Abuja — The Solid Mineral Development Fund (SMDF) is ready to invest US$500 million in Nigeria's mining sector.
This is anticipated to unlock $1,5 billion in third party investments and financing.
Officials confirmed the plans at the ongoing Nigeria Mining Week, a digital event.
"We are here to promote private sector-led investments, although we do have a social investment angle to the fund," Hajia Fatima Shinkafi, executive secretary at the SMDF.
She was part of a panel discussion focused on the key challenge of funding mining operations, namely the perceived high risk by financiers.
The official mandate of the SMDF is to: "Act as a catalyst to spur development of Nigeria's mining sector by undertaking targeted sustainable, profit-oriented investments and interventions in key areas, in close coordination with stakeholders in the sector."
Shinkafi said it was clear why financiers were wary and private capital would remain a challenge as many of the projects in Nigeria were at initial stages.
This is the exploration stage. Feasibility studies are also ongoing.
"We hope to move projects to further stages where financiers are more comfortable to get involved," Shinkafi said.
She said often implementation was the problem and an innovative approach was needed, such as a combination of tools to solve the problems in the mining sector.
"Now, with post-COVID I am very hopeful, the human race is resilient. We need to be innovative with regards to finance."
Nigeria aims to diversify its economy from an over-reliance on oil.
It is the continent's biggest producer of the commodity.
Available data suggest a value between $700 billion to $1 trillion under the ground in Nigeria.
The gold estimated value has been scaled up from 1 million ounces, from the Nigerian roadmap, to 60 million ounces.
Nigerian gold valued at $1,3 billion has been illegally taken to Dubai in the last two years.
Some $2,2 billion worth of gold, tin and lead has illegally exported out of Nigeria from 2016-2018.
To date, Nigeria accounts for just 2 percent of the total gold production volumes in Africa with an estimated 854 tons.
"There is huge opportunity for growth there," the SMDF executive secretary stated.