Solid minerals are important to the economic growth of many countries. Minerals can either be extracted from the surface of earth or deep in earth. A mineral is a naturally occurring substance that is solid and inorganic, representable by a chemical formula, usually abiogenic and has an ordered atomic structure. The study addressed the contributions of Solid mineral sector to Nigeria’s economic growth from 1985 to 2014. In the study, variables captured are Capital accumulation, Exchange rate and Solid mineral production rate on Gross domestic product (GDP). On the application of statistical techniques employed, the following information surfaced; Solid minerals do not contribute significantly to Nigeria’s economic growth during the chosen period of observation. Solid minerals have no significantly Granger causality relationship with gross domestic product (RGDP) in Nigeria’s economy. In generally, the R2 stood at 97 percent total variation on Gross domestic product (GDP) was affected by the influence of the increase of Capital accumulation, Exchange rate and Solid mineral production rate, shows good fit. The regression plane is statistically significant. This means that the joint influence of the explanatory variables (Capital accumulation, Exchange rate and Solid mineral production rate) on the dependent variable (GDP) are statistically significant. The results show that the coefficient of the error-correction term for the estimated is statistically significant since it shows negative at 5 percent critical level. The coefficient of ECM is -7% denotes that up to 7 years Speed of adjustment for Gross domestic product (GDP) to attain equilibrium from the short-run dynamics resulted from the independent variables. There is an evidence of first-order serial correlation (autocorrelation).









                                                            CHAPTER 1


1.1 Background of Study

An established and well managed solid minerals sub-sector will accelerate economic, social and political growth of Nigeria by provision of gainful employment and rise in national income earnings far exceeding petroleum sector. In addition, solid minerals will provide local raw materials for industries and bring vital infrastructure and wealth to the rural areas. Solid minerals have capacity to provide all important launching pad for the development of other sectors of economy as well as give sense and meaning to the oneness of Nigerian state as minerals are located in all states of the federation. This will douse the agitation for resource control. It is therefore vital that the nation explore this latent potential which has slumbered over years.

Solid minerals contributed immensely to the economic development of Nigeria in the pre-independence years. During this period, Nigeria was known for the production of coal as an energy source for electricity, railways and also for export. Tin, columbite, lead and zinc were exported. Nigeria was the largest producer of columbite at one point. The earnings from solid minerals were used to develop roads, education, hospitals and in fact develop the petroleum industry. The decline of solid minerals industry started with the discovery of oil to an extent that Nigeria became a mono product economy and vulnerable to international oil politics. The domineering role of oil did not allow past governments to attend to global challenges that evolved in the development of solid minerals. The neglect of the solid minerals sector led to disorder in the minefield with strong presence of illegal miners whose activities are characterized by inefficient mining, illegal trading of highly priced minerals, sever ecological degradation, spread of disease and huge loss of revenue to the government through smuggling.

Of recent, increased emphasis has come to be placed on the potential importance of the solid minerals sub-sector of the Nigerian economy. The quest for diversification of the national economy and in particular, the importance attached to breaking the dominance of crude oil in the export structure of the economy, has led to a focus on the sub-sector. Yet, it must be recognised from the outset that solid mineral extraction has historically been an important contributor to the national economy in the past. Solid minerals are natural resources that forms part of the earth resources which beckons on human race for exploitation, extraction, development and utilization, and since these minerals are contained within the earth on whose surface we dwell and from whose belly we extract the minerals, our attitudes have to impact on the physical environment on which the operations take place. The industry and science associated with Nigeria’s solid minerals is perhaps the oldest human activity in the “Niger Area” and most certainly, much older than the Nigerian nation itself. Therefore, the development of these resources is an important factor in the upliftment of economic values of people and certainly remains an important index on development goals as each millennium rolled past. It was also in realization of these valued opportunities that institutions such as Geological Survey of Nigeria of the 1900s were established for appraisal of Nigeria rock mineralization. It was well strengthened and had performed this task creditably and to the advantage of the colonial master swindlers. Subsequently, enormous quantity of mineral wealth especially tin and columbite and to a certain extent, gold were scooped out and hauled over the sea to the “Master”. If solid mineral deposits that are available in Nigeria are properly exploited, the solid minerals sector will be contributing to local and foreign direct investment and boosting the country’s economy thereby leading to economic growth.

  • Statement of the Problem

It has been raised that it is not just enough to list the number of minerals which are in Nigeria and which can attract the establishment of various industries, but it is very important to examine whether the scale of production of these minerals can sustain the operation of industries over time. The scale of production of various minerals in Nigeria is still very low. Mineral raw materials exploitation and production is largely in the hands of small-scale miners whose production are still determined mainly by subsistent needs which cannot meet the huge demands of industries. Large-scale production of minerals is being neglected because of various reasons some of which are listed below:

 High cost of exploitation and exploration

 Inadequate infrastructural facilities

 Lack of appropriate technology

 Problem of manpower

 Lack of finance

 Mineral resource inventory etc.

The Nigerian industrial environment is fraught with problems associated with poor infrastructure and high level of competitions by imported products. Of these problems, poor infrastructure constitute the highest impediment to the smooth operation of industries in Nigeria. Prominent amongst the infrastructural problems is the epileptic supply of power which places operators of industries with the expensive and unprofitable option of using diesel to power production equipment through electric generators. Close to the problem of power, is the poor condition of our roads especially those linking the rural to urban areas where the factories should be rightly located in order to be close to the source of raw materials. Poor road networks and dilapidated nature of existing roads make it impossible for industries to source their raw materials cheaply. At the market front, Nigerian mineral industries also face the challenge of grappling with a market which they cannot control as a result of the crisis (competition) created by the global economic trend called globalization.

Globalization is a world economic programme which creates a common global market thereby removing trade barriers between countries. Under this condition, goods are moved between countries without restriction.

Thus this study ‘’contributions of solid mineral sector to Nigeria economic growth’’ unveils the contributions of solid mineral sectors to Nigeria’s GDP which has been grossly neglected by government amongst other factors and proffer solutions on the right innovative variables to apply so as to enhance economic growth.

  • Objectives of Study

The country’s over-dependence on oil has put the nation’s economy in a precarious state as possible large income from solid minerals was ignored. It is in this regard that the Nigerian economy is argued to be over 90  dependent on oil. The oil sector has no doubt contributed to Nigeria’s economic growth. This is merely a growth without development of the more permanent sector such as the mineral sector, which, if developed, will lead to the diversification of the economy, as solid minerals development has relationship with several other sectors of the economy.

  • The major objective of this study is directed towards an analysis of the contributions of the solid minerals sector to the Nigerian economy.
  • This research work also try to study the impact of solid mineral sector on Nigeria economic growth.

1.4 Research Question                                                                                       

In other to achieve an efficient work, a research question would be included. The following research questions are stated;

1: Is solid minerals production a significant contributor to Nigeria’s real gross domestic product (RGDP)?

2: What is the short and long-run impact of solid mineral production on real gross domestic product (RGDP)?

1.5 Test of Hypothesis

Ho – solid minerals do not contribute significantly to Nigeria’s economic growth.

H1 – solid minerals contribute significantly to Nigeria’s economic growth.

1.6 Significance of the Study

Solid minerals deposit in Nigeria constitute the most viable and veritable vehicle for self-sustaining solid mineral sectors development. The findings from this study will be of immense significant in various ways. Indeed solid minerals possess enormous capabilities to grow and develop a nation more than any other sector if properly harnessed.  The resurgence of mineral commodity prices with global increase in exploration solid minerals necessitates the development of a policy framework that will ensure the efficient and effective utilisation of a nation’s mineral resources.

This study will be beneficial to policy makers in providing information for formulating effective macroeconomic policies on Nigerians developmental issues. It will equally add to the body of existing literature on Nigerian economy and as well provide inference for future investigations.

1.7 Scope and Limitation of study

The study covers the contributions of solid minerals to economic growth. In this research we will look at how solid minerals has contributed to the Nigeria’s economic growth within the year 1981-2014 and also state the problems encountered over the years as well as solutions to the problems.

This research work will be limited to the theoretical and empirical analysis of contributions, causality and cointegration of solid minerals sectors to economic growth.