The minister of mines and steel development, Dr Kayode Fayemi, has disclosed that his ministry spent N700 million developing an Integrated Automation and Interactive Geographic Information System (GIS) Web Portal to improve 'Ease-of-Doing-Business' in the mining sector.
"The portal was designed for mining investors to perform business processes such as online mining licences and mineral titles applications, online payment of royalties and fees, database for revenue drive and to block revenue leakages,'' the minister stated at the launch of the portal.
The minister also mentioned other interesting features of the portal (website) but this news has provoked all kinds of angry reactions in the social media. One senator tweeted about how ridiculous it was to develop a website for N700 million. While one commenter, who claimed to be a web developer, argued that a quality website would not cost more than N200,000.
But there are some technicalities that need to be addressed in order to get a holistic picture of what the minister presented. And of course, in order to ask the right questions.
Prior to 2007, Nigeria's mining sector was characterized by a multiplicity of functions; outdated mineral titles that rendered the entire mining register opaque; and the issuance of mining rights without recourse to the Mining Act.
But the Mining and Mineral Act 2007 led to the modernization of the mining register to a computerized cadastral system. The Act guaranteed a secure mineral rights system, by recording the geographical location, ownership, type of mineral rights and validity period. It ensured compliance with environmental obligations and social agreements and also payment of required fees.
With these reforms, an aerial-survey was carried out in order to map out mining sites in Nigeria.But these were still not able to bring in the required investments, as anticipated.
One reason for this was that mining licenses in Nigeria could not be used as collaterals for loans, as it applied in other global mining hubs. Existing licenses were worth mineral titles without any reliable and proven information on estimated quantity.
Investment banks need to know the value of scientifically proven and agreed upon reserves in mines in order to calculate cash flow from assets.
Funding gaps had also been the reason for the lack of an extensive geo-science data gathering,on the part of government, in order to establish the real values of these licenses and assets.
Carrying out geo-science data gathering to map out the quantity of minerals in these sites would cost billions of dollars just as it is in the oil and gas industry. And that, certainly, was not what has been done. (Industry experts are stilled worried about the paucity of these data and the guestimates in this space.)
And of course, the interactive and payment features of the portal presented by the minister were obviously not the reason for the huge cost of the platform. Technically, the GIS feature could be the only explanation for the huge cost of the platform.
A GIS system is designed to capture, store, manipulate, analyze, manage, and present all types of geographical data - in this case mining data. Thus, some portion of the data would be spatial and could be referenced to locations on the earth.
The key activities needed to develop a GIS system are (1) preliminary survey (which had been done in the ministry) (2) establishing control centre set-ups (3) GIS and asset management software installation, integration, interphase design and configuration (3) data update, collection and map digitalization (4) Testing of the developed system.
The ball is on the minister's court to explain how these activities amounted to the figure attributed to as the cost of the website. Such explanation would douse the public outcry about the cost of this portal - or rather, website.
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