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THE IMPACT OF SOLID MINERALS RESOURCES ON ECONOMIC GROWTH IN NIGERIA: AN OLS AND CAUSALITY APPROACH
ABSTRACT
Over the past four decades, increasing emphasis has come to be placed on the potential importance of solid mineral resources to the Nigerian economy. A more common strand of research is those that tested the resource curse hypothesis to show empirically the actual relationship between natural resources and economic growth. Whereas, most of the studies have looked at various resource endowment, especially oil and metals, just a few have focused on solid mineral resources. This paper empirically tries to expose the potentiality in solid mineral resources as viable alternative to the petroleum sector, which production in Nigeria is unpredictable and the crisis in the region that produce the oil make unreliable as revenueearning source for the country. Using various econometric tools of analysis, the variables for study were tested for stationarity and all variables became stationary at first difference. In the same vein, evidence revealed that series in the model exhibit long-run equilibrium relationship judging from the Johansen cointegration result. Major findings from the OLS output showed that, a billion naira increase in solid minerals development e.g. quarrying, bauxite, metal ores, iron ore, coal etc will contribute 0.26 billion naira to the GDP of Nigeria. This contribution, though negligible is commendable owing to the fact that successive administrations in Nigeria have paid scant attention to the development of the solid minerals sector. Nigeria over the decades was trapped in the web of the Netherlands affliction known as the Dutch disease where proceeds from crude oil sale led to almost complete neglect of the non-oil sector. The study recommended that in view of the importance of the solid minerals sector as part of the federal government policy on diversifying the economy away from oil revenue, the government must formulate an explicit export-promotion programme based on principles of comparative advantage in order to encourage the growth of the sector. The government should encourage private investment, both local and foreign, through adequate provision of infrastructures, and encouragement of macroeconomic stability such as low inflation rate, stable exchange rate and assurance of security such as reduction in attacks by herdsmen across the country, kidnapping, the Boko Haram insurgency etc, that has contributed greatly in stagnating exploration activities across such regions.
KEYWORD
Solid minerals, Economic Growth, Exports, Exchange Rate, OLS