and venture funds) occasioned by low understanding of the synergy between the (exploration and exploitation of key minerals:-Dolomite, Manganese, Lime stone and other minerals) in the value chain (minerals, metals and steel development)

The result of this is that even in event of government commissioning all the lines in Niomco to produce foundry grade iron, the plant would still require equal if not larger amounts of other mineral products like limestone, Coal, Manganese, Dolomite to commence local production

Explanatory notes Contd

Structural defects of Ajaokuta Steel Plant and Itakpe Iron ore mining company

The Coke oven and the Iron Blast furnace in ASCL are complex and expensive and require continuous 24 hours operations for at least five(5) years.

ASCL is designed to process at least 1.3 million metric tonnes of Iron ore annually

Any shut down as a result of unsustainable production will result to the destruction of the two facilities with all is cost implications.

The Itakpe project is believed to have produced 3 million tonnes of iron ore with 200 thousand metric tonnes upgraded to foundry grade ore

It is not clear what % the 3 million tonnes was supplied to ASCL, but even then the quantity is still insignificant for the blast furnace requirement

AGRICULTURE SUB-SET

Agri-business represents not just a major component of the economy but a way of life for millions of Nigerians that must be reckoned with. Agribusiness in Nigeria however is plagued by myraid infrastructure challenges.Fixing the infrastructure needs for development of agribusiness in Nigeria will require a holistic approach that will involve governments at all levels, regulatory bodies as well as other stakeholders.This will require enactment of enabling laws, overhauling of relevant agencies as well as deployment of mechanisms that will ensure substantial infusion of fixed investment and working capital towards sustainable infrastructure development.

Executive Summary

Nigerian Microeconomic CompetitivenessBusiness Environment

Strengths Weaknesses

• Home market• Favourable location• Abundant resources and agricultural potential

• Electricity• Land transport• Air transport• Land use• Workforce skills• ICT capacity• Business regulation/red tape• Tariff and non-tariff barriers• Monopoly/lack of open competition• IP protection

Challenges of the Agro-Allied Sub-Sector1. The agro-allied sector was a key contributor to the pre and post colonial administrations in Nigeria, accounting for

40 percent of GDP and providing 60 percent of informal employment.

2. Out of 2.9 million hectares of arable land, only about 974,900 hectares is currently irrigated in Nigeria

3. Due to the nature of the post colonial agriculture development models and programs, Nigeria has lost a lot of grounds in the production and exports of key crops such as cocoa, groundnuts, ground nut oil and palm oil.

4. Hitherto, In the 1960s, Nigeria had over 60% of global palm oil exports, 30% of global ground nut exports, 20-30% of global ground nut oil exports, and 15 % of global cocoa exports and by the 2000s, Nigeria global share of exports of each of these crops was 5% or less.

5. The loss of production capability has turned Nigeria into a net importer of agricultural produce, with imports of some major food products like wheat (NGN 635.5 billion – USD 4.1bn), fish (NGN 96.9 billion – USD 625 million), rice (NGN 356.5 billion – USD 2.3 billion) and sugar (NGN 217 billion – USD 1.4 billion) totalling NGN 98.08 trillion (USD 632.8 billion) of food import bill for the period 2007 t0 2010.

6. Consequently Nigeria faces a large and growing global agricultural market – Rising commodity prices, growing demand for food, and opportunities in bio-fuel all present significant opportunities for Nigeria. For example, global cereal demand will grow by between 31% and 150% by 2050 depending on the region, and global commodity prices are in their second major spike in three years. Agriculture can become the main driver for more equitable income growth, compared to oil and gas sector.

7. This growth potential can be driven by increasing the acreage by 14 m ha of new agricultural land, which is approximately 38% of Nigeria’s unused arable land of 36.9m ha; and this will in turn shift 20% of production to higher value crops’.

OVERVIEW AGRI-BUSINESS IN NIGERIA

Cut across formal and informal sector of the

economy

Farming input supply companies

Producing farm firms

Food processing agribusinesses firms

Food marketing and distribution agribusiness

organizations

Un-integrated and Delinked

challenges of agro-allied sector to be Correctedby the Sub Structure Model

CONCLUSION

The Proposed National Sub-Structure Matrix1. Gausau Cluster comprising states of Sokoto, Kebbi and Zamfara States 2. Kano Cluster comprising of Kano, Kaduna and Katsina States3. Guyuk Cluster comprising, Adamawa. Bauchi, Taraba. Gombe ,Yobe and Borno States 4. FCT Cluster FCT, Niger, , Kogi States 5. Lafia Cluster comprising of Benue, Plateau and Nassarawa States6. Calabar Cluster comprising Akwa ibom, Cross river, Rivers, Bayelsa and Delta states 7. Abakaliki Cluster comprising of Abia, Enugu, Ebonyi Imo and Anambra States8. Ado-Ekiti Cluster comprising Lagos, Ondo, Edo, Ogun , Osun ,Ekiti, and Oyo states for the:• Establishment integrated solid minerals projects for essential raw materials for existing front end

facilities• Establishment of major and minor belts for the planting of cash and food crops that would drive a food

chain for human and animal consumption• Establishment of Animal husbandry and bio-fuel belt• Establishment of Gas gathering and distribution facilities• Establishment of cash crop belts of cocoa, palm ,forestry and integrated aquaculture projects• Establishment of minor belts for food and cash crops The Super Structure• These projects would be used to support existing infrastructure in the Power, Transport, Agriculture

and Solid Minerals Sub Sectors of the Nigerian Economy and also promote the use of alternative power generation, especially the existing small hydro power potentials and the integration to the existing 12,000 km rail network in the country.

The New Thinking: (PSISF) Mineral Development as the Sub

Structure of the Nigerian Economy

Increased Privatesector

Investment in Infrastructure etcin Mineral cluster

areas due toMining activities &Support industry Economic growth +

Wealth/Employment creation +Internally

Generated Revenue(IGR)

Increased Spending on

Social & Infrastructure projects

Education,Health, roads

etc

Exploration& Exploitation work

to developSolid Mineral

Clusters areas

Ajaokuta Steel Plant(primary product) billet

Oshogbo Rolling Mill

Solid Mineral Exploration program for Iron-ore, Coal, Manganese, Dolomite, Limestone, etc

Feasibility on Mine Development& Value added (Appropriate funding)

katsina Rolling Mill Jos Rolling Mill

Delta steel plant

Coal productionfacility

Integrated Mineral/InfrastructureDevelopment Matrix

Ajaokuta Steel Plant(primary product) billet

Oshogbo Rolling Mill

katsina Rolling Mill Jos Rolling Mill

Delta steel plant

National Rail track Rehabilitation prog,Trans Sahara Gas &

National gas pipelineProg,

Mines: Iron ore, Coal, Zinc, Tin

IndustrialParks Industrial

Parks

IndustrialParksIndustrial

Parks

IndustrialParks

IPPs

Offtakers

Offtakers

Offtakers Offtakers Offtakers

Offtakers

Offtakers

Offtakers

Shiroro

Abuja

2

2

2 Potential Mining Site

Keffi

Lafia

Kaduna

NguruKaura Namoda

Maiduguri

Minna

Enugu

Jos

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

Mineral DepositsIron OreCoalBentoniteGypsumBariteGoldPhosphateLimestoneMarbleDiamondsFeldsparTalcLead/ZincColumbiteTantaliteChromiumSalt

2

2

2

2

2

2

22

2

2

2

2

2

2

2

2

2

Shiroro

Abuja

Existing Hydro Power Station

Obajana

2 Existing Gas Power Station

On-going Gas Power Station

Existing Gas PipelineProposed Gas Pipeline

Oben

Lafia

Kaduna

Nguru

Maiduguri

Minna

Enugu

Jos

Gas Field

(Geregu)

2

2

2

2

2

2

2

2

2

2

kano

2

2

2

2

2

2

2

Proposed Hydro

2

Mambila

Dadin Kowa

Kainji

Jebba

Tran

s-Sa

hara

pip

elin

e

Ajaokuta Steel Plant(primary product) billet

Oshogbo Rolling Mill

katsina Rolling Mill

Jos Rolling Mill

Delta steel plant

IndustrialParks

IndustrialParks

IndustrialParks

IndustrialParks

IndustrialParks

Offtakers

Offtakers

Offtakers

Offtakers

Offtakers

A PSISF Driven Economy

Benefits of Sub Structure development Model to the Public/ Private Sectors

• Creation of economic activities (including service industry) and organized settlements within the country’s rural and semi urban centres so as to create employment opportunities and stem population explosion in the metropolis.

• Provide alternative (non-oil) source of internally generated foreign exchange that can be used to fund critical infrastructure projects.

• Provide an incentive for private sector investment in supplementary infrastructure projects e.g. roads, housing, schools, power plants, water etc around the mining clusters to service organized settlements that will evolve from the mining clusters. e.g. Jos city evolved and developed as a result of tin mining activities.

Sustainable Benefits of the Program

• JOB SECURITY• SUSTAINABLE HOUSING DEVELOPMENT• BOTTOM UP SOCIAL SERVICES SCHEME• NATIONAL INTEGRATION• MASS EMPLOYMENT• SUSTAINABLE INFRASTRUCTURE

DEVELOPMENT

QUESTIONS

THANK YOU FOR THE KIND ATTENTION