Concerns over poor investor relations may deter foreign investment in Osun

By BusinessWorld Intelligence

Recent reports from various Nigerians engaged in feasibility studies for potential investments in manufacturing and the extractive industries reveal alarming trends that could discourage foreign investment in Osun State. Many prospective investors are expressing concerns over instances of harassment and intimidation that have reportedly marred the investment climate in the region.

Anonymous sources within the extraction industry have raised serious allegations, claiming that both state authorities and influential local citizens have devised methods to intimidate investors. These methods reportedly include blackmail, extortion, and even actions reminiscent of banditry and hooliganism. Such activities have proven counterproductive, prompting potential investors to reconsider their plans and explore opportunities in other parts of Nigeria that offer a more stable and welcoming environment.

This unsettling situation has garnered international attention, particularly following the recent forced closure of a prominent gold refining company in Osun. The incident has sparked widespread outrage and raised questions about the state’s commitment to fostering a conducive investment atmosphere.

In response to these troubling developments, Dr. Dele Alake, the Minister of Solid Minerals Development, has taken proactive steps by inaugurating a fact-finding committee to investigate the contentious relationship between the Osun State Government and Segilola Resources Operating Limited (SROL). This committee was formed in the wake of the recent confrontation that led to the shutdown of the gold mining company, allegedly over tax evasion and other regulatory infractions.

During a press briefing, Dr. Alake reiterated the federal government’s stance that mining operations fall under the exclusive legislative purview of the federal government. He emphasized that sub-national authorities lack the authority to unilaterally disrupt mining activities, a practice that could deter foreign direct investment and undermine the potential for economic growth in the region.

"I want to reaffirm our position that while mining companies must adhere to all relevant laws and regulations—including tax obligations, environmental guidelines, and Corporate Social Responsibility (CSR)—it is our firm belief that state governments do not possess the power to arbitrarily shut down mining operations," the minister stated firmly.

Dr. Alake acknowledged the unique challenges of the mining sector and underscored the importance of collaboration between federal and state authorities. He highlighted the role of state governments in the Mineral Resources and Environmental Management Committee (MIREMCO), which allows states to play a significant part in overseeing mining activities while ensuring compliance with regulations.

"MIREMCO operates in all states of the federation, and its mandate is to ensure that mining companies comply with existing regulations and laws. Of the eight members on each state’s MIREMCO, five, including the chairperson, are nominated by state governments. This involvement demonstrates that states already play a crucial role in regulating mining activities, so there should be no grounds for constitutional violations," he added.

In launching the fact-finding committee, Dr. Alake outlined its Terms of Reference (ToR), which include identifying the underlying causes of the conflict between the Osun State Government and SROL, reviewing contractual obligations and agreements, and assessing the impact of SROL’s operations on local communities and the broader Osun State economy.

Dr. Mary Ogbe, the Permanent Secretary, urged state governments to cooperate with federal authorities to prevent disruptions in mining operations. She stressed that such actions could send negative signals to potential investors, ultimately hindering the influx of Foreign Direct Investment (FDI) essential for the development of the sector.

In response to the minister’s call, Dr. Dele Oye, the Vice-Chairman of the committee and representative of the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), assured the minister that the panel would carry out its responsibilities with the utmost integrity.

The newly formed committee comprises various stakeholders, including:

• Engr. Imam Ganiyu, Director of Mines Inspectorate (Chairman)
• Dr. Dele Oye, Representative of NACCIMA (Vice-Chairman)
• Mr. Pwol Dareng, Assistant Director, Organised Private Sector (Secretary)
• Dr. Vivian Okono, Director, Mines Environmental Compliance (MEC)
• Mrs. N.C. Odili, Director, Legal
• A representative from the Federal Inland Revenue Service (FIRS)
• Tayo Koleosho, Chief of Staff to the Executive Chairman
• Zubeir S. Abubakar, Representative of the Nigerian Investment Promotion Commission (NIPC)

As this committee embarks on its investigation, the eyes of both local and international investors will be closely watching, hoping for a resolution that can restore confidence in Osun State’s investment landscape.