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Document of The World Bank

Report No: ICR2258

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-40120)

ON A

CREDIT

IN THE AMOUNT OF SDR 80.1 MILLION (US$120 MILLION EQUIVALENT)

TO THE

FEDERAL REPUBLIC OF NIGERIA

FOR A

SUSTAINABLE MANAGEMENT OF MINERAL RESOURCES PROJECT

November 28, 2012

Sustainable Energy, Oil, Gas, and Mining Unit Sustainable Development Network

AFCW2 Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective November 28, 2012)

Currency Unit = Nigerian NIARA 1.00 = US$ 0.01 US$ 1.00 = 157.4

FISCAL YEAR

January 1 thru December 31

ABBREVIATIONS AND ACRONYMS

ASM Artisanal and Small Scale Mining AusAID Australia Agency for International Development BPE Bureau of Public Enterprises CAS Country Assistance Strategy CASM Communities and Small Scale Mining CBUDP Community-Based Urban Development Project CDAs Community Development Associations CDD Community Driven Development CIDA Canadian International Development Authority DCA Development Credit Agreement DFID Department for International Development EIR Extractive Industries Review EMIS Environmental Management and Information System FOSTER Facility for Oil Sector Transparency GDP Gross Domestic Products GSNA Geological Survey of Nigeria Agency ISRs Implementation Status Reports JIS Joint Interim Strategy KPIs Key Performance Indicators LEEMP Local Empowerment and Economic Management Project M&E Monitoring and Evaluation MCRC Mining Community Resource Center MDGs Millennium Development Goals MEC Mines Environmental Compliance MID Mines Inspectorate Department MMSD Ministry of Mines and Steel Development MSMD Ministry of Solid Minerals Development MTR Midterm Review NCC National Coal Corporation NEEDS National Economic Empowerment and Development Strategy

NGRL National Geosciences Research Laboratory NGSA Nigerian Geological Survey Agency NIMG National Institute of Mining and Geology NMG National Institute of Mining and Geoscience NRDF Natural Resources Development Fund PAD Project Appraisal Document PCC Project Consultative Committee PDO Project Development Objectives PF Process Framework PMU Project Management Unit PRA Participatory Rural Appraisal QALP Quality Assessment of the Lending Portfolio RAMP-2 Second Rural Access and Mobility RPF Resettlement Policy and Process Framework SESA Sector Environmental and Social Assessment SMART Specific, Measurable, Achievable, Realistic and Time SMDF Solid Minerals Development Fund SMMRP Sustainable Management of Mineral Resources Project UNDP United Nations Development Program

WGI World Governance Indicator

Vice President: Makhtar Diop Country Director: Marie Francoise Marie-Nelly Sector Manager: Christopher Sheldon Project Team Leader: Ekaterina Mikhaylova ICR Team Leader: Ekaterina Mikhaylova ICR Primary Author: Sabine Cornelius

NIGERIA Sustainable Management of Mineral Resources Project

CONTENTS

B. Key Dates .................................................................................................................. vi C. Ratings Summary ...................................................................................................... vi D. Sector and Theme Codes ......................................................................................... vii E. Bank Staff ................................................................................................................. vii F. Results Framework Analysis .................................................................................... vii G. Ratings of Project Performance in ISRs ................................................................... xi H. Restructuring (if any) ................................................................................................ xi I. Disbursement Profile ................................................................................................. xi 1. Project Context, Development Objectives and Design ............................................ 1

1.1. Context at Appraisal ......................................................................................... 1

1.2. Original Project Development Objectives (PDO) and Key Indicators (as approved) .................................................................................................................... 3

1.3. Revised PDO and Key Indicators, and reasons/justification ............................ 6

1.4. Main Beneficiaries ............................................................................................ 6

1.5. Original Components (as approved) ................................................................ 6

1.6. Revised Components ........................................................................................ 8

1.7. Other significant changes ................................................................................. 8

2. Key Factors Affecting Implementation and Outcomes ......................................... 10 2.1. Project Preparation, Design and Quality at Entry........................................... 10

2.2. Implementation ............................................................................................... 13

2.3. Monitoring and Evaluation (M&E) Design, Implementation and Utilization 15

2.4. Safeguard and Fiduciary Compliance ............................................................. 16

2.5. Post-completion Operation/Next Phase .......................................................... 18

3. Assessment of Outcomes ....................................................................................... 19 3.1. Relevance of Objectives, Design and Implementation ................................... 19

3.2. Achievement of the PDO:............................................................................... 20

3.3. Efficiency ........................................................................................................ 25

3.4. Justification of Overall Outcome Rating ........................................................ 27

3.5. Overarching Themes, Other Outcomes and Impacts ...................................... 27

3.6. Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops. 28

4. Assessment of Risk to Development Outcome ...................................................... 28 5. Assessment of Bank and Borrower Performance .................................................. 29

5.1. Bank Performance .......................................................................................... 29

5.2. Borrower Performance ................................................................................... 30

6. Lessons Learned..................................................................................................... 31 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners........ 32 Annex 1. Project Costs and Financing .......................................................................... 33 Annex 2. Outputs by Component ................................................................................. 34 Annex 3. Economic and Financial Analysis ................................................................. 40 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 41 Annex 5. Beneficiary Survey Results ........................................................................... 43 Annex 6. Stakeholder Workshop Report and Result .................................................... 44 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 45 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 53 Annex 9. List of Supporting Documents ...................................................................... 54

NIGERIA: SUSTAINABLE MANAGEMENT OF MINERAL RESOURCES DATA SHEET

A. Basic Information

Country: Nigeria Project Name: Sustainable Management of Mineral Resources

Project ID: P086716 L/C/TF Number(s): IDA-40120 ICR Date: 11/28/2012 ICR Type: Core ICR

Lending Instrument: SIL Borrower: MINISTER OF FINANCE

Original Total Commitment:

XDR 80.10M Disbursed Amount: XDR 80.10M

Revised Amount: XDR 80.10M Environmental Category: B Implementing Agencies: Ministry of Minerals and Steel Development Cofinanciers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 11/26/2003 Effectiveness: 04/25/2005 04/25/2005 Appraisal: 11/01/2004 Restructuring(s): Approval: 12/14/2004 Mid-term Review: 07/01/2007 Closing: 06/30/2010 05/30/2012 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Moderately Satisfactory

Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory

Overall Bank Performance: Satisfactory Overall Borrower

Performance: Moderately Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance Indicators QAG Assessments

(if any) Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

No Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes

Original Actual Sector Code (as % of total Bank financing) Central government administration 30 30 Micro- and SME finance 5 5 Mining and other extractive 50 50 Other social services 10 10 Vocational training 5 5

Theme Code (as % of total Bank financing) Micro, Small and Medium Enterprise support 17 17 Pollution management and environmental health 17 17 Regulation and competition policy 33 33 Rural non-farm income generation 33 33 E. Bank Staff

Positions At ICR At Approval Vice President: Makhtar Diop Gobind T. Nankani Country Director: Marie Francoise Marie-Nelly Hafez M. H. Ghanem Sector Manager: Christopher Gilbert Sheldon Peter A. van der Veen Project Team Leader: Ekaterina Mikhaylova Jeffrey Davidson ICR Team Leader: Ekaterina Mikhaylova ICR Primary Author: Sabine Cornelius F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) (i) Increase the Government's long-term institutional and technical capacity to manage Nigeria's mineral resources in a sustainable way;

(ii) Establish a basis for poverty reduction and rural economic renewal in selected areas of the country via the development of nonfarm income generating opportunities through small-scale and artisanal mining. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : 50% increase in per capita income for selected small-grants recipients

Value quantitative or Qualitative)

NGN 651,844 per ASM cooperative

50% increase in per capita income in pilot project areas, as measured by village income surveys

50% increase in per cap. income for selected small-grants recipients

NGN 968,131 per ASM cooperative (49% increase)

Date achieved 07/01/2010 06/30/2010 05/30/2012 05/30/2012 Comments (incl. % achievement)

48.5% increase based on sample of 15 cooperatives out of a total of 147 ASM cooperative grant recipient entities (achieved based on small sample)

Indicator 2 : Backlog of mining title applications at the MCO cleared Value quantitative or Qualitative)

3,000 pending applications

Backlog of mining title applications at the MCO cleared

Backlog cleared

Date achieved 04/24/2005 06/30/2010 05/30/2012 Comments (incl. % achievement)

Original backlog cleared in 2005, final clean-up of inactive licenses completed in July/August 2011 (100% achieved)

Indicator 3 : Mining Cadastre Office and ASM field offices staffed, fully equipped and operational


No MCO 5 ASM field offices

1 Mining Cadastre Office and 12 ASM field offices staffed, fully equipped and operational

1 MCO 17 ASM offices


The Mining Cadastre Office's operating budget is now fully funded through the Federal budget (100% achieved)

Indicator 4 : Number of artisanal and small-scale mining associations and enterprises established and fully operational under a legal license


0 200 1030


1,030 associations/cooperatives established and licensed (100% achieved)

Indicator 5 : Adoption of new mining law, regulations - including environmental regulation for the sector


Old Mining Law - No regulation

New mining law and regulations

Adoption of new mining law, regulations including environmental regulation for the sector

Mining law and regulations adopted and gazetted.

Date achieved 04/24/2005 06/30/2010 05/30/2012 05/30/2012 Comments (incl. % achievement)

Mining law and mining regulations adopted and gazetted in 2007 and 2011, respectively. Environmental regulations have been prepared and were issued as part of the mining regulation (100% achieved)

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Number of licenses issued by Mining Cadastre Value (quantitative or Qualitative)

0 5,000 10,056


At project closing, 10,056 licenses had been granted, of which 6,300 were active licenses (100% achieved)

Indicator 2 : % of country covered by geophysical survey Value (quantitative or Qualitative)

40% 100% 100%


Airborne survey completed in late 2010. Interpretation of survey data and production of geo-physical maps, including radio-metrics, gravity and magnetics, completed in 2012 (100% achieved)

Indicator 3 : Annual solid minerals production Value (quantitative or Qualitative)

US$35 million US$100 million US$229 million

Date achieved 04/24/2005 12/31/2009 05/30/2012 Comments (incl. %

Since data regarding value of annual solid minerals production was not readily available, value of collected royalties was used as a proxy indicator (100%

achievement) achieved) Indicator 4 : New private investment in the mining industry Value (quantitative or Qualitative)

Not available USD100 million Not available


Compilation of this data was not feasible. More than 6,300 active licensesat end of Project compared to the 1,000 baseline suggests new investments. 50-60 international companies engaged in exploration (50% achieved)

Indicator 5 : Number of mining operators benefiting from financing and business development assistance, number of mining cooperatives or communities receiving grants.

Value (quantitative or Qualitative)

0 250 enterprises or cooperatives

245 ASM cooperatives and community groups


Project financed 147 sub-projects implemented by ASM cooperatives (improvements in granite/sand/gravel/laterite quarrying) and 98 community sub-projects (class-room blocks and water supply) (95%) achieved)

Indicator 6 : Sustainable environmental practices in ASM communities, as measured by EIA in pilot areas


0 100% of pilot projects/ ASM grants

100% of ASM grants


Achieved

Indicator 7 : Number of jobs formalized including self-employment in number of communities using matching grants


0 formalized jobs 200,000 formalized jobs Estimated 250,000

formalized jobs


250,000 miners previously engaged in informal and illegal mining became formally employed (100% achieved).

Indicator 8 : Direct project beneficiaries Value (quantitative or Qualitative)

0 persons 3,000 persons Estimated 15,000 persons


Estimated 12,000 ASM grant beneficiaries and 3,000 training beneficiaries. Indicator only introduced in 2009. IDA core indicator (100% achieved)

Indicator 9 : Number of female beneficiaries Value (quantitative 0 20% 28%

or Qualitative) Date achieved 04/24/2005 12/31/2009 05/30/2012 Comments (incl. % achievement)

25% of ASM beneficiaries and 40% of training participants were female. Indicator only introduced in 2009. IDA core indicator. (100% achieved)

G. Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP

Actual Disbursements (USD millions)

1 06/30/2005 Satisfactory 1.76 2 11/25/2005 Satisfactory Satisfactory 6.58 3 04/17/2006 Satisfactory Satisfactory 8.90 4 11/17/2006 Satisfactory Satisfactory 14.73 5 05/03/2007 Moderately Satisfactory Moderately Satisfactory 17.19 6 10/16/2007 Satisfactory Satisfactory 27.17 7 04/18/2008 Satisfactory Satisfactory 35.47 8 12/11/2008 Satisfactory Satisfactory 51.36 9 06/05/2009 Satisfactory Satisfactory 59.91

10 10/30/2009 Satisfactory Satisfactory 68.98 11 05/28/2010 Satisfactory Satisfactory 83.92 12 06/21/2010 Satisfactory Satisfactory 84.86 13 12/22/2010 Satisfactory Satisfactory 93.32 14 10/10/2011 Satisfactory Satisfactory 112.70 15 05/27/2012 Satisfactory Satisfactory 122.32

H. Restructuring (if any) Not Applicable

I. Disbursement Profile

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1. Project Context, Development Objectives and Design

1.1. Context at Appraisal

1. Country context. At the time of Project appraisal, Nigeria ranked low on the human development scale of the United Nations Development Program (UNDP). With a population of 133 million people and an annual population growth rate of 2.6 percent, it was the most populous country in Africa (Project Appraisal Document (PAD), Second Rural Access and Mobility Project (RAMP-2), p. 24). About 67 percent of the population lived below the poverty line, and the majority of the 80-90 million Nigerians in dire economic conditions lived in rural areas. In 2002, the country ranked 151 out 177 countries on the Human Poverty Index (HPI). In 2004, at a per capita income of US$320 per year, Nigeria experienced one of the lowest per capita Gross Domestic Products (GDP) in the world (PAD, p. 24), despite the fact that Nigeria was the second largest economy in Sub-Saharan Africa (after South Africa). While Nigeria’s per capita GDP increased to low middle-income country level at about US$1,541 in 2011 as a result of the positive economic performance over the past decade, its Human Development Index remained low at 156 out of 187 countries. Nigeria is currently behind its target to meet most of its MDGs, including halving poverty to 31 percent by 2015, given that the poverty rate was 54 percent in 2008) (PAD, RAMP-2). 2. Overdependence on the oil sector. In Nigeria, overdependence on oil-driven growth had constrained pro-poor growth since the mid-1970s. While oil export earnings had increased to about US$300 billion between the 1970s and Project appraisal in 2004, Nigeria’s per capita income had dropped by 20 percent between 1975-2004 (Sustainable Management of Mineral Resources Project (SMMRP) PAD, p. 1). In addition, macroeconomic mismanagement, weak governance and corruption, a hostile business environment, and social conflict and insecurity contributed to the decline of the non-oil part of the economy and the persistence of poverty within Nigeria (PAD, p. 24). The macroeconomic instability had disproportionately impacted the poor, given that opportunities for rural populations to improve their livelihood declined as export agriculture contracted, productivity of subsistence agriculture weakened, and non-farm income generating activities became limited. Achieving pro-poor growth and attaining the Millennium Development Goals (MDGs) thus required a special focus on rural poverty, as well as significant growth and productivity gains outside of the oil sector (PAD, RAMP-2). 3. Sector background. Organized mining in Nigeria began around 1903, and until the 1960s coal and tin were extracted and exported on a large scale (PAD, p. 2). However, with the emergence of the petroleum industry about forty years ago, the Government shifted its attention away from the mining sector. The sector’s decline, which was exacerbated by macroeconomic and socio-economic instability and poor management of state-owned enterprises led to a large-scale withdrawal of foreign investments in the sector. Existing mining operations declined, and new investment, in particular by foreign mining companies was constrained by the “absence of a comprehensive geological survey, the lack of adequate proven deposits, an unfavorable fiscal regime, and an uncompetitive legal and fiscal regulatory framework” (PAD, p. 25). At the time of appraisal, despite its substantial and widespread mineral endowment, Nigeria gained about 0.4 percent of its export earnings from solid minerals, compared to more than 20 percent in Namibia, Botswana and Zambia, and more than 50 percent of export earnings were generated in the Democratic of Congo (Eyre, 2007).

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4. Industry structure. At the time of Project appraisal, there were no medium- or large-scale mining operations in Nigeria. Active mining in the country was primarily carried out by small entrepreneurs and artisans, working deposits of precious, semi-precious stones, construction and industrial minerals. 1 Typically, these miners were not licensed or operating outside of the parameters of the licenses they held (PAD, p. 2). Government estimates available at the time of appraisal suggested that as many as 500,000 households (potentially 2-4 million people) depended directly or indirectly on informal mining for their sustenance. Common problems associated with informal Artisanal and Small-scale Mining (ASM) 2 operations included: (i) environmental degradation; (ii) social problems, including child labor and poor working conditions; (iii) national security risk due to migrations of cross-border labor; (iv) low productivity and waste of minerals due to inefficient mining methods; (v) poor health and safety conditions; (iv) high level of smuggling and loss of Government revenue” (PAD, p. 25). Given that mining was the only cash-generating activity for subsistence farmers it represented the most immediate and promising means of poverty alleviation for rural communities (PAD, p. 2). 5. Sector Reforms. In 2002, in order to correct the poor performance of the mining sector, the Government constituted a Committee under the auspices of the Ministry of Solid Minerals Development3 to draft a reform strategy for the sector. The Committee published a seven-year strategic action plan to outline the framework for renewal and growth for the sector. Nigeria’s agenda for the development of the solid minerals sector, considered one of six priority sectors crucial for economic diversification away from oil dependence was outlined in the 2003-2007 National Economic Empowerment and Development Strategy (NEEDS) (NPC, 2004). The NEEDS pursued the dual aims of fostering the development of a modern, private sector driven solid minerals sector (and thus the exploration of base metals and precious and semi-precious stones) as well as formalizing the ASM sector (NPC, 2004, p. 79). To this end, at the time of appraisal, the Government had embarked on several key sector reforms: (i) the Ministry of Mines and Steel Development (MMSD) had begun to draft a new Mining Code and competitive fiscal regime to attract new private sector investment;4 and (ii) it had prioritized the integration of artisanal and small-scale mining into the formal economy, as part of its broader poverty reduction and rural economic renewal program.

6. Rationale for Bank assistance. The Project was the first Bank-funded mining project in Africa following the World Bank Group’s Management Response to the July 2001 Extractive

1 A variety of minerals occur across Nigeria, with different types of mineral deposits clustered in different parts of the country. The main Artisanal and Small Scale Mining (ASM) mining areas include: PlateauState for tin and columbite; Niger, Zamfara, Kebbi and Kaduna States for gold; Benue and Cross River States for barites, Gombe and Yobe States for gypsum, and Oyo; Plateau and Kaduna States for gemstones; and Cross River, Ogun and Benue States for limestone for us in the manufacturing of cement (PMU). 2 According to the 2007 Minerals Act, Artisanal Mining refers to mining operations that utilize non-mechanized methods of reconnaissance, exploration, extraction and processing of mineral resources within a small-scale mining lease area. Small-scale mining refers to artisanal, alluvial and other forms of mining operations involving the use of low level technology or methods not requiring substantial expenditure for the conduct of mining operations within small-scale lease areas (MMSD, 2007). 3 In 2007, the Ministry of Solid Minerals Development (MSMD) was restructured and renamed Ministry of Mines and Steel Development (MMSD). Designated departments were created for: (i) Mines Inspection, (ii) Artisanal and Small-scale Mining, (iii) Mining Environmental Compliance, and (iv) Legal Advisor. In the remainder of this ICR, this Ministry will be referred to by its new name or acronym. 4 MSMD had also initiated work on an airborne geophysical survey, which was to cover about 35 percent of the country’s land area of interest (PAD, p. 1).

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Industries Review (EIR), 5 which affirmed the Bank’s legitimate role in the mining sector provided these interventions allowed extractive industries to contribute to poverty alleviation through sustainable development (PAD, p. 3). The Bank’s Management’s response further emphasized the need for selectivity in the Bank Group’s involvement in the extractive industries, and for greater focus on the needs of the poor, and increased focus on governance and transparency, as well as environmentally and socially sustainable development. These “rules of engagement” were fully embraced by the Project’s focus on ASM activities as well as its intent to establish a rule-based system for the administration of mining rights as well as enforce the industry’s compliance with sustainable development guidelines (PAD, p. 3). To this end, the Project was the first attempt to adopt a new governance centered approach to mining sector development, which provided valuable lessons learnt for other projects that followed. 7. The Project responded to all three strategic goals outlined in the World Bank Group’s 2004 Joint Interim Strategy (JIS) for Nigeria: (i) improvement of economic governance; (ii) creation of the conditions for rapid private-sector led, poverty-reducing growth; and (iii) enablement of local communities to take charge of their own development (World Bank, 2003). The Project further aimed to support the JIS’s goal to assist the Government, and the Bureau of Public Enterprises (BPE) in particular, in advancing the privatization of the Nigerian Mining Corporation (NMC) and the National Coal Corporation (NCC), in accordance with the 1999 Privatisation and Commercialisation Act. The Project was also fully aligned with the main themes of the Bank’s 2005-2008 Country Assistance Strategy (CAS) for Nigeria, which was completed one year after the Project became effective.6

1.2. Original Project Development Objectives (PDO) and Key Indicators (as approved) 8. Project Development Objectives. The Project Development Objectives (PDO) as stated in the PAD Results Framework (PAD, p. 30) and the Development Credit Agreement (DCA), were to: “(i) improve governance and technical capacity in the solid minerals sector to enable the Government to manage Nigeria’s mineral resources in a sustainable way; and (ii) establish a basis for poverty reduction and rural economic renewal in selected areas of the country 7 via the development of non-farm income generating opportunities through small-scale and artisanal mining and to diversify away from oil sources of income.” The PDO statement followed standards applied to World Bank financed projects at the time of project preparation, which were focused on broader economic Project outcomes. 9. Part (i) of the wording of the PDO stated in the main text of the PAD differs slightly from that in the Results framework and the DCA, given that it aims to “increase the Government’s long-term institutional and technical capacity to manage Nigeria’s mineral resources in a

5 The Extractive Industries Review entailed an independent stakeholder review process which produced a number of recommendations, to which a Bank Group’s Management response was prepared (World Bank, 2004). 6 The CAS was developed on the basis of the Government’s Poverty Reduction Strategy, i.e. the National Economic Empowerment and Development Strategy (NEEDS), which aimed to reduce poverty, create wealth and human development through reforms and initiatives in three key areas: (i) overhauling the way government works; (ii) growing the non-oil private sector; and (iii) implementing a social charter to achieve improvement in human development. Under the NEEDS the government planned to vigorously promote the exploration and exploitation of solid minerals to provide inputs for local industries as well as for exports (NPC, 2004). 7 The only minor difference in wording between the PDO in the PAD’s Results Framework and the one in the DCA is that the latter refers to the “territory of the Borrower” instead of “the country.”

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sustainable way” (PAD, p.5). The wording in Part (i) of the PDO in the Results Framework of the PAD and the DCA is more explicit as it refers to “governance and technical capacity” instead of “long-term institutional and technical capacity“. The former more appropriately reflects the Project’s focus on the socio-political, economic and institutional dimensions of governance.8 Part (ii) of the PDO is essentially identical in all three references. Given the legal status of the DCA as an official document signed between IDA and the Federal Republic of Nigeria, and the relatively minor difference in the wording, the assessment of the Project’s performance in this ICR will be based on the DCA version of the PDO. 10. Key Performance Indicators. A total of fourteen Key Performance Indicators (KPIs) were listed in the Results Framework of the PAD (see left column of Table 1 below). The indicators in the PAD’s Results Framework and those in the DCA were rather similar, and the DCA included additional indicators to measure the increase in solid minerals production and new private investment, and to track to what extent sustainable environmental practices were “functional in artisanal and small-scale mining communities, as measured by environmental impact assessments in all pilot areas” (DCA, Schedule 5, p. 35). The DCA further included two different sets indicators, which were to be monitored: (i) after Year 1, and (ii) at Midterm Review and Project completion. The assessment of the Project’s achievements in this ICR will be based on the Project completion indicators in the DCA, which are listed in the right column in Table 1 below, given that they: (i) do not differ significantly in substance from the ones in the PAD; (ii) are the legally binding indicators; and (iii) were tracked particularly during the later stages of Project implementation. Table 1: Key Performance Indicators (as specified in the PAD’s Results Framework and DCA) PDO indicators as stated in the Results Framework in Annex 3 of the PAD (pp. 30f.)

PDO indicators, as stated in the DCA9

1. New Mining Law and regulations 1. Adoption into law of new mining law and regulations, including environmental regulations for sector, by Midterm Review.

2. Mining Cadastre and ASM directorates staffed, fully equipped and operational by mid-term review - Baseline: 0; End of Project target: 12

2. Establishment and effective operation of Mining Cadastre

3. Backlog of mining titles applications at the Mining Cadastre cleared Baseline: 3,000 pending; End of Project target: 0 (PDO indicator 4 in the DCA was included as Intermediate Result indicators 5 in the Results Framework of the PAD (see below).

3. Backlog of pending applications cleared by Midterm Review; and 4. Number of new mining titles issued in a transparent and efficient manner, as evidenced by compliance with procedures and timelines set out in new mining law and regulations (Midterm Review: 1,000; Project Completion: 5,000).

8 The World Governance Indicator (WGI) Project reports aggregate and individual governance indicators for six dimensions of governance: (i) voice and accountability; (ii) political stability and absence of violence; (iii) government effectiveness; (iv) regulatory quality; (v) rule of law; and (vi) control of corruption (World Governance Indicators, 2012). 9 The indictors in the DCA were numbered but not categorized as PDO and Intermediate Outcome indicators. However, they were divided into PDO and Intermediate Outcome indicators as shown in the right column of Table 1 during Project implementation. PDO and Indicators followed standards applied by the World Bank financed project at that time.

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4. Number of ASM associations and enterprises established and fully operational under a legal license (Baseline: 0; End of Project target: 200)

5. Number of artisanal mining associations established and operating in accordance with the law (Midterm Review: 85; Project Completion: 200).

5. By project end, 50% increase in per capita income in pilot project areas, as measured by village income surveys (Baseline: to be established by village income surveys; End of Project target: 50%)

6. Increase in per capita income in pilot project areas, as measured by village income surveys which shall set the baseline (Midterm Review: 10%; Project Completion: 50%).

Intermediate Outcome indicators as stated in the Results Framework in Annex 3 of the PAD (pp. 30f.)

Intermediate Outcome indicators, as stated in the DCA

1. Number of jobs formalized, including self-employment in number of communities using matching grants (Baseline: 0; End of Project target: 200,000)

1. Volume of formal employment created during the life of the Project (Midterm Review: 50,000; Project Completion: 200,000).

2. Increase in income (%) in pilot project communities (baseline established by village income surveys)

2. Number of mining operators benefiting from financing and business development assistance; and 3. Number of mining communities or associations receiving Subproject Grants under the Project (Midterm Review: 25% of artisanal mining associations and formal artisanal miners; Project Completion: 50%)

3. Number of foreign investors operating in Nigeria (Baseline: 0; End of Project target: 20)

Indicator was not included in the DCA

4. Investment in mineral exploration (Baseline: 0; End of Project target: US$80 million)

4. New private investment in the mining sector since Effective Date (Midterm Review: $12 million; Project Completion: $100 million).

5. Increase in annual solid minerals production in the sector (Midterm Review: $12 million; Project Completion: $100 million).

5. Number of licenses issued by Mining Cadastre

This indicator was categorized in the DCA as a PDO indicator (see PDO indicator 4 above)

6. Number of geological maps published in digital format (scale: 1:250,000) (Baseline: 0; End of Project target: 100)


7. Number of mineral inventory maps (for each state) (Baseline: 0; End of Project target: 36)


8. % of country covered by geophysical survey (Baseline: 20%; End of Project target: 100%)

6. Area covered by new geological maps, as percentage of total area of the Borrower’s territory (Midterm Review: 50%; Project Completion: 100%).

9. Staff continuity (at least 2-year assignments) Indicator was not included in the DCA 7. Sustainable environmental practices functional in

artisanal and small-scale mining communities, as measured by environmental impact assessments in all pilot areas (Midterm Review: 50%; Project Completion: 100%

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1.3. Revised PDO and Key Indicators, and reasons/justification 11. The PDOs and the Key Performance Indicators were not revised. However, it was noted that the Performance Indicators were to be updated in accordance with the new format for project result frameworks, which was adopted after the Project became effective and to be aligned with the indicators that were used in the Implementation Status Reports (ISRs), which followed the new standards. This update was expected to be done concurrently with the Additional Financing. However, since the Bank dropped the proposed Additional Financing in May 2011, and since by that time the more than 90 percent of the Credit proceeds had been disbursed, the indicators were left unchanged. 1.4. Main Beneficiaries 12. The Project’s direct beneficiaries included:

• 200,000 artisanal and small-scale miners whose employment was to be formalized and whose capacity to manage the environmental, health, and social impacts of their own extractive activities was expected to improve; and another 300,000 people working in the supply of goods and ancillary services to the 200,000 ASM operators (PAD, p. 73); and

• The Ministry of Mines and Steel Development (MMSD) and its delegated authorizing agencies such as the Geological Survey of Nigeria Agency10 and the National Institute of Mining and Geology (NIMG) which were to benefit from improved institutional and regulatory capacity, which was needed in order to deliver services to private investors and artisanal miners in accordance with the proposed theme of the new proposed Minerals Act.

13. The project’s indirect potential beneficiaries included:

• About two million people living in mining communities, including disadvantaged population groups, who were to benefit from the expansion and creation of economic opportunities;

• The people of Nigeria, who were envisaged to benefit from a more robust economic position resulting from the removal of potential impediments to new private investments in the mining sector; and

• Private investors. 14. These primary target groups were not revised. 1.5. Original Components (as approved) 15. The Project objectives were to be supported by four components (see Table 2 below): (i) economic development and livelihood diversification in Artisanal and Small-scale mining (ASM) areas; (ii) strengthening governance and transparency in mining; (iii) private sector development; and (iv) Project coordination and management. Components 1 to 3 were to address the industry’s key constraints concurrently from three different angles, while Component 4 supported the attainment of the PDO indirectly by orchestrating Project activities to be undertaken under Components 1, 2 and 3.

10 The Geological Survey of Nigeria Agency’s (GSNA) name was later changed to the Nigerian Geological Survey Agency (NGSA).

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• Component 1: Economic development and livelihood diversification in Artisanal and Small scale-mining Areas (US$48.9 million at appraisal). In support of Part (ii) of the PDO, Component 1 was to empower artisanal and small-scale miners to increase the extraction and production of solid minerals in an environmentally and socially sustainable way. Key activities to be undertaken under this Component included: (i) analytical work to characterize the nature and extent of small-scale mining and associated socio-economic, community, gender and health aspects; (ii) community-driven pilot projects aimed to improve technical, environmental and social conditions of small-scale mining operations; (iii) rehabilitation and resuscitation of the Jos School of Mines located in Nigeria’s Plateau zone; (iv) creation of a Small Scale Mining Unit at the Federal level with ASM satellite field offices; (v) improved access to credit and financing in particular for medium and small-scale mining operations; (vi) support for mining-related private sector trade associations and professional interest groups; and (vii) the promotion of small-scale mining of specific commodities with emphasis on important substitution and sector development (PAD, p. 6).

• Component 2: Strengthening Governance and transparency in Mining (US$33.3 million at appraisal). In support of Part (ii) of the PDO, Component 2 sought to address governance and transparency issues, notably an unfavorable fiscal regime and an uncompetitive legal and fiscal regulatory framework that had previously deterred private investments (see paragraph 3). Nigeria’s attractiveness to private investors in mining was to be enhanced through the following activities: (i) revision and modernization of the legal and fiscal frameworks for mining; (ii) strengthening of public mining institutions to provide for transparent management of the sector; (iii) development of a computerized registry and mining Cadastre system in accordance in accordance with international best practice; and (iv) development of good environmental and social management practices within the mining sector (PAD, p. 8).

• Component 3: Private Sector Development (US$26.1 million at appraisal). Component 3

sought to support Part (i) of the PDO by addressing a key constraint to the development of the mining sector, i.e. the absence of a comprehensive geological survey and the lack of adequate proven deposits (see paragraph 3). This was largely to be achieved through the following Project activities: (i) restructuring of the State-owned mining corporations (NMC and NCC – see paragraph 6); and (ii) undertaking geophysical, geological mapping, and mineral assessments, as well as compiling and completing a large number of maps prepared by GSNA. The resulting geodata was to be made available to potential investors through a national solid minerals information system.

• Component 4 – Project Coordination and Management (US$6.9 million at appraisal).

Component 4 essentially represented the anticipated overhead costs for implementing the Project. These included the operating expenses of a Project Management Unit (PMU) within the MMSD, which was to coordinate and manage Project activities and functions, including procurement, monitoring and evaluation, financial management and record keeping, accounts and disbursement. The PCU was further responsible for coordinating Project activities with other stakeholders, i.e. other ministries and institutions at the Federal and State levels, stakeholders from the public and private sectors, and civil society (PAD, p. 8).

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Table 2: Indicative cost at Appraisal by Project Component (in US$ million) Project Components and Sub-Components Indicative Cost %

Component 1: Economic Development and Livelihood Diversification in Artisanal and Small-scale Mining Areas 48.90 42

1. Sustainability of Small-scale Mining and Livelihoods Diversification 30.16

2. Financing Program for Business Development in Mining 16.54

Component 2: Strengthening Governance and Transparency in Mining 33.28 28

1. Legal and Fiscal Reform 2.17

2. Institutional Capacity Building 16.10

3. Mining Cadastre 5.31

4. Environment and Social Management 9.70

Component 3: Private Sector Development 26.81 24

1. Restructuring of Solid Minerals State-owned Enterprises 1.10

2. Strengthening of the Geological Infrastructure 25.71

Component 4: Project Coordination and Management 6.91 6

PPF 1.8 Total (US$) 117.7 100

1.6. Revised Components 16. The Components were not revised.

1.7. Other significant changes 17. Changes in the scope or scale of planned activities. During the Project’s lifetime, the following activities were reduced in scope or cancelled altogether. Cost savings realized through these reductions were used to cover cost overruns incurred under other components (see paragraph 19).

• At the request of the Minister in 2005, it was agreed that the scope of the rehabilitation and resuscitation of the Jos School of Mines activity be expanded to upgrade the Jos School to the Nigerian Institute of Mining and Geosciences (AM, December 2005 mission) which was to play the role of a Regional Center Excellence. The Project provided more support to the infrastructure of the NIMG.

• In 2005, the number of ASM pilot studies in support of the demonstration projects to be undertaken under Component 1 was reduced from six to two, with focus on barites and gypsum (AM, October 2005 mission). The two studies were completed, but implementation of the pilot demonstration projects was subsequently dropped. This decision was motivated by the notion that the methodology was too complex and not a cost effective use of credit proceeds (as expressed reportedly by the Minister of Mines and Steel Development at the time). These changes did not adversely affect the achievement of Part (i) of the PDO, as they were offset by higher allocation for small grant programs as well as the addition of activities aimed at fostering value added in the gemstone industry by establishing a lapidary school in Jos and providing training in dimension stone quarrying – all contributing to improved ASM value addition and improving ASM efficiency and productivity following good standards.

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• The number of ASM field offices to be established under the Project was reduced from six to two in Ogoja (barites) and Nafada (gypsum) to meet the demands of artisanal and small-scale miners in the areas where the demonstration pilot projects were to be implemented (AM, October 2005 mission). Activities aimed to improve access to credit and financing in the mining sector, especially for mid-tier and small scale miners, were intentionally postponed by the Project to await the completion of the small grants program to provide lessons learnt. (Draft PP for AF, 2011). This sub-component was envisaged to be implemented under the proposed Additional Financing Credit, which did not materialize due to the Bank’s new selectivity criteria for lending in Nigeria (see paragraph 20)

• The privatization of state-owned mining enterprises was carried out solely with government funding11 (Draft PP for AF, 2011);

• The development of a National Solid Minerals Information System was postponed until the acquisition and organization of geodata was completed and could be linked to the database (preparatory work for this sub-component was to be completed under the original financing, but implementation was to be funded under the proposed Additional Financing (Draft PP for AF, 2011).

18. Changes in Implementation Schedule. The Project was approved by the World Bank’s Board of Directors on December 14, 2004 and became effective on April 25, 2005. The Project was originally scheduled to close on June 30, 2010. However, due to implementation delays (see paragraphs 33 and 34) that were actively addressed jointly by the Bank and the client but which had caused a 21-month disbursement lag by December 2008, the Midterm Review (MTR) mission recommended that an extension of the closing date be requested. This conclusion was endorsed during the review of the Project by the Bank’s Quality Assessment of the Lending Portfolio (QALP) exercise, which took place in October 2008. A 23-month extension until May 30, 2012 was subsequently requested and granted on November 24, 2009. The Project closed on May 30, 2012. 19. Changes in Funding Allocations. In 2008, the Government requested a reallocation pertaining to about US$65 million of undisbursed and uncommitted Credit proceeds, in order to raise the amounts in certain categories to enable the Project to accomplish its intended objectives (ISR No.8, December 2008). Several disbursement categories of the project, such as works, were overdrawn, while others remained underutilized, such as consultancies, due to the cancellation of the envisaged pilot projects and a reduction in the number of studies to be undertaken under the Project. A first reallocation was approved on December 5, 2008. Following a formal request by the Government, a second reallocation of Credit proceeds was approved by the Bank’s Vice President for the Africa Region on November 24, 2009, along with the above-mentioned extension of the closing date. A third reallocation of funds was requested and approved shortly before closing, on May 8, 2012, “to prepare the credit for closing and to allow the recipient to utilize all credit proceeds within the agreed work program” (Restructuring Cover Memo). This last reallocation shortly before the closing date solely represented a “cleanup” effort to advance disbursements under overdrawn categories (AM, April/May 2012 mission).

11 There was no formal assessment of the privatization of these SOEs. While the Project could have potentially helped to improve outcome of the privatization (the companies privatized remained nonperforming), given high sensitivity and political issues around the privatizations, the Government took the lead and full responsibility for this sub-component, thus freeing up the earmarked credit funds for other activities.

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20. The reasons for the overutilization of certain disbursement categories included: (i) underestimation of the cost of the airborne geophysics surveys, whose actual contract value amounted to about US$23.5 million versus the budgeted amount of US$10 million due to a sharp increase in commodity and fuel prices associated with the global mining boom (the estimate was based on per line-kilometer cost at the time of appraisal; the sharp increase in cost of surveying resulting from the commodity boom affected all surveying projects globally and was not Nigeria a specific issue); (ii) the addition of civil works, based on the incumbent Minister’s directives, for the rehabilitation of MMSD headquarters in Abuja and regional office in Jos; (iii) increased funding requirements as a result of the decision to upgrade of the Jos School of Mining to the Nigerian Institute for Mining and Geoscience (NIMG); and (iv) the allocation of additional funding to promotional activities, training/workshops and operating costs in recognition of the strategic importance of the activities to the Project’s achievement of its objectives. 21. While amount wise the changes were significant, on balance, they did not have negative impact on the achievement of the PDO and were made based on the business needs revealed during Project implementation. The large size of the credit and flexibility of the design, combined with dropping of some of the activities, allowed such decision to be made on as needed basis. It was noted that the Government had expressed interest in obtaining additional financing to finance some of the cost overruns and expand the scale of ASM support, enhance capacity building and institutional strengthening, expand activities carried out by the NGSA, and conduct additional work related to the seven strategic minerals (ISR No. 9, June 2009). While preparatory work for an additional IDA credit was completed in February 2011, the World Bank withdrew the proposed Additional Financing in May 2011 due to the Bank’s selectivity criteria, which determine the sectors that can be supported by the Bank at the same time (AM, August 2011 mission).

2. Key Factors Affecting Implementation and Outcomes 2.1. Project Preparation, Design and Quality at Entry

22. Soundness of background analysis. Project preparation took place between November 2003 (Project Concept Note Review) and November 2004 (appraisal). For the most part, the prevailing conditions were correctly diagnosed during Project preparation, in particular regulatory and governance factors that constrained the growth of the minerals sector and that adversely affected the environment, social fabrics and the health of miners and their families (PAD, pp. 24f.). The Project assessed the geological potential and sector development needs based on the existing data, such as past mining operations and geological data available at that time, global trends, and prevailing conditions in Nigeria. To comply with the safeguards’ requirements, the project prepared a Mining Sector Environmental and Social Assessment (SESA) (Wardell Armstrong, 2005), which characterized Nigeria’s mining sector and its mining potential, and appropriately identified key environmental and social management issues, notably institutional shortcomings in the implementation of environmental regulations, monitoring, and the evaluation of socio-economic impacts of mining projects. 23. It further provided specific recommendations for remedying these deficiencies such as: (i) setting up and capacity building of an environmental management unit at the Mines Department in collaboration with the EIA division of the Federal Ministry of Environment for the review and approval of EIAs; (ii) setting up of an Environmental Management and Information System (EMIS); and (iii) completion of Environmental and social baseline studies of selected mining areas (Wardell Armstrong, 2005, p. 21f.). As a precautionary measure, a Resettlement Policy and

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Process Framework (RPF) and a Process Framework (PF) were prepared to identify alternative sources of income in the event of displacement of small-scale miners. 24. Incorporation of lessons learned. According to the PAD (p. 9), Project design adequately incorporated lessons learned from Bank-supported community development as well as micro, small and medium enterprise projects that were operational in Nigeria at the time of appraisal.12 It also reflected lessons learned from ongoing similar capacity building operations for mineral sector technical assistance projects in other countries in the Africa region.13 Furthermore, findings from the World Bank’s Management Response to the Extractive Industries Review (EIR), the World Bank/DFID global Communities and Small Scale Mining initiative (CASM), and Bank supported small-scale mining projects in Mozambique and Madagascar were taken into consideration. In addition, Project design incorporated previous policy level experience with project implementation, which had highlighted the importance of “involving Government counterparts at an early stage of project preparation [as] an important factor in future project success” (PAD, p. 9). Accordingly, officials from the Ministry of Mines and Steel Development, Ministry of Finance, the (Federal) Ministry of Environment, the National Assembly, the Office of the President as well as representatives of the private sector, civil society and non-governmental organizations had been consulted at various stages of Project preparation (PAD, pp. 9f.). It was noted that the SMMRP was the first project following the Extractive Industries Review and as such became a valuable source of lessons learnt for future projects itself. 25. Assessment of Project objectives, design and components. The PDO was highly relevant at the time of appraisal, as evidenced by the fact that the mining sector was fully aligned with all three pillars (see paragraph 6) of the World Bank’s 2004 Joint Interim Strategy for country assistance and the three poles (see paragraph 6) of the Government’s 2003-2007 National Economic Empowerment and Development Strategy (NEEDS). The PDO’s continued relevance was confirmed during the MTR. The focus on improving the technical capacity under Part (i) of the PDO was appropriate, given that strengthening the capacity of key institutions was a prerequisite to the effective enforcement of legislation and regulations and sound management of the minerals sector. Regarding Part (ii) of the PDO, it is commendable that it aimed to create a basis for poverty reduction rather than the, at the time, customary higher level objective of poverty alleviation, even though the concepts of “basis for poverty reduction” and “rural economic renewal” could have been more clearly defined to make them more readily measurable, and there could have been some qualification as to which extent the Project could be held accountable for achievement (or not) of this part of the PDO. The PDO, as noted, was designed following standards at the time of appraisal and was in compliance with those. 26. Project design was consistent with the Project’s stated objectives. While the PAD did not specify a particular theory of change upon which Project design was based, it is commendable that it implicitly embraced the World Bank’s – at the time of appraisal – novel value chain approach for supporting extractive industries. The value chain approach, which marked the evolution from the historic emphasis on “merely” increasing investment to promoting sustainable development (McMahon, 2010) posits that sustainable sector development requires the following interlinked elements: (i) confidence-instilling mineral legislation and award of licenses; (ii) a

12 Annex 2 of the PAD (pp. 28f.) contained a thorough review of potential linkages of the SMMR with contemporary projects, such as the FADAMA 2 (an irrigation project), Community-Based Urban Development Project (CBUDP), Local Empowerment and Economic Management Project (LEEMP). 13 These included Burkina Faso, Ghana, Mali, Mauritania, Mozambique, Madagascar, and Tanzania (PAD, p. 9).

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clear regulatory framework and adequate capacity for monitoring and enforcement; (iii) transparent and efficient collection of taxes and royalties; (iv) efficient management and allocation of fiscal revenues; and (v) the sector contributing to sustainable socio-economic development (McMahon, 2010). 27. Implementation arrangements. Implementation arrangements were appropriately designed. The Project was to be housed in the Ministry of Mines and Steel Development, and a Project Management Unit (PMU), comprised of a combination of Ministry staff and consultants, was responsible for the day-to-day management of Project implementation. The Project relied on the Project Steering Committee at the Ministry level, which comprised director generals and heads of the departments and agencies affected by the Project. The Steering Committee was tasked with higher-level decisions and oversight of implementation. The records indicate that the PSC meetings were well attended and steered project related decision-making. 28. While it was preferable for the PMU to be staffed by permanent public sector officers rather than consultants who were likely to leave the PMU after the closing date (and jeopardizing sustainability and continuity of the “institutional infrastructure” created under the Project), the unequal pay scales for public sector staff and individual consultants have been the cause of discontent and conflict among PMU members in the case of similar Projects elsewhere. In order to harmonize the two payment scales, the Government supported the payment of “salary top ups” to public sector staff employed by the PMU through Government’s counterpart funding (ISR No. 3, April 2006). 29. The PMU was generally responsible for the procurement of all goods, services, and works under the Project. However, in the case of the envisaged pilot projects (which did not materialize), procurement was to be undertaken by local Mining Community Associations, i.e. local implementation committees, and funds were to be disbursed directly to these entities (PAD, p.12). In regards to the small grants program on the ground, the PMU engaged local NGOs and provincial departments to carry out outreach, dissemination of information and supervision of grant utilization. 30. Adequacy of Government commitment. At the time of appraisal, the Government’s commitment was inferred from its preparation of a new Minerals Act to replace the 1999 Minerals and Mining Decree, which was considered inadequate in terms of improving Nigeria’s investment climate (PAD, p. 3). This action indicated a clear commitment of the Government during Project design and preparation to implement the strategic action plan of the NEEDS Agenda related to the solid minerals sector reform (see paragraph 6 and 29). The Project objectives, components and activities were designed to contribute to the government’s objectives. 31. Stakeholder involvement and participatory process. Recognizing the need to involve Government counterparts as well as other stakeholders in all stages of project preparation Project preparation appropriately entailed a comprehensive consultative process and workshops – much in line with the Government’s own regulations for consultations – on the topics of small-scale mining, fiscal reform, and legal and regulatory issues, which culminated in “the formulation of project development objectives, a comprehensive Mining Code, and the piloting of ASM projects” (PAD, p. 10). About 700 stakeholders comprised of “individuals from the private sector, (Federal and State) Government, NGOs and civil society, participated in this National Policy Dialogue. Furthermore, according to the PAD, the Project was expected to select pilot sites through public consultation (PAD, p 10), but since this activity was dropped, the consultations on this particular issue were no longer relevant. For small grants purposes, there was no selection of sites per se – the entire country was eligible – but the Project successfully involved elements of public outreach

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and information dissemination in each mining district to ensure that communities and miners were aware of the opportunities. 32. The outreach was conducted through local NGOs under contract with the project, regional ASM officers and extension officers, as well as the PMU staff as appropriate. Primary stakeholders likely to be disadvantaged by a project activity, “due to an unavoidable loss of access to resources upon which their livelihoods depends” (PAD, p. 19) were to be identified through a Participatory Rural Appraisal (PRA) in accordance with the Project’s Resettlement Policy Framework and Process Frameworks (RPF and PF) and to be involved in the design and implementation of compensatory measures. Since the project did not cause any involuntary resettlement, these provisions of the RPF and PF remained a recommendation and did not apply. The Project files retain appropriate documentation and proof of land transfers and acquisition documenting that there was no negative loss of land or access because of Project activities. 33. Assessment of Risks. Overall, the list of identified risks was comprehensive and the risk ratings appropriate. In light of the Bank’s experience with similar operations elsewhere (while the ICR notes that the Project was to test a new approach and as such had to rely on its own judgment), the High risk rating associated with the risk of insufficient knowledge and experience with IDA’s procurement procedures was prudent (and the mitigation measures proved to be appropriate), as was the high risk rating associated with the complexity of the ASM component. Two risks were not identified at the time of appraisal, but were perhaps less unique given the nature of the government service: (i) the risk of implementation delays caused by the high turnover in high-level Ministry officials, given that during the 7-year life of the Project, eight Ministers and nine Permanent Secretaries had held appointments at the MMSD (PMU, 2012, p. 3) and by bureaucratic delays; and (ii) security-related risks particularly in the Northern parts of the country, given that Jos (location of a large regional office of MMSD, the National Institute of Mining and Geosciences (NIMG), the gem stone / lapidary school, and ASM community center), Kaduna (location of the National Geological Survey Agency (NGSA) laboratory and center for dimension stone cutting) and some of the ASM areas were strongly affected by religious and sectarian violence and rioting in 2010 and 2011. These risks were beyond the control of the Project, and the Bank’s supervision team and the PMU diligently and candidly addressed, to the extent possible, these unforeseen risks during the regularly conducted supervision missions. 2.2. Implementation 34. Extension of Closing Date. In order to ensure sufficient time for the completion of Project activities, which had been delayed by the frequent ministerial changes, the Midterm Review (MTR) mission as well as a review by the Bank’s Quality Assessment of the Lending Portfolio (QALP) recommended an extension of the closing date. In November 2009, a 23-month extension until May 30, 2012 was granted. The Project closed on May 30, 2012. It was noted that while a seven-year implementation period appears to be on a high end and is two years longer than the originally anticipated implementation period, this is a relatively standard actual implementation period for mining (and many other) technical assistance projects. In fact, the Project disbursement rate (US$120 million over seven years) was much higher than that of other SIL/TAL operations. 35. Temporary Disruption of Project implementation. For a brief four- to six-month period during the second year of implementation the Project experienced a temporary setback due to political interference. While the Project had made satisfactory progress related to the promotion of large-scale mining investment in Nigeria (Components 2 and 3), it had temporarily been unable to focus on poverty-reducing activities, such as the small grants program under

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Component 1, which accounted for about eight percent of total estimated Project baseline cost at appraisal (AM, March/April 2007 mission). In order to remedy the situation, in March/April 2007, the Bank’s task teams and the PMU promptly agreed on an Action Plan to improve project progress and performance. As observed during the subsequent mission the Government had made substantial progress towards rectifying14 the shortcomings previously observed, thus putting the Project back on track towards achieving its development objectives (AM July/August 2007 mission). 36. Midterm Review. In view of the above-mentioned temporary implementation challenges particularly in regards to ASM-related activities in the first years, the Mid-term Review (MTR) was postponed from November 2007 until May 2008 to allow the Project time to reach its mid point to make the review more relevant. The main recommendations identified during the MTR included the need to:

• formally revise the disbursement projections since the project had a disbursement lag of 20 months;

• discuss with the counterparts how activities related to EITI++ agenda could be covered under the project;

• develop actions to improve and upgrade the Moderately Satisfactory rating for M&E, procurement and counterpart funding (ISR No. 7, April 2008);

• recruit external and internal support to address capacity deficiencies in the PMU and the Ministry’s ASM department;

• consider replacing the pilot demonstration projects with more practical and cost-effective measures aimed at promoting value added in the ASM sub-sector, in particular with regard to strategic minerals, such as gemstones and dimension stones (see paragraph 16);

• consider requesting an extension of the closing date to accommodate the slower than expected implementation of Component 1 activities at the beginning of the Project.

37. The Project was also randomly selected for a review as part of the Bank’s Quality Assessment of the Lending Portfolio (QALP) exercise in October 2008; it found “no significant issues or weaknesses” but emphasized the necessity of an extension” (AM, October 2008 mission). The final (QALP) report appropriately “gave a satisfactory rating only noting the delay in implementing the ASM component which is now underway” (ISR No. 9, December 2008). 38. Implementation arrangements. Upon the successful implementation of the above-mentioned Action Plan, the Project promptly resumed the implementation of the ASM component in March 2007. In order to ensure a swift implementation pace during the remainder of the Project’s lifetime, it was recommended that external and internal support be recruited15 to enhance the capacity in the PMU and the MMSD’s ASM department. While the pilot activities, which had envisaged CDD-type implementation arrangements involving direct involvement of and disbursements to Mining Communities, did not materialize, the CDD-approach was embraced by the small grants program. Procurement under small grants was done by recipients and subsequently inspected by the PMU and assigned NGOs. The arrangement worked well with the vast majority of small grants, which were carried out in accordance with the agreed schedules and plans. However the cost of supervision was perhaps on a high side due to the multiple layers

14 For example, the Project Consultative Committee, which had been suspended for more than a year met in March 2007 and approved the 2007 budget (AM, March 2007 mission). 15 These included external consultants, such as an M&E consultant, the National Coordinator for the small grants program, and extension officers to facilitate capacity building for ASM operators, and experts in information technology, procurement, financial management, and geophysics.

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involved. To some extent the higher cost of supervision of this community driven development (CDD) program can be justified by the need to test this innovative approach, which was to be used in similar projects, to better understand the risks involved, and to ensure demonstration effects on other ASM operations. 39. Project Risk status. Throughout its lifetime, the Project carried a country record and a country environment flag. The Project risk status did not reflect the security risk (as mentioned earlier in this section) as warranted. 2.3. Monitoring and Evaluation (M&E) Design, Implementation and Utilization 40. M&E Framework Design. While the M&E system for the Project had deficiencies as mentioned in paragraph below, the majority of the performance indicators in the PAD and the DCA included end of Project target values as well as baseline values, although the latter mostly equaled zero, since “most of the available information about the social, economic, and technological character of artisanal and small-scale mining in Nigeria, as well as its scope and extent, was anecdotal in nature (PAD, p. 31), including the estimated value of Nigeria’s minerals production (PAD, p. 73). At the end of the project, the volume of mineral production was estimated based on royalties collected. To measure poverty alleviation results, an extensive program of socio-economic profiling and baseline assessments was to be undertaken during the first year of the project (PAD, p. 41). However, with reduction of pilot areas to two (as mentioned in the earlier sections) and a delay in start of the ASM components in general, the approach had to be revised later in the Project, which however still did not produce much reliable socio-economic data due to deficiencies of methodology used by the consultants and insufficient time to remedy the survey. In part compensating for this deficiency, the PMU was tracking socio-economic data related to the Project grantees which indeed was correlated with the Project (this data was used in the reporting of performance indicators)16. 41. The performance indicators used in the DCA and PAD followed an older format which was discontinued after the Project was launched. Due to the faults of earlier format, some of the Project’s Intermediate Results indicators were de facto outcome indicators, and vice versa (i.e. the offices staffed and equipped; number of associations formed and operational; and adoption of regulation indicators) (ISR No. 13, December 2010). One of the main shortcomings of the M&E framework was that it contained only one PDO and one Intermediate Results indicator pertaining to Part (ii) of the PDO.

42. Despite these shortcomings, the individual indicators demonstrated an implicit connection to the PDO, except for the “basis for rural economic renewal” aspect of Part (ii) of the PDO. The Project was able to monitor the indicators through supervision missions (see section below, paragraphs 43-44) and adjusted the Indicators to better fit with the newly adopted at that time Implementation Status Report format. As mentioned in the earlier sections, the Performance Indicators were expected to be amended to comply with the new requirements, but the amended did not happen since the the proposed Additional Financing with which it was linked was not supported in the end (as explained in paragraph 11 above).

16 Going forward, the MMSD’s new M&E department which was formed between 2011-2012, will be in charge of M&E data collection and analysis which will sufficiently improve MMSD’s reporting and analysis functions, but it will require time to build its capacity and will come too late for the purpose of this Project evaluation.

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M& E Framework Utilization 43. During the first five years of the Project’s lifetime, the supervision reports partially monitored three out of five PDO indicators (ISR No. 10, October 2009). The full set of key performance indicators, which contained a blend of PAD and DCA wording of indicators was tracked for the first time in May 2010 (ISR No. 11). In order to intensify monitoring efforts, an M&E expert was recruited in 2007 (AM, October 2007 mission) to “assist in establishing an appropriate system to monitor and evaluate the performance of the project as well as preparing the necessary report on the progress of the project as well as the mid-term review mid-term review” (AM, July/August 2007 mission). Of particular concern at the time was the measurement of the Project’s progress towards achieving Part (ii) of the PDO, pertaining to poverty reduction and rural economic renewal (ISR No. 14, October 2011). 44. The Task Team was urged to track the outcome indictor “[50 %] increase in per capita income in pilot project areas, as measured by village income surveys which shall set the baseline,” given that it represented the most directly related poverty reduction outcome indicator (ISR No. 15, May 2012). While baseline studies were completed for barites and gypsum, the socio-economic profiling did not materialize as discussed in earlier sections of this ICR. However, baseline and follow-up data has been collected diligently for the 245 small grants recipient entities, and an evaluation of the short-term impact on a sample of 15 ASM cooperatives was conducted in 2012. While these data are not statistically significant given the small sample and short time period, it shows a positive trend and is accurate being based on actual reports. With continued monitoring by the Government after the Project’s closure together with data from new projects under Government financed programs, it will provide valuable information for measuring results in the future. 2.4. Safeguard and Fiduciary Compliance 45. Safeguard Compliance. The Project was categorized as an Environmental Category B Project; it triggered safeguard policies OP 4.01 (Environmental Assessment) and Involuntary Resettlement (OP 4.12).17 Throughout Project implementation, both environmental and social safeguard compliance were complied with and consistently rated Satisfactory in supervision reports,18 and no major safeguards issues were observed during supervision missions. Compliance with environmental and social safeguards was monitored by two Abuja-based Environmental and Social Specialists on the Bank’s supervision team. With the Social Specialist’s relocation in 2010, social safeguards oversight was transferred to a HQ-based Bank staff. On the PMU’s side, two qualified Environmental and Social Specialists/Safeguards Officers trained in environmental and social issues in mining projects as well as World Bank safeguard policies, carried out site visits at least five times per year. In addition to the diligent monitoring of compliance with safeguards

17 The Project’s intention was to avoid causing any resettlement or restricting access to the extent possible. Potentially, resettlement or restriction of access could have occurred in conjunction with the implementation of the originally planned six pilot projects, small grants program and civil works, but the Project was able to avoid causing any resettlement. 18 Three safeguard instruments were prepared and disclosed in 2005 for safeguarding Project activities during Project implementation: a Sector Environmental and Social Assessment (SESA); a Resettlement Framework; and a Process Framework. All three documents were updated and re-disclosed in 2011 prior to the appraisal of the proposed Additional Financing credit (Draft PP for AF).

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policies through regular supervision missions, a one-week environmental safeguard implementation support mission was carried out in July 2010 (ISR No. 14, October 2011), and an independent environmental and social safeguards audit was conducted in 2010. 46. A 2011 implementation support mission commended the PMU for their “exemplary effort” in supervising the implementation of the small grants program, in accordance with the recommendations of the previous year’s safeguards audit (AM, August 2011 mission). Several minor safeguard concerns were observed during the July 2010 safeguards mission in relation to the small-grants program, which were promptly addressed. While the mission noted the small grants beneficiaries’ high level of awareness on occupational health issues (AM, July 2010 mission) it noticed that “some of the workers [did] not use ear musters and hand gloves, reportedly because of cost and discomfort (AM, July 2010 mission). In addition, the 2010 safeguards mission revealed that some land acquisition documentation associated with involuntary resettlement for several grants was missing in project files. By the subsequent mission this shortcoming had been remedied (ISR No. 14, September 2011). Furthermore, in 2010, a social and environmental checklist was prepared and used as mandatory documentation for small-grant applications (in case the check-list was triggered, adequate management plans were to be developed). 47. Financial Management. All audits were unqualified, and no cases of misdemeanor or fraud were uncovered in the Financial Management system. The Project’s Financial Management performance was rated Satisfactory in supervision reports throughout the Project’s lifetime, with the exception of two Moderately Satisfactory ratings at the beginning of implementation (ISRs Nos. 1 and 2), for the following reasons: a 2006 Financial Management mission had pointed out the need to upgrade the Project filing system and to pay the Project’s suppliers directly, rather than through an intermediary (AM, March 2006 mission). Several remedial measures were taken in due course: the record keeping was revamped; receipts retiring was managed in a proper manner; and the Project no longer issued payments through intermediaries (AM, March 2006 mission). Secondly, deficiencies in the maintenance of the asset register were observed. Remedial action was promptly taken in the form of the recommended embossment of fixed assets (AM, October 2008 mission). The final supervision mission in May 2012 concluded that “the project did not have any material financial management accountability and internal control issues “except for NGN81.06 million, which was trapped in the defunct Hallmark bank for over two years” (ISR No. 15, May 2012). As confirmed by the team’s financial management specialist and reflected in the audit, these funds have since been released. 48. Procurement. During implementation, two-thirds of the Project’s procurement performance ratings in supervision reports were mostly Satisfactory, and one-third of the ratings were Moderately Satisfactory or, in one instance, Moderately Unsatisfactory. The latter was related to the above-mentioned brief period of political interference, which was beyond the PMU’s control and did not have any adverse impacts on the Project beyond this period. Several minor shortcomings were observed primarily during the early stages of implementation when “a lack of attention to detail in preparation of procurement documents and poor filing (AM, March 2007 mission) was noted. To address these concerns, an additional Procurement Consultant was recruited in September 2006, and a filing procurement clerk was hired in April 2007 (AM March 2007 mission). As a result, procurement performance improved considerably after December 2006. A procurement review undertaken shortly before the Project closing date confirmed that all procedures were followed. Procurement implementation was satisfactory except that the project did not comply with the requirement for publication of NCB contract awards. This shortcoming was remedied prior to the closing date (ISR, No. 15, May 2012). There were no cases of mis-procurement under the Project.

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2.5. Post-completion Operation/Next Phase 49. The Government is committed to sustaining and expanding Project-funded investments, as evidenced, for example, by the fact that it expressed its intent to maintain the PMU going forward and progress made in setting up of the Solid Minerals Development Fund (SMDF)19 to support sector reforms. The continued development of the ASM sub-sector, as well as the continued development of human and fiscal capacity, geoscientific data gathering, and the equipment of mining institutions will be funded by the Solid Minerals Development Fund, as stipulated by the 2007 Minerals and Mining Act. With respect to the ASM sub-sector, the Government intends to finance an expansion of the small grants program and providing support to mid-tier operators. The Government has further raised the profile of the Mines Inspectorate Department, which is mandated to monitor the activities of information miners, by setting up a high-level inter-ministerial Task Force to ensure inter-agency cooperation in this matter. In addition to Government’s own initiatives, there is a strong commitment from other donors, the Canadian International Development Agency (CIDA), Australian International Aid (AusAid) and Department for International Development of UK (DfID) to provide immediate support on most important topics ranging from update of fiscal regime for mining, preparation of the spatial analysis of potential mineral resources corridors, to other activities “in supporting the Government in its effort to consolidate the reforms in the minerals sector” (AM April/May 2012 mission, p. 2). 50. The PMU is envisaged to become the implementing entity for the Solid Minerals Development Fund and coordinate other donor aid given its excellent experience and track record in managing the Project since its launch in 2005 (AM, September 2012 mission). The SMDF, in turn, at least initially while sector revenues are still modest, is to be funded by the President-approved Natural Resources Development Fund (NRDF), which is based on the road map developed for the mining sector. The purpose of the NRDF is to provide funding for the longer-term development of the sector by: (i) funding the establishment and operation of the Solid Mineral Development Fund; and (ii) provide a financing mechanism for the Nigerian mid-tier operators (AM, September 2012 mission). Progress towards establishing the SMDF has been made but its actual start up date remains to be determined. 51. The Government is also demonstrating commitment to Project-supported investments by fully funding the budget of the autonomous Mining Cadastre as well as that of the Nigerian Institute for Mining and Geoscience through the annual National Budget Appropriation. In order to achieve the full benefits of Project-supported reforms “MMSD has requested continued support from the Bank – ideally through a project, but at a minimum through a non-lending TA/policy advice following the project completion in May 2012” (ISR 15, May 2012).

19 The SMDF was envisaged under the updated Mining Act 2007. The SMDF is not yet fully established, but enabling documents are drafted and are being processed through the legislation. The SMDF will have a Board and will carry out its activities in accordance with the procedures that are being developed.

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3. Assessment of Outcomes 3.1. Relevance of Objectives, Design and Implementation Rating: Substantial 52. The Substantial overall Relevance rating is based on the following observations: • Relevance of Objectives. The continued Substantial relevance of the Project objectives is

evidenced by the fact that “positioning Nigeria’s mining sector to take advantage of the world wide minerals boom” is one of the key elements of Pillar I: Achieving Sustainable and Inclusive Non-Oil Growth of the World Bank’s Country Partnership Strategy for FY2010-FY2013 (World Bank, 2011). Both parts of the PDO are highly relevant to core focal areas of the Bank’s Country Partnership Strategy (CPS) for FY2010-FY2013 (World Bank, 2011), such as capacity development in the minerals sector, promotion of non-oil growth, and community participation. Furthermore, Nigeria’s Vision 20:2020 (NPC, 2009) identified the solid minerals sector as one of the strategic industries in the diversification of Nigeria’s largely petroleum dependent economy increasing job creation in rural areas. The Vision 20:2020’s specific objectives to which both Project objectives are highly relevant are: (i) entrench sustainability as a fundamental principle in the exploration of mineral resources; (ii) strengthen institutional and human capacity across every aspect of the metals sector; and (iii) sustain stable and attractive legal and regulatory framework for the minerals sector (NPC, 2010, p. 120).

• Relevance of Design and Implementation. The continued Substantial relevance of the

Project’s design to the Project’s objectives is evidenced by the fact that the Project’s ambitious set of activities, sub-components and components were, for the most part, implemented as planned and contributing, as intended, to the achievement of both PDOs. Overall, Project design was sound, and given that the Project: (i) supported the right activities, some of which are explicitly referred to in the Government’s Vision 20:2020 in relation to the objectives that are very similar to the two parts of the Project’s PDOs; (ii) targeted the right beneficiaries, i.e. public sector staff and institutions in charge of mining sector governance and administration; artisanal miners and communities; and potential larger scale investors benefiting from improved services and environment; and (iii) the Project design remained focused on development outcomes and was revised appropriately to maintain its relevance and mitigate initial M&E shortcomings. The Project’s activities, sub-components, components and the two parts of the PDO could have been tied together more explicitly and the Results Framework could have reflected more clearly how the Project’s elements were to support especially Part (ii) of the PDO. However, despite these presentational shortcomings, which were in line with the Project’s “trailblazing” nature as the first Bank-supported mining sector operation following the Extractive Industries Review, Project design was solid from all technical and sector specific perspectives.

• Feedback from central and local decision-makers confirmed that Project activities and

outcomes continue to be highly relevant to the federal and state-level development strategy (ISR No. 15, May 2012). Project design was well-aligned with client needs as well as global best practice since the Project combined support to local economic development with focus on training and education of the next generation of sector professionals. Furthermore, the Project design’s continued Substantial relevance during implementation is evidenced by the fact that the Project was one of the central World Bank-supported operations cited in the

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2005-2009 joint Bank-DFID Country Program Strategy under Pillar II (and Pillar II of the Government’s strategy for growth and poverty reduction (NEEDS) (World Bank, 2005).

• On balance, the overall Project relevance is Substantial.

Achievement of Project Development Objectives Rating: Moderately Satisfactory 53. At the time of approval, the Project was considered one of the most important Bank-supported operations in the sector, especially since it was the first Project to be approved following the Extractive Industries Review (see paragraph 5). At the time, Nigeria did not have any medium- or large-scale operations, and mining of precious, semi-precious, construction and industrial minerals was mainly carried out informally by artisanal and small-scale miners in environmentally and socially unsustainable ways (see paragraph 3). The Project was instrumental in initiating the sector dialogue and elevating its prominence and significance and launching a new era in solid minerals development in Nigeria. Had it not been for the Project, Nigeria’s solid minerals would not have enjoyed the level of attention they are presently receiving from the investors, and most ASM operations would have remained informal and unrecorded. The Project strong positive impact on the sector is evidenced by the fact that it features prominently in the Bank’s CPS and the Government’s Vision 20:2020. 54. The Project’s Development Objective comprised two parts: (i) Part (i) of the PDO focused on strengthening the capacity of key institutions to better manage the minerals sector and improve transparency in order to attract increased investments in and generate revenues from mining; and Part (ii) aimed to increase the socio-economic benefits from artisanal and industrial mining in project areas. There is a certain level of cross influence between the first and second Part of the PDO as improved sector governance contributes to the improved livelihoods in mining areas. In accordance with the Bank’s ICR guidelines, the two sub-objectives will be assessed separately below. The achievements by indicator are summarized in Table 3 below.

3.2. Achievement of the PDO: 3.2.1. Part (i) of the PDO: “improve governance and technical capacity in the solid minerals sector to enable the sustainable management of mineral resources” Rating: Satisfactory 55. The Project achieved the following improved governance and transparency outcomes: • Well-performing state of the art Cadastre (PDO indicator 3). In 2006 a “world-class Mining Cadastre Office” (CPS Progress Report, 2005), based on transparent, non-discretionary, publicly available procedures, was established in Abuja and granted autonomous legal status as stipulated in the 2007 Minerals Act (PDO indicator 2). It is remarkable that Nigeria, which has historically had a high incidence of corruption in oil and many other industries, now has one of the best performing cadastre systems in Africa, which instills confidence in potential investors. The mining cadastre system was audited by an international expert in 2011 and passed with flying colors. The Cadastre Office’s operating budget is now fully funded through the Federal budget (AM, April/May 2012 mission). In light of the growing volume of applications received by the Mining Cadastre’s head office in Abuja, a regional Cadastre office was opened in Jos and, with support from the Project equipped and staff trained.

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• Efficient management of mining licenses (PDO indicator 2). The original backlog of 3,000 licenses was cleared in 2005, and the final clean up was completed in July/August 2011. At Project closing, out of a total of 14,110 applications that had been received during the Project’s lifetime, a total of 10,056 licenses, i.e. more than twice the end of Project target of 5,000 licenses had been granted. Licenses are processed on an ongoing first come first served basis, and about 1,000 licenses were being processed at time of Project closing, reflecting the high demand and healthy turn-over of properties. It is also worth noting that the system maintains its regulatory integrity and that licenses are indeed revoked in the event that license holders fail to follow the stipulations. The names of revoked license holders are published quarterly on the Cadastre’s website as well as in newspapers. This represents a major transparency gain, which resulted from Project-supported activities carried out under Component 2. • Strengthened institutional and technical capacity. After nearly 40 years of inattention in the mining sector, the newly restructured Ministry of Mines and Steel Development was housed in debilitated physical premises and lacked adequately skilled staff. The Project supported extensive capacity building activities about 2,000 staff from the Ministry’s departments, the Mining Cadastre Office, the Nigerian Geological Survey Agency and the National Institute for Mining and Geosciences who were enabled to effectively perform their mandates, as evidenced by the smooth functioning of these offices, In addition to the enhancing staff’s competencies: (i) the Ministry headquarter office in Wuse II/Abuja, and the Zonal Offices in Jos, Sokoto, Kano and Kaduna were rehabilitated, refurbished and equipped with modern information and communication technology infrastructure, including the installation of an internet facility (PMU, 2012); (ii) 50 vehicles were provided to facilitate field work and mine inspections; the vehicles are being put to use as was evidenced through a tracking system that was used by the MMSD to monitor their movements and locations; and (iii) more than 2,000 Government staff benefited from extensive capacity building activities carried out under Component 2 (PMU, 2012). This combination of capacity building of the ministry’s staff and modernized equipment and upgrade of premises enabled MMSD to provide better services to the industry and put sector development back on track. • Legal and regulatory framework (PDO indicator 5). The creation of an investor-friendly legal and regulatory framework, supported out under Component 2, was one of the Project’s key accomplishments. A new Minerals and Mining Act was passed into Law by the National Assembly in 2007; and (ii) mining regulations were adopted in 2011 (ISR No. 15 May 2012). Environmental regulations were issued as part of the mining regulations. The 2007 Minerals and Metals Policy, which is embedded in the 2007 Minerals and Mining Act (MMSD, 2007) also contains provisions pertaining to the fiscal regime for mining, notably royalty payments and deductions and exemptions to incentivize investors, which partly overlap with (but not contradict) other fiscal laws.

56. The Project accomplished the following private sector development outcomes: • State of the art geoscientific data (Intermediate Outcome indicator 2). Nigeria now has one of the best and modern geophysical databases in Africa, which is a considerable achievement. At appraisal, the absence of geodata was considered the key constraint to the development of the sector. As planned, an airborne geophysical survey of the entire country was completed in 2010, of which 56 percent were Project-funded; (ii) about 3,600 geo-physical maps, including radio-metrics, gravity and magnetics, were completed in 2012, as well as radio-metric, gravity and magnetic map interpretations; and geochemical maps of various scales were produced for 49 substances; and (iii) the National Geosciences Research Laboratory (NGRL) has renewed mineral

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analysis capabilities as a result of the Project-funded refurbishment, staff training and twinning arrangements with specialist institutions in the UK and Canada. Sustaibility of the NGRL however remains an issue and will have to be addressed by the Government after the Project’s closure – including preparation of a business plan and commercialization strategy. • Increased mining activities. The available data strongly suggests that private investment in the Nigerian solid minerals sector increased over the lifetime of the Project. As mentioned above (see paragraph 55) the Mining Cadastre Office granted more than 10,000 mining titles during the Project’s lifetime, and the number of active licenses -- a proxy indicator for new private investment in the mining sector (Intermediate Outcome indicator 4) -- increased from 1,000 to over 6,300 over the Project’s lifetime (2,000 were mining licenses and more than 4,300 - exploration licenses). At the time of closing, up to 60 international companies were exploring different mineral deposits in Nigeria. While the increase in solid mineral exploration and production is influenced by many other factors (such as commodity markets and global demand) in addition to Project investments, the governance and transparency gains as well as the state of the art geodata certainly contributed to the enhanced investment activity. • The annual royalty collection value – a proxy indicator for the annual increase in solid mineral production in the sector (Intermediate Outcome indicator 3) – increased by about US$7.7 million, from US$1.4 million in 2005 to US$8.8 million in 2011 in nominal terms. The (nominal) value of mining royalties collected in 2011 was thus more than six times the royalty revenues in 2005 (see Figures 1 and 2 below). The total official sales value of solid minerals (as a proxy for mineral production) increased from about US$35 million in 2005 to nearly US$129 million in 2011 (see Figures 3 and 4 below). Figure 1: Annual solid mineral royalties Figure 2: Cumulative solid mineral royalties (in million NGN in nominal terms) (in million NGN in nominal terms)

Source: MMSD Source: MMSD 57. In sum, the Project’s achievements under Part (i) of the PDO are rated Satisfactory, given the remarkable results as explained above, especially considering the sector’s long history of neglect The Project-generated transparency and governance gains are significant, especially given that this the first Project to tackle governance in the mining sector in Nigeria, which at the time of approval, ranked 154 out of 159 in Transparency International’s Corruption Perception Index (Transparency International, 2012).

0200400600800

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Figure 3: Annual solid mineral sales value Figure 4: Cumulative solid mineral sales value (estimate, in million NGN in nominal terms) (estimate, in million NGN in nominal terms)

Source: MMSD Source: MMSD 3.2.2. Achievement of Part (ii) of the PDO Rating: Moderately Satisfactory 58. Recognizing the important role attributed by the Government to artisanal and small-scale mining in reducing poverty and accelerating sustainable rural development, the Project contributed significantly to the development and formalization of the Artisanal and Small Scale Mining sector in Nigeria, as a basis for poverty reduction and rural economic renewal. as evidenced by the following accomplishments: • Improved governance and capacity achieved under Part (i) of the PDO directly contributes

to better services to the ASM sub-sector and communities through formalized employment, training and extension services and better infrastructure.

• About 251,500 miners who had previously engaged in informal and illegal mining became formally employed. The total number of formal jobs created under the Project was thus 25 percent higher than the targeted number of 200,000 jobs at Project completion (Intermediate Outcome Indicator 7). This outcome was the direct result of effective application of new tools and approaches by MMSD’s staff in both Abuja and in the field (Component 1 of the Project).

• Improved livelihoods of ASM operators (PDO indicator 4 and Intermediate Outcome Indicator 5). A total of 245 grants amounting to about US$9 million were extended 147 ASM cooperatives as well as 98 community entities. The ASM grants supported sub-projects to enhance granite, sand, gravel and laterite quarrying, and nearly 85 percent of the community grants supported the construction/rehabilitation of classroom blocks and water schemes (see Annex 2 for more detail). The number of ASM and communities reached under the Project is remarkable and by far exceeds achievements of other mining Projects implemented in sub-Saharan Africa (see for example mining projects in Uganda, Tanzania or Mozambique). Preliminary results based on the first batch of 15 grant-supported ASM cooperatives suggest, on average, a 49 percent increase in annual cooperative incomes from about US$4,150 in 2010 to about US$6,160 at the end of 2011. At an average cooperative membership of 50 miners, this translates into an increase in annual income from about US$83 to about US$123 per cooperative member.

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• Formation of ASM associations and cooperatives (PDO indicator 4). During the Project’s

lifetime, 1,030 ASM licenses were issued, out of which 475 licenses had been certified as of Project closing. This was twice the number the end of Project target value of 200 fully compliant associations. (The remaining 555 associations and cooperatives had received their licenses and were awaiting certification, given that the MMSD’s ASM department was not able to keep with the high volume of license applications.)

• Development of gemstone and dimension stone industries. The Project was instrumental in the creation of the now flourishing gemstone and dimension stone industries, both of which are of high priority to the Government due to their high potential for import substitution revenue generation, and employment creation (PMU, 2012, Proposal). A Lapidary school established in Jos with Project support succeeded in training 15 commercial cutters as well as nine trainers who, in turn, are expected to train 500 commercial cutters within the next five years. Similarly, training in dimension stone quarrying (from primitive blasting to cutting of square slabs) led to the opening of six new dimension stone processing plants (PMU, 2012). These activities have this significantly advanced the potential for local value-addition, especially in the gemstone sector.

• Resuscitation of professional mining education. The project was addressing two levels of

professionals - direct mining and geology professionals in pursuit of employment in Nigeria’s mining sector, as well as accounting and finance professionals pursuing employment with financial institutions and Government agencies focusing on mining industry. In addition to the set up and rehabilitation of the National Institute of Mining and Geosciences the Project supported mainstreaming mining related courses in business schools and universities. The practical post–graduate instruction in NIMG has become operational; the first batch of 33 students graduated in late 2011, half of who succeeded in finding relevant employment by now; a second batch enrolled in February 2012 and is expected to graduate in April 2013 (ISR 15, October 2011 and AM, September 2012 mission). The number of graduates is being rationed to be in line with the industry demand. In addition, the project developed courses and trained university lecturers, who have subsequently mainstreamed the mining accounting, governance, taxation and finance into the curricula of several educational institutions in Nigeria.

59. In sum, the Project’s achievements under Part (ii) of the PDO did establish a basis for poverty reduction and rural economic renewal given that, among other results, the Project accomplished the following results: (i) the small grants program supported artisanal and community sub-projects, which, based on preliminary results, improved productivity, occupational safety and livelihoods in ASM communities; (ii) significant progress was made in the development of two strategic industries, i.e. the production of gemstones as well as the local mining of dimension stones, which play an important role in the development of local commercial and residential construction markets. While these achievements are significant, a Moderately Satisfactory rating was chosen, given that, due to shortcomings in the initial design and utilization of the M&E framework, the collected data does not fully capture the results in terms of the actual increase of incomes and livelihoods among ASM operators and communities even though they are tangible through project support and are visible on the ground. This is evidenced though increasing number of ASM operators registering and forming cooperatives (the on-going process that can be tracked through the Mining Cadastre Office), number of ASM receiving services from ASM departments in the districts, and improved mining practices as evidenced by environmental audits carried out by the Environmental Department of MMSD. Better mining practices in dimension

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stone sector can also be seen through the quarries that received training in particular in Kaduna area. Given the Satisfactory rating of the Project’s achievements of the Part (i) of the PDO, and a Moderately Satisfactory rating for Part (ii) of the PDO, the Project’s overall achievement of its PDO is rating Moderately Satisfactory.

Table 3: PDO indicators, as stated in the DCA (Schedule 5, pp. 34ff.) PDO indicators, as stated in the DCA (Schedule 5, pp. 34ff.) 1. Adoption into law of new mining law and regulations, including environmental regulations for sector, by Midterm Review. Baseline: No; Project Completion: Yes Achieved. Mining law and mining law regulations were adopted and gazetted in 2007 and 2011,

respectively. Environmental regulations have been prepared and were issued as part of the mining regulations.

2. Establishment and effective operation of Mining Cadastre Baseline: No Mining Cadastre Office; Project Completion: Mining Cadastre office established Achieved: A central Mining Cadastre Office was established in Abuja in early 2006 and is fully

operational. The Cadastre Office’s operating budget is now fully funded through the Federal budget. 3. Backlog of pending applications cleared by Midterm Review, and number of new mining titles issued in a transparent and efficient manner, as evidenced by compliance with procedures and timelines set out in new mining law and regulations Baseline: backlog of 3,000 pending licenses (PAD, p.37); Midterm Review: 1,000; Project Completion: 5,000). Exceeded: The original backlog of 3,000 licenses was cleared in 2005, and the final clean up to cancel

inactive licensees was completed in July/August 2011. At Project closing, out of a total of 14,110 applications received during the Project’s lifetime, a total of 10,056 licenses had been granted, twice as many as the target value of 5,000. At closing, mining operators held a total of 6,300 valid licenses. In light of the growing volume of applications received by the Mining Cadastre’s head office in Abuja, the mining cadastre functions required decentralization to improve quality of service and efficiency. The regional office in Jos was therefore supported through staff training and equipment under the Project.

4. Number of artisanal mining associations established and operating in accordance with the law Baseline: x Midterm Review: 85; Project Completion: 200).

More than fully achieved. 1,030 associations/cooperatives were established, of which 475 have been certified and inspected, which more than twice the targeted number of 200 associations/cooperatives.

5. Increase in per capita income in pilot project areas, as measured by village income surveys which shall set the baseline Baseline per ASM cooperative: NGN 651,844 Midterm Review: 10%; Project Completion: 50% Achieved based on sampled collectives. The planned socio-economic survey was not carried out due to

its overly complex design. However, a sample of 15 ASM cooperatives (out of a total of 147 ASM cooperative grant recipient entities) tracked over a 1.5 year-period experienced, on average a 49 percent increase in cooperative income from about US$4,150 in 2010 to about US$6,160 at the end of 2011. At an average cooperative membership of 50 miners, this translates into an increase in annual income from about US$83 to about US$123 per cooperative member.

3.3. Efficiency Rating: Substantial 60. The Project was essentially a technical assistance/capacity building operation with investment components (civil works construction of relevant to the sector, such as Government buildings and facilities), which, as such, did not lend itself to an economic and financial investment analysis. Similar to other World Bank-supported projects of this nature the economic and fiscal analysis

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section in the PAD did not contain Net Present Value/Economic Rate of Return or cost effectiveness calculation, The efficiency assessment in the PAD was based on “economic indicators that can be projected and compared, such as the estimated value of mineral exports, fiscal revenues coming from the sector, and the amount of new investment in the near future” (p. 15).20 According to the PAD: (i) the value of the solid minerals annual gross production from artisanal and small-scale mining was to increase to US$75-125 million by 2010; (ii) foreign investment was to boost mineral production to US$500-700 million by 2015; and (iii) fiscal revenues were to increase to US$10 to $20 million per year (p. 16). In actuality, revenue from royalties increased by about US$ 7.7million from US$1.4 million in 2005 to US$8.8 million in 2011 in nominal terms. While this indicator did not meet the projected value of US$10 to US$20 million per year, the (nominal) value of mining royalties collected in 2011 was more than six times the royalty revenues in 2005. Given that there was no medium or large-scale mining in Nigeria at the time of approval, that mining investments typically take 10 years to materialize, and that they are influenced by many external factors and market conditions, it was difficult to get a realistic royalty projection at appraisal. 61. The value of mineral production from artisanal and small-scale mining was difficult to discern as revenues and production are aggregated among all producers; there is no separate category for ASM licenses in Nigeria. However, marked increases were observed in the quantity of mineral production between 2004 and 2010: (i) the recorded production of gold increased from 30 to 600 kilogram; (ii) the production of barite more than tripled from 6,000 to 19,000 metric tons; and (iii) production doubled in cement production (from 2,300 to 5,400 metric tons) -- and there was an increase in mining of kaolin (from 58,000 to 100,000 metric tons), gypsum (from160,000 to 320,000 metric tons) and limestone (from 2,100 to 4,300 metric tons) (Mobbs, 2011 and Mobbs, 2010). In addition, more than 6,300 active licenses were held by private mining companies at the end of the Project, compared to 1,000 at the beginning of the Project. These data suggest a positive trend in the development of the solid mineral sector, which is assumed to be at least partially attributable to the Project’s contribution. It is further likely that the Project was able to partially redress “informal exports” of gemstones and reduce imports of dimension stones by making available locally mined granites. At the time of Project approval, the value of smuggled gemstones was estimated at US$100 million, and 90 percent of dimension stones used in domestic construction were imported (MMSD, 2012). 62. Operating costs are another indicator of efficiency of implementation, particularly the ratio of actual operating cost to total actual Project cost, which, at first glance, seemed to amount to nearly 21 percent under this Project. While this ratio is on the high side, it is important to note that the increase in the operating costs to total Project cost ratio compared to the appraisal estimate of six percent is not an indication of administrative inefficiencies. Rather, in addition to operating costs as defined in the DCA as “incremental expenses incurred by the PMU on account of Project implementation, management, and monitoring” (DCA, p. 15), the Project was covering operating expenses of the Nigerian Institute for Mining and Geosciences, the Mining Cadastre Office, and the Nigerian Geological Survey Agency (for surveys) as well as for the Ministry

20 In accordance with the NEITI Act, the first solid minerals EITI audit report for 2007 to 2010 will be released by December 2012, and is expected to provide an insight into the operations of mining companies in the country.

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(including utilities and maintenance) – all of which were bundled into the operating cost category under Project coordination component. At appraisal, it was assumed that these agencies’ operating costs would be charged to respective Project Components and corresponding disbursement categories. However, during implementation the Bank’s Financial Management experts advised the Bank’s supervision team to include these expenses as operating costs under Component 4 and its corresponding disbursement category. 63. These “non-DCA” operating expenses amounted for nearly 60 percent of the “gross” operating costs of US$15.9 million. The remaining “real” operating costs, as defined in the DCA, amounted to US$11.39 million or the equivalent of about 8.4 percent of the total actual Project cost. In light of the fact that: (i) the “real” overhead cost ratio was reasonable; (ii) the Project accomplished most of its intended objectives within its allocated budget; (iii) no misprocurement was observed; (iv) the financial management under the Project was sound; and (v) out of total of 245 small grants sub-projects, there were only four reported cases of misuse of funds, all of which were settled in court and the money was recovered is a remarkable achievement in a country that ranks low on the ease of business and perceived corruption indices.

64. The Project followed the World Bank procurement and consultants’ selection guidelines and awarded vast majority of contacts’ on competitive basis. Least cost principle was thus consistently applied to procurement of all goods, works and consultants services as well as to small grants (which followed CDD practices for efficiency as mentioned in the paragraph above). In consideration of explanations provided in this section, on balance, efficiency is rated Substantial. 3.4. Justification of Overall Outcome Rating (combining relevance, achievement of PDOs, and efficiency) Rating: Moderately Satisfactory 65. The Overall Project Outcome was rated Moderately Satisfactory, given that (i) the relevance of the Project objectives and design was Substantial; (ii) the overall achievement of Project Development Objectives was rated Moderately Satisfactory; and (iii) the Project efficiency was considered Satisfactory. 3.5. Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 66. Poverty Impacts. Activities carried out under Component 1 resulted in improved livelihoods of artisanal and small-scale miners in the form of increased incomes, improved occupational safety, and access to Project-funded community infrastructure, such as health facilities, schools, and water supply. In addition, investments in productivity- and value-enhancing capacity building activities enhanced gemstone identification, testing, cutting and selling at Project-supported gem buying and trading platforms, as well as the identification, processing and marketing of dimension stone. 67. Gender Aspects. About 25 percent of the Project’s 12,250 beneficiaries who benefited from the small grants program were women; and about 40 percent of beneficiaries from ASM training activities were women. In accordance with the National Gender Policy, the Project was gender sensitive in that it successfully promoted the participation of women in diploma programs offered

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at the National Institute for Mining and Geosciences. It further proactively supported the formation of six women’s ASM cooperative societies (see Box 1 for a case example).

Box 1: Example of Project-supported women’s cooperative society

Source: Ifeadiro, 2012

68. A Gender Assessment was conducted in 2011 - at a time when ministerial structures (Environmental Compliance Division) were adequately equipped to engage in gender assessment and strategizing. Women interviewed as part of the Project-commissioned gender study observed that ASM capacity building and extension services provided under the Project did not include any trainings that were tailored to specifically promote gender mainstreaming. In addition, interviewees noted a low representation of women in the management, i.e. decision making, of the ASM sub-projects (Ifeadiro, 2012). Respondents further emphasized the importance of developing general community infrastructure, including water and sanitation, health services, food security and road access. Women were thus one of the key groups to benefit from the 98 community sub-projects supported by the Project. (b) Institutional Change/Strengthening N/A (c) Other Unintended Outcomes and Impacts (positive or negative) N/A 3.6. Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops. A stakeholder workshop was prepared at Project closing. It reviewed the Project’s achievements and challenges. However, a workshop report was not prepared.

4. Assessment of Risk to Development Outcome Rating: Moderate 69. As noted in Section 2.5 above, the Government has demonstrated significant commitment to setting up mechanisms, such as the Solid Mineral Development Fund, aimed at ensuring the availability of sufficient funding to sustain and expand Project-funded investments and implementation structures, such as: (i) the retention of the PMU; (ii) the continuation of the small grants program and other ASM activities with the added support of several extension service consultants; and (iii) the operating budgets of the Mining Cadastre and the Nigerian Institute for Mining and Geoscience through the annual National Budget Appropriation. The following modest risks to the sustainability of Project investments were identified at the time of Project closing: • Legal status of the National Institute of Mining and Geosciences (NIMG). At the time of

closing, the NIMG Bill had not been presented to the National Assembly for enactment in

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order to reconfirm the legal status of the Institute. However, as of the time of writing of this ICR, the Bill for the legal establishment of the Institute is before the National Assembly for consideration and passage. A positive and encouraging recent development is the Institute’s accreditation by the National Universities Commission.

• Operating cost for decentralized institutions. The July 2009 mission observed a shortage of

funding and support for the decentralized institutions and their personnel/ equipment. For example, the ASM officers based at the ASM offices in 23 states of the Federation, who were trained by extension services consultants and NGOs, are faced with major funding constraints and lack vehicles needed to provide extension services to ASM operators (correspondence with PMU, October 2012). This situation was being somewhat improved towards the end of the Project with MMSD committing higher overall budget and, going forward, allocating a part of the Solid Minerals Development Fund towards ASM related activities. Follow up assessment of sustainability and current solutions will be undertaken under forthcoming funding from other donors.

• Ease of access by investors to geophysical survey data. As was flagged in a number of ISRs and mission Aide-memoires between 2010 and 2012, the access to geophysical survey data by potential investors was calling for being streamlined. The bottleneck was mitigated through MMSD’s publication of procedures to access data and the recent set-up of the Mineral Information Center tasked to assist investors and researchers with facilitating information access and promotion of Nigeria’s mineral wealth. While good steps have been made and there is evidence that investors purchase the data, there is still some risk that data will be kept less accessible than was intended.

70. While two out of three of these risks have yet to be mitigated, the overall risk to the sustainability of other achievements, such as the data produced by the geophysical airborne survey, the institutions established with Project support, the formalization of the artisanal and small scale mining operators and continuation of ASM activities is considered low and are likely to have a lasting positive impact on the development of the sector. Therefore, the risk to development outcome is rated Modest.

5. Assessment of Bank and Borrower Performance

5.1. Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 71. Overall, the Project’s conceptual approach was appropriate and in line with international good practice experience at the time even though its presentation in the PAD, and in particular the linkages between the miscellaneous sub-components of Component 1 could have been presented more clearly. Project design would have further benefited from a clearly articulated theory of change, which would have also provided valuable guidance to the design of the results framework and the formulation of key performance indicators. Similar to many of its contemporary projects, the scope of the proposed activities was very ambitious but most of them were indeed implemented. Furthermore, as mentioned above, some of the Project activities were not implemented, such as the pilot projects and the socio-economic village survey, because their design was reportedly too complicated. Lastly, some of the Project activities, such as the airborne survey, were under-budgeted, given that the preparation team did not seem to have anticipated the

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extent of the increases in the prices of goods and services, given that the minerals boom was already occurring at the time of appraisal. As mentioned above, under-budgeting for surveying and mapping was a common occurrence in similar projects implemented in other parts of Africa during the same time period. The M&E design in the hind-sight could have been more robust, but the Project followed formats for result frameworks at the time of appraisal. On substance, the selected indicators were relevant and adequately linked with PDO. (b) Quality of Supervision Rating: Satisfactory 72. As appropriately pointed out by the 2008 Project review, conducted as part of the Bank’s Quality Assessment of the Lending Portfolio the quality of supervision by “an experienced task team, with strong support from the country office” (QUAL, 2008), was high throughout implementation. As evidenced by the fact that most of the envisaged Project activities were completed on time, the Bank’s supervision “kept the Project reasonably on track, and despite frequent changes at the top in the ministry.” Furthermore, the Bank intervened effectively “at a critical juncture in implementation “when the Project threatened to go off-track due to political interference.” The supervision of safeguards policies as well as, financial and procurement aspects of the Project appears to have been carried out in a timely, diligent and thorough manner. 73. The only shortcoming in the quality of supervision was its inconsistent tracking of key performance indicators. In the first seven ISRs a maximum of two PDO indicators and four Intermediate Outcome indicators were tracked; the last five ISRs contained a set of four PDO and nine Intermediate Outcome indicators, whose wordings were taken partially from the DCA and partially from the PAD. It was noted in the last ISR (No. 15, May 2012) that a few indicators, such as “the socio-economic indicators and investment figures” were not captured. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 74. Overall, Bank Performance is rated Satisfactory, despite the above-mentioned design and M&E shortcomings, given that the Project’s innovative design emphasized the need for environmentally and socially responsible sector development. The supervision team’s firm stance and insistence on compliance with obligations outlined in the DCA and procurement guidelines during the time of political interference prevented the Project from derailing. As a result, a significant portion of the envisaged scope of activities was accomplished, utilizing international best practice approaches.

5.2. Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 75. Government support was rather strong at the time of Project design. However, at the end of the first 26 months of Project implementation the Project was operating under its fifth Minister (ISR No. 5, May 2007), which slowed down the implementation pace. The Government’s commitment over the lifetime of the Project was rather volatile, ranging from a high level of commitment and full understanding of Project objectives and components and close cooperation (ISR No. 2, November 2005) to “a lack of adequate attention of the Ministry to small scale mining, the Jos school for excellence, and hiatus in passage of the mining law” (ISR 5, May 2007), which put the Project at risk of not achieving its objectives as it caused a the ASM

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component to be two years behind schedule (QALP, 2008). In addition, the release of counterpart funding was rated Moderately Satisfactory in six out of 15 ISRs, which contributed to further implementation delays. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 76. Despite the above-mentioned multiple disruptions and considerable constraints the Project Management Unit continued to function well (ISR 5, May 2007). The PMU staff was commended “for their dedication and perseverance 21 […] and on the manner in which they have moved forward under trying circumstances. The mission does not wish to underscore the importance of continuity of project staff” (AM July/August 2007 mission). The PMU’s capacity was reinforced during Project implementation, e.g. through the recruitment of a Procurement Advisor, Project Management Assistant, Monitoring and Evaluation Consultant (ISR No. 3, April 2006). It was noted that the results of financial management and procurement post reviews were positive and audits unqualified. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory 77. In light of the above-mentioned shortcomings in the Government’s performance, which caused significant delays in the implementation of Project activities in support of Part (ii) of the PDO; and the strong performance of the PMU, the overall Borrower performance is rated as Moderately Satisfactory.

6. Lessons Learned 78. Key lessons learned from Project implementation include:

• Keeping Project design relatively simple when operating in countries with complex environments, limited capacity, and a weak country implementation record (QALP, 2008).

• Making the stability of Project Management or Coordination Units a covenant can be an effective means of avoiding adverse consequences of political interference in complex policy environments.

• While acquisition and development of geo-data (geological, geo-physical, magnetic, etc.) is instrumental in attracting investors, there is a parallel demand for designing adequate systems and modalities for dissemination (and sale) of the data to a wide international audience. Web-based solutions have proven most efficient but constrained by national security concerns and limited band-with in developing countries;

• When the Project is supporting the start up and initial operating expenses of new institutions, such as the Nigeria Institute of Mining and Geosciences or the Mining Cadastre Office, it is important to build a plan for phasing out subsidies for operating expenses into Project design.

21 Given the exceptionally long working hours, private sector demands and overall challenges posed by implementation of this large project the Bank’s supervision team “was strongly supportive” of giving PMU staff salary top-ups (AM, March 2006 mission).

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• The importance of Government commitment to budgeting sufficient funds to cover recurrent cost in order to sustain Project investments beyond the Project closing date;

• The necessity to approach mining sector development from different interrelated angles, such as looking to reform, in parallel, the mining sector’s regulatory framework and institutional set up; capacity building of the lead agency to improve governance; increase transparency through computerization of the mining cadastre; promote the mineral sector through high quality data and integrated data management; and to redress adverse environmental, social and economic conditions typically associated with informal mining by incentivizing the legalization of and giving a “leg up out of poverty” to small scale miners.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies. No comments were received in addition to the Borrower’s ICR. (b) Cofinanciers Not applicable (c) Other partners and stakeholders No comments were received.

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate (USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

Component 1: Economic Development and Livelihood Diversification in Artisanal and Small-scale Mining Areas

48.90 27.38 56%

Component 2: Strengthening Governance and Transparency in Mining

33.28 49.12 148%

Component 3: Private Sector Development 26.81 30.49 114%

Component 4: Project Coordination and Management 6.91 27.29 395%

PPF 1.80 1.72 96% Total Baseline Cost 117.70 136.00

Physical Contingencies 3.06

-

116%

Price Contingencies 7.14

-

-

Total Project Costs 127.89 136.00 106% Front-end fee PPF - - - Front-end fee IBRD - - .-

Total Financing Required 127.89 136.00 106%

(b) Financing

Source of Funds Type of Cofinancing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of Appraisal

Borrower 7.89 12.15 154% International Development Association (IDA) 120.00 123.85 103%

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Annex 2. Outputs by Component The Outputs/Intermediate Outcomes produced by the Project were to be measured by the following indicators, as stated in the DCA (Schedule 5, pp. 34ff.) Component 1 Indicator 1. Volume of formal employment created during the life of the Project (Midterm Review: 50,000; Project Completion: 200,000) More than fully achieved. About 251,500 miners who had previously engaged in informal and illegal mining became formally employed. The total number of formal jobs created under the Project was thus 25 percent higher than the targeted number of 200,000 jobs at Project completion. In addition to extension services, and training of trainers in productivity enhancing mining techniques and other topics covered in the ASM Handbook produced under the Project, 200 ASM operators benefited from training in cooperative management and conflict resolution

Indicator 2. Number of mining operators benefiting from financing and business development assistance and number of mining communities or associations receiving Subproject Grants under the Project Baseline: 0; Midterm Review: 25% of artisanal mining associations and formal artisanal miners; Project Completion: 50% of artisanal mining associations and formal artisanal miners). Fully achieved. As a result of the Project-supported small grants program, a total of 245 grants amounting to about US$9 million were extended, which financed 147 sub-projects implemented by ASM cooperatives as well as 98 community sub-projects (see Tables 1, 2 and 3 below for more details). About one third of the ASM grants supported the enhancement of granite quarrying operations, another third supported improvements in sand/gravel/laterite quarrying. Nearly 85 percent of the community grants supported the construction/rehabilitation of classroom blocks and water supply schemes. This is a remarkable accomplishment, especially given its late startup in August 2008. Table 1: ASM grants by type of mineral (Source: MMSD) ASM grants by type of mineral Number of grants Granite Quarrying 52 Gypsum Mining 12 Sand/Gravel/Laterite Quarrying 57 Clay Processing 3 Bentonite/Dolomite 3 Baryte Quarrying 3 Kaolin 5 Beryl/Feldspar 2 Gemstone 1 Gold 3 Limestone 1 Marble 1 Tin/Columbite 3 Salt processing 1 TOTAL 147

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Table 2: community grants by type Community grants by

type number of grants

Classroom blocks 36 Civic/Training/Skills

Acquisition Centres 5 Community Town Halls 3 Health Centres 7 Water Schemes 46 Water Reticulation/

Transformer 1 TOTAL 98

Table 3: ASM grants by zone

ASM small grants as of April 2012 by zone

ZONE ASM grants community grants TOTAL

NORTH EAST 29 12 41 NORTH CENTRAL 24 19 43 FCT 8 1 9 NORTH WEST 26 21 47 SOUTH EAST 17 17 34 SOUTH SOUTH 18 13 31 SOUTH WEST 25 15 40

TOTAL 147 98 245 Indicator 6. Sustainable environmental practices functional in artisanal and small-scale mining communities, as measured by environmental impact assessments in all pilot areas Baseline: 0% ; Midterm Review: 50%; Project Completion: 100% Achieved. All ASM grant recipients have completed the required safeguards screening. According to an environmental audit carried out in 2010, all recommendations had been followed. Component 2 Indicator 3. New private investment in the mining sector since Effective Date Baseline: 0; Midterm Review: $12 million; Project Completion: $100 million Partly achieved. Contrary to expectations at entry, it was reportedly not feasible to track the value of new private investment in the solid mining sector. However, the fact that more than 6,300 active licenses were held by private mining companies at the end of the Project, compared to 1,000 at the beginning of the Project, suggests that significant new investments occurred in the solid minerals sector. In addition, a total of more than 4,000 exploration and reconnaissance licenses were granted during the Project’s lifetime.

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Indicator 4. Increase in annual solid minerals production in the sector Baseline: 0; Midterm Review: $12 million; Project Completion: $100 million Achieved. Given that data regarding the value of annual solid minerals production quantities was not readily available, the value of collected royalties was used as a proxy indicator. According to data provided by the Mines Inspectorate Department of MMSD, in nominal terms, the annual royalty collection value increased by NGN 1,162 million (about US$ 7.7million) from NGN215 million (about US$1.4 million) in 2005 to NGN1,377 (US$8.8 million) in 2011 in nominal terms. The (nominal) value of mining royalties collected in 2011 was thus more than six times the royalty revenues in 200. Given that royalties represent 4 percent of the total mineral sales value, the official sales value (as a proxy for mineral production) is 25 times the royalty collected. Component 3 Indicator 5. Area covered by new geological maps, as percentage of total area of the Borrower’s territory Baseline: 40%; Midterm Review: 50%; Project Completion: 100% Achieved. The airborne geophysical survey of the entire country was completed in 2010. The interpretation of survey data and production of geo-physical maps, including radio-metrics, gravity and magnetics, was also completed in 2012. Geochemical maps of various scales were produced for 49 substances, and the geo-physical analysis has produced radio-metric, gravity and magnetic map interpretations. The National Geosciences Research Laboratory (NGRL) received equipment. A planned consultancy to prepare the road map for the full commercialization of the NGRL was not carried out under the Project, reportedly due to time constraints. However, however, the “MMSD has confirmed that savings on counterpart funds will finance this consultancy. Execution will be carried without Bank involvement” (ISR No. 15, May 2012). In addition to the above-mentioned outputs, the Project carried out extensive capacity building activities to enable Government institutions to acquire the capacity to manage the sector. Training programs targeted staff in the technical departments of the ministry - the Mines Inspectorate, Mines Environmental Compliance, Legal, Mining Cadastre Office and the Nigerian Geological Survey Agency. Additional trainings were conducted to build the technical skills of non-Government actors, such as ASM operators and journalists. The following overview of training activities undertaken with Project support was taken, with minor editing, from MMSD’s publication “Mining in Nigeria. Breaking New Grounds. The Story of SMMRP Intervention” (MMSD, 2012): Mines Inspectorate Department o Fifty (50) staff from the department and three each from Mines Environmental

Compliance and ASM Departments were trained on GIS at the Obafemi Awolowo University, Ile-Ife.

o Eight (8) Senior Officers of Mines Inspectorate Staff on Mines Health and Safety Inspection Procedures at the Indian School of Mines, Dhanbad, with the objective of enhancing the capacity of the staff in discharging their mandate in ensuring safe and healthy mineral development activities as contained in the Minerals and Mining Act and the Minerals Regulations.

o The Project also organized three sets of short courses for 60 senior mines officers of the Mines Inspectorate Department at the University Of Mines And Technology, Tarkwa Ghana. The courses are intended to train the staff of the Mines Inspectorate Department to

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effectively supervise and monitor the activities of Mining and exploration companies to ensure compliance with the legal and regulatory provisions.

o The project also sponsored a course for Eight (8) Senior Staff of the Mines Inspectorate Department on Safe and Efficient Blasting Course at Orica Mining Services Stockholm, Sweden for of the Mines Inspectorate Department in February, 2012. The course is meant to build capacity of the participants to the latest state of the art techniques and technology in the blasting process. It will also enable the participants to make informed decisions on how to optimize blasting operations and the "Mine to Mill process.

Artisanal and Small-Scale Mining Department

The project has organized courses that for staff of the ASM department. in November 2011, senior officers of the department attended a training programme at the Indian School of Mines. The objective was to provide the participants with sound and quality knowledge as well as the skills necessary to enhance the quality of their output.

Nigerian Geological Survey Agency NGSA staff have benefitted from various training programmes both in Nigeria and abroad. In January 2009, The Project facilitated a training programme in Geochemical Mapping in Kaduna and Minna. The programmed was conducted by the British Geological Survey and the Finish Geological Survey. Over 50 geologists of NGSA took part in the training programme. The NGSA also benefitted from various training programmes in airborne geophysics, airborne data interpretation, and technical report presentation.

As part of the capacity building of the staff of the NGSA in Airborne geophysical survey data acquisition and interpretation, the following courses were delivered to about 30 Staff of the Geophysics Department of The NGSA by Messrs FUGRO Airborne Surveys and Peterson Grant and Watson (PGW) the consultants on the Airborne geophysical survey data acquisition and interpretation respectively. A two-weeks course was conducted on

• Modelling of geophysical data for interpretation. • Regolith mapping and Geophysical Interpretation • Cartographic and GIS Application related to Geophysical Interpretation • Aero-gravity and Aeromagnetic interpretation applied to sedimentary basins: structural

framework and configuration • Daily checks of the airborne data • Quality control processes for airborne geophysical survey data acquisition.

Artisanal and Small-Scale Miners

Both ASM operators and the Ministry staff have benefitted from the following capacity building programmes:

i. Gemstone awareness and identification ii. Gemstone cutting and faceting

iii. Fundamentals of gemstone mining iv. Co-operative management and finance v. Basic book keeping for artisanal miners.

Environmental Management Capacity Building Program for the Nigerian Mining Sector The Environmental Management Capacity Building Programme addresses the strategic needs to improve environmental management capabilities in the mining sector in Nigeria and to improve the system's effectiveness by building capacities in the relevant departments and agencies responsible for the formulation of environmental policies and also responsible for the

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enforcement of the legal and regulatory framework as it affects mining. The departments/agencies that benefited from this programme are; • Mining Environmental Compliance Department of MMSD • Mines Inspectorate Department (MID) of MMSD • Artisanal and Small-Scale Mining (ASM) of MMSD • National Environmental & Regulatory and Enforcement Agency Other courses organised were: • Environmental auditing, Environmental risk assessment, Environmental Management

Systems, EIA processes summary. • Detailed EIA processes: screening, scoping, monitoring, community consultation: • Mitigation measures for mining sector, remediation of abandoned mines;

decommissioning/closure of mines, sectoral/strategic environmental assessment; • Study Tour of South Africa: Environmental enforcement approaches in mining, water and air

quality monitoring techniques in mining, and waste management techniques in the mining sector

Training on Governance, Accounting, Finance, Taxation, Environment and Mining The Governance Education Trust of New Zealand was engaged by the project to train the trainers from the Nigerian tertiary institutions on basic concepts of internationally accepted practices on the management of mining revenues. The following topics were selected for the training: • Finance for the mining industry, including project finance; • Accounting for the mining industry; • Taxation for the mining industry; • Elements of mineral economics; • Mining project cycle: exploration, development, operations, closure; • Mining in the International context; • Environmental and social considerations; • Governance, Transparency and Accountability.

The ultimate outcome of the training is that the institutions involved in the training have introduced the courses in their curricula for sustainability. The participating Universities are: University of Jos, University of Nigeria, University of Technology, Akure, Ahmadu Bello University, University of Calabar, Lagos Business School, University of Ife and the Nigerian Institute of Mining and Geosciences. Their participants include the National Universities Commission, Federal Inland Revenue Service, Ministry of Mines and Steel Development, Zenith Bank Plc, Skye Bank Plc, First Bank of Nigeria Plc, Guarantee Trust Bank Plc, Fidelity Bank Plc and the United Bank for Africa Plc. Capacity Building Programme for Journalists To facilitate a proper appreciation of the Minerals and Metals sector, a two-day technical workshop was organized for journalists covering the beat. Over 60 journalists from both the print and broadcast media took part in the programme. Two Nigerian professors of Mass Communication, Professor Lai Oso from the Olabisi Onabanjo University and Professor Mahmud Pate from the University of Maiduguri presented two working papers on the role of the media in the development of mining.

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Directors-General of the various agencies of the ministry and heads of parastatals presented technical papers on their respective departments and agencies. The occasion was also attended by many media top media executives. They include: Mallam Kabir Yusuf, Chairman/Chief Executive publishers of the Trust Newspapers, Mallam Muhammed Haruna, former Managing Director of New Nigerian Newspapers, serial columnist and member of the board of the News Agency of Nigeria, John Ndakauba, Deputy Editorin-Chief, News Agency of Nigeria and Secretary, Nigerian Guild of Editors, Mr. Bidemi Osunbiyi, former head of Mass Communication Department, Moshood Abiola Polytechnic, Abeokuta, Mr. Yomi Odunuga, head of Abuja bureau represented the Managing Director of Nation Newspapers while This Day Managing Director was represented by Mr. Paul Ibe, Editor, Federal Capital.

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Annex 3. Economic and Financial Analysis The assessment of the Project’s efficiency was fully covered in Section 3.3 of the main body of this ICR.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members

Names Title Unit Responsibility/ Specialty

Lending Jefrey Davidson (left the Bank in 2005) SEGOM TTL at LEN Boubacar Bocoum Sr Mining Spec. SEGOM

Paulo De Sa Sector Manager SEGOM Lead Mining Specialist and co-TTL at LEN

Alexandra Pugachevsky Senior Country Officer MNCA4 Gotthard Walser Consultant SEGOM

Supervision/ICR

Ekaterina Mikhaylova Sr Mining Specialist SEGOM TTL between 2010 and ICR

Amanda Lumun Feese EITI Consultant SEGOM Amos Abu Senior Environmental Specialis AFTEN Sunday Achile Acheneje Procurement Specialist AFTPC Akinrinmola Oyenuga Akinyele Sr Financial Management Specia AFTFM

Craig B. Andrews Consultant SASGP

Lead Mining Specialist (now retired), TTL between 2006 - 2010

Brenda Uche Anugwom Team Assistant AFCW2 Mary Asanato-Adiwu Senior Procurement Specialist AFTPC Bayo Awosemusi Lead Procurement Specialist AFTPC Morten Larsen Mining Spec. SEGOM Regina Oritshetemeyin Nesiama Program Assistant ECSHD

Chukwudi H. Okafor Senior Social Development Spec ECSS4 Kenneth O. Okpara Sr Financial Management Specia SARFM Comfort Onyeje Olatunji Program Assistant SASDO Africa Eshogba Olojoba Senior Environmental Specialis AFTEN Modupe Dayo Olorunfemi Program Assistant INTOP Adenike Sherifat Oyeyiola Sr Financial Management Specia AFTFM Alexandra Pugachevsky Senior Country Officer MNCA4 Andre Manfred Ufer Operations Officer SEGOM Amelia V. Williams Language Program Assistant SEGOM

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(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending FY04 31.83 165.93 FY05 55.51 269.96 FY06 6.74 0.95 FY07 0.00 0.17 FY08 0.00 0.00

Total: 437.01 Supervision/ICR

FY04 0.00 FY05 0.05 FY06 29.6 163.42 FY07 37.9 147.69 FY08 36.4 156.90

FY09 31.55 121 FY10 38.18 219 FY11 28.28 152 FY12 22.32 97

Total: 1,057

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Annex 5. Beneficiary Survey Results Beneficiary feedback was solicited and received during the 2012 stakeholder workshop held at Project closing. A separate beneficiary Survey was not carried out under the Project.

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Annex 6. Stakeholder Workshop Report and Result A stakeholder workshop was held prior to the Project’s closure. While the Project’s achievements and challenges were reviewed no workshop report was prepared. MMSD has organized a completion workshop in Abuja on May 3, 2012. The event was very successful and provided an avenue for the MMSD/PMU to showcase the achievements of the project in concrete terms to various stakeholders. There were exhibitions of the products from the lapidary and grantees as well as the numerous publications and baseline studies funded by the project. There were presentations by beneficiaries from the MMSD (MCO, ASM, Environment, NIMG, and NGSA), other beneficiaries (for example geodetic network and universities) and grantees. Overall, the comments by stakeholders were balanced on the impact of the project with the running theme being for continuity of the project to sustain the reforms and in the case of grantees support to advance to the mid-tier level. Many participants expressed concern over closure of the project and the need to continue the reform. The World Bank was strongly commended for its role in the process of the reforms.

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Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

MINISTRY OF MINES AND STEEL DEVELOPMENT

SUSTAINABLE MANAGEMENT OF MINERAL RESOURCES PROJECT

PROJECT IMPLEMENTATION COMPLETION REPORT OF THE MINISTRY OF MINES AND STEEL DEVELOPMENT

PREPARED BY THE PROJECT MANAGEMENT UNIT

SEPTEMBER, 2012

CONTENTS

1. SECTION 1: INTRODUCTION ON THE SUSTAINABLE MANAGEMENT OF

MINERAL RESOURCES PROJECT (SMMRP)

2. SECTION 2: STRENGTHENING GOVERNANCE AND TRANSPARENCY IN

MINING 3. SECTION THREE: DEVELOPMENT OF PHYSICAL INFRASTRUCTURE

4. SECTION FOUR: PRIVATE SECTOR DEVELOPMENT 5. SECTION FIVE: TRAINING AND INSTITUTIONAL CAPACITY BUILDING

6. SECTION SIX: ARTISANAL AND SMALL-SCALE MINING DEVELOPMENT

7. SECTION SEVEN: ADMINISTRATION OF MICRO GRANT TO ARTISANAL AND

SMALL SCALE MINERS (ASM) AND MINING COMMUNITIES

8. SECTION EIGHT: OUTCOMES FROM PROJECT ACTIVITIES

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1. SECTION ONE: INTRODUCTION ON THE SUSTAINABLE MANAGEMENT

OF MINERAL RESOURCES PROJECT (SMMRP)

Prior to the discovery of oil, Nigeria had a flourishing mining industry as world largest exporter of Columbite and ranked as eighth highest producer of Casiterite (Tin). A large number of Nigerians earned their livelihood from this sector. However, with the rise in government’s revenues from crude oil and the collapse of tin in the world market, the mining industry declined to very low levels where operations were reduced to only artisanal and small scale mining (ASM). With the return to democratic governance in 1999, the Federal Government of Nigeria identified the development of solid minerals as a major sector for the diversification of the economy away from the dominant oil and gas sources of income. Consequently, the President constituted a Committee to produce a Seven-year Strategic Plan for the development of solid minerals in Nigeria. The report of the Committee provided a basic framework to grow the sector, build both infrastructural and human capacity and provide pro-poor strategies for ASM operators. In its mission to quickly implement the recommendation of the Committee, the Federal Government invited the World Bank to intervene and lay a solid foundation that will propel the sector to full realization. The Project Development Objectives of SMMRP were in tandem with the strategic direction of both the Federal Government of Nigeria and the World Bank as regards poverty reduction, wealth creation, employment generation, and additional revenues to government. The Federal Government’s economic blueprints –National Economic Empowerment and Development Strategy (NEEDS), Seven-Point Agenda/Vision 20-2020 and Vision 20-2020/Transformation Agenda represent the policy thrusts of successive administrations since the return to democracy in 1999. All these economic strategies placed strong emphasis on poverty reduction in the country. The World Bank/IDA Project: The Sustainable Management of Mineral Resources Project (SMMRP) is a home-grown intervention conceptualized after a National Mining Policy Dialogue held in 2004. The Project became effective on April 25, 2005 and was implemented through a period of 7 years (closed on May 30, 2012). The original Closing Date was June 30, 2010 but a 23-month extension was granted by the World Bank to compensate for some implementation delays which occurred earlier in the life of the Project. The SMMR Project was suspended for a few months in the second year of implementation because of interferences by political office holders. The stoppage led to loss of momentum. Again, activities (pilot projects) relating to poverty reduction, were ignored up to mid-term review in April/May 2008 because the political leadership at the time did not consider them important. Another implementation bottleneck encountered was the frequency with which political and career leadership of the Ministry changed through the life of the Project. During the 7-year life of the SMMRP, 8 (eight) Ministers and 9 (nine) Permanent Secretaries had held appointments at the Ministry of Mines and Steel Development (MMSD). Project Development Objectives: The dual Development Objectives of the SMMRP were to:

i. Increase government’s long-term institutional and technical capacity to manage Nigeria’s mineral resources in a sustainable way; and

ii. Establish a basis for poverty reduction and rural economic renewal in selected areas of the country through the development of non-farm income generating opportunities through small-scale and artisanal mining, and to diversify away from oil sources of income

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Project Components: The Project had the following Components: (i) Economic Development and Livelihood Diversification in Artisanal and Small Scale Mining Areas; (ii) Strengthening Governance and Transparency in Mining, (iii) Private Sector Development, and (iv) Project Management and Coordination Implementation Arrangements: The SMMRP was implemented by establishing a Project Management Unit (PMU) with a team of experienced public and private sector technocrats. The set up and mode of operation made the PMU less susceptible to the bureaucracies of the Public Service. The operation of the PMU was guided by covenants and guidelines of the World Bank. The overall supervision of the Project with the apex organ of the SMMRP, which was the Project Consultative Committee (PCC) which was required to meet at least once every quarter. The PCC was chaired by the Permanent Secretary with some Directors-General (of Agencies) and Directors (MMSD), and the Project Coordinator, as members. The Assistant Project Coordinator doubled as Member and Secretary. 2. SECTION 2: STRENGTHENING GOVERNANCE AND TRANSPARENCY IN

MINING

Institutional Reforms and Reorganization: The Project facilitated the restructuring and reorganizing of the Ministry of Mines and Steel Development in 2006 as a necessary step toward addressing hitherto prevailing institutional weaknesses. One of the most important features of this exercise was the change in the role of Government from being a Regulator/Operator to Regulator/Administrator. In the restructuring exercise, three technical Departments were created as follows: (i) Mines Inspectorate (MI), (ii) Artisanal and Small-scale Mining (ASM), and (iii) Mines Environmental Compliance (MEC). Legal and Regulatory Framework: The Project facilitated the creation of legal and regulatory instruments to guide the development of the solid minerals sector. Some key features of the Nigerian Minerals and Mining Act, 2007 include: Guarantee of tenure for mineral titles, Creation of the Mining Cadastre Office as an autonomous institution, Removal of discretionary powers of political heads, Transparency in the issuance of mineral titles, Transferability of mineral titles, and Provision of model agreements. As part of regulatory instruments, the Nigerian Minerals and Metals Policy, 2008 was developed from the provisions of the Minerals and Mining Act, 2007. The Nigerian Minerals and Mining Regulations, 2011 was concluded and adopted after wide consultations with, and input from relevant stakeholders. It was formally presented to the public in a Stakeholders’ Forum in 2011. Establishment of the Mining Cadastre Office: Prior to the SMMRP intervention mineral title administration was fraught with opaque processes and discretionary powers of political office holders. The project facilitated the conversion of the Mining Cadastre from a standard paper files and analog-based to digital, computerized system. In 2007, a new computerized cadastral system was set up. Mining Governance, Accounting, Taxation, and Finance Curriculum Development: A group of professors from the New Zealand, Governance Education Trust, were engaged to develop the capacity of Nigerian Lecturers to effectively deliver courses specifically in mining accounting and governance at their various universities and other tertiary educational institutions. The course was structured with 60% commercial (finance, accounting, taxation and governance) and 40% technical (mining and environment).

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3. SECTION THREE: DEVELOPMENT OF PHYSICAL INFRASTRUCTURE

The MMSD Head Office Complex, Zonal, and State Offices were renovated and equipped in line with the new institutional model and re-designed work procedures. The Project also financed the renovation of the premises of the Nigeria Geological Survey Agency and the alteration and modification of the Nigeria Institute of Mining and Geosciences, Jos and the Mining Community Resource Centre (MCRC). It also established a Lapidary & Gemology Laboratory, financed rehabilitation of laboratories, Work Shops and external works within the Nigeria Geological Survey Agency (NGSA) facility in Kaduna. The Laboratories were also equipped with highly sensitive and up-to-date instruments. The project also facilitated the establishment of the Mining Cadastre Office through the purchase and renovation of the building structure. 4. SECTION FOUR: PRIVATE SECTOR DEVELOPMENT

Geological Data Acquisition and Dissemination: In order to support private sector-led development of the Nigerian mining sector, the Project carried out extensive geological information gathering (airborne geophysical survey and geochemical mapping) with the view to establish Nigerian mining/mineral potential at the international level. Some of the activities undertaken by the Project include the following: (i) Following the success of the Phase 1, financed by the Federal Government, the Project financed the balance of 56% of the country land space with airborne geophysics, (ii) Interpretation of Airborne Geophysical Data generated in Phase II. (iii) Geochemical mapping of two cells, (iv) The Project was jointly executed with the Nigerian Geological Survey Agency (NGSA) as part of capacity building program of the project. Revision of Geodetic Network and Completion of Cartographic Coverage of Nigeria: The outcomes of the reinforcement of the vision of the technical capability for the management of the mining titles through modern cadastre system A included: (i) Provision of additional high accurate international cartographic controls in the country, (ii) Upgrading of the Nigerian geodetic information, provision of the platform for a conflict free cadaster system operations, among others. 5. SECTION FIVE: TRAINING AND INSTITUTIONAL CAPACITY BUILDING

At the inception of the Project, training needs assessments were conducted round the Ministry with the view to identify skill gaps. . Between 2005 and 2012 when the Project came to a close, over 2,000 personnel had benefited from various training programs both within and outside the country. The Nigerian Institute of Mining and Geosciences, Jos: The Ministry upgraded the Jos School of Mines School to a Centre of Excellence for postgraduate training. The training curricula and delivery methodology emphasize more of practical work than academic, in line with the operational needs of the mining sector. The Project facilitated the recruitment of the provost, management, and staff of the Nigerian Institute of Mining and Geosciences (NIMG), Jos. The curriculum from Pen State University was reviewed and adapted to the local context by a team of professors and senior lecturers in Nigerian tertiary institutions. In April 2010 the NIMG commenced 18-month postgraduate diploma programs in (1) Mineral Exploration, (2) Mining Engineering, and (3) Minerals Engineering.

49

6. SECTION SIX: ARTISANAL AND SMALL-SCALE MINING DEVELOPMENT

The Project completed four ASM baseline studies on Gold, Barites, Gypsum and Gemstones. Two pilot project studies on Barite and Gypsum were concluded between 2005 and 2006, but were subsequently not executed due to a change in policy and sector policy priorities at the Ministry. Gemstone Industry Development and Establishment of the National Lapidary Centre: The Project established an International Standard Lapidary, with well stocked machines. The Lapidary Centre is housed in the Administrative Block of the Mining Community Resource Center. The Project facilitated the training of 9 Master Trainers and 15 Commercial Cutters. The training courses were all conducted at the Lapidary Centre, Mining Community Resource Centre, Nigerian Institute of Mining and Geosciences, Jos. It was estimated that the Lapidary Center would turn out about 500 commercial cutters within 5 years through organization of short courses in Lapidary. Outcomes: The early result of the promotional activities at local and international fora undertaken by the Project is the stimulation of interest of potential local and foreign investors. By Project closing, there was already an influx of investors into the subsector, and operators were opening up new mines with semi- mechanized mining methods. Dimension Stone Industry Development and Establishment of Dimension Stone Laboratory: The Project facilitated the formation of Association of Dimension Stone Operators of Nigeria, using similar steps applied for the Gemstone Industry development in coordinating the formation of the, with full complement of executives to run the Association in place. Outcomes: Various activities implemented in pursuance of the development of Dimension Stone subsector in Nigeria have begun to yield some fruits, some of which are: (i) Huge awareness on the potentials of the DS industry, (ii) International visibility, (iii) 5 new processing plants being installed across the country, (iv) New DS quarries springing up. (v) Existing investors are expanding operations and processing plants, (vi) Establishment of ancillary industries in the increase, and increased job creation 7. SECTION SEVEN: ADMINISTRATION OF MICRO GRANT TO ARTISANAL AND

SMALL SCALE MINERS (ASM) AND MINING COMMUNITIES

Grants of not more than US$50,000 equivalent per Grantee were given to 245 Beneficiaries comprising ASM (Cooperatives) and Community Development Associations (CDAs). The grants were given to enable the ASMs improve their mining operations by using better tools and equipment. The CDAs utilized their grants for the provision of social infrastructure in the mining communities they represented. Both the ASMs and CDAs were required to provide counterpart contribution of 50% and 10% respectively. Such contributions were made either in cash or kind or a hybrid. Monitoring Structure: The SMMRP had a monitoring structure in place with the following functionaries: (i) Non-Governmental Organizations: for monitoring the performance of the Grantees and presenting quarterly reports to the Project Management Unit. (ii) Extension Service Consultants: for providing technical support to the Grantees vis-à-vis production, maintenance, record keeping. (iii) 6 State Coordinators: for the general administration of the scheme in their

50

various zones; (iv) The Monitoring and Evaluation team from the Project undertook visits to the grantees as a way of cross-checking the reports from the field officers. 8. SECTION EIGHT: OUTCOMES FROM PROJECT ACTIVITIES

However, within the 7-year life of the SMMR Project, short- to medium-term outcomes were already showing, which is an indication that with sustained effort, the future holds high prospects for mining in Nigeria. Some of these Outcomes are discussed below. Increased Investment in the Solid Minerals Sector: Nigeria has witnessed a preponderant influx of investors into the local mining sector since the passage of the Nigerian Minerals and Mining Act, 2007. The increasing number of applications received by the Mining Cadastre Office is a clear attestation to investors’ interest in Nigeria’s solid minerals sector. At project closing, over 37 foreign companies were involved in solid minerals exploration activities. Improvement in Minerals Title Administration: The cadastre system established by the SMMR Project has, over the years, engendered transparency and efficiency in minerals title administration process in Nigeria. The Mining Cadastre Office has greatly improved in operational effectiveness, with short transaction cycle time and feedback system for applicants, which, has also contributed to investors’ confidence. Access to Geological Infrastructure: The huge geological data sets generated by the SMMR Project are now available to potential investors. Many investors have been able to access geological maps and other information relevant to their needs. The Minerals and Metals Investment Centre now facilitates improved access to investment information, geological data and other ancillary services required by potential investors. Higher productivity at the Ministry of Mines and Steel Development: The restructuring and reorganizing of the Ministry of Mines and Steel Development in 2006 has made the Ministry relatively more focused and effective with the division of functions among the three new technical Departments. Hitherto, the original Mines Department was rather omnibus and hydra-headed in its operations. The current organization structure of the Ministry and specialization among the technical staff has brought in its wake enhanced productivity, and different levels of mine site supervision are now better linked to the responsible Department, for accountability. Enhanced Capacity for Execution of Statutory Mandate: Ministry of Mines and Steel Development is arguably a leading ministry in terms of capacity to deliver on statutory mandate. This can be traced to the massive investment which the Project has made in staff training, creation of favorable working environment and provision of ICT equipment and know-how. As a technical and research department of Government, the infrastructure provided for MMSD by the Project has enhanced productive capacity. As a result, the Ministry generated over N1.6 billion in 2011 compared with about N200 million recorded for 2005. Capacity Building for Artisanal and Small Scale Miners: The Project supported the Ministry to register over 400 ASM cooperatives. Many of them benefited from the micro grant scheme that enabled them to acquire improved mining tools, equipment and services. The training which some of them received has enabled them to imbibe better mining practices, keep record of business and financial transactions.

51

Reduced Poverty/Improved Income of ASM Grantees: Many of the grantees have recorded increase in income from mining operations as a result of higher production achieved with better tools and machinery. The households represented by membership of the beneficiary cooperatives now enjoy improved livelihood with more disposable income accruing from mining business. Production of relevant Manpower for Mining Sector by the NIMG: The first set of 34 students at the NIMG completed their postgraduate diplomas and the second set has been admitted. This presents a new crop of available manpower for the mining industry. The process for admitting the next batch of students into the Institute was being concluded by the time of Project closing. Promotion of Mineral Endowment: Many foreign investors are coming to Nigeria today as a result of the extensive investment in mineral promotional activities over the years. Many investor companies are involved in exploration activities in parts of the country. Developing Dimension Stone Industry: The dimension stone industry development activities undertaken by the Project have given rise to some early positive outcomes. The activities of the Project have led to increased awareness of the huge potential of the dimension stone industry. Nigeria’s Dimension Stone industry is now contributing more to the economy in terms of employment generation and Gross Domestic Product. Developing Gemstone Industry: With the training of Master Trainers and commercial cutters, the Gemstone industry is set on the path of growth. If development activities are sustained, this industry would witness the creation of numerous private mini-Lapidaries nationwide. This will create jobs and build skills in gem cutting, polishing and marketing. Management Skills Transferred to ASM Cooperatives: With the training and technical assistance extended to the beneficiaries, their capacity has been greatly improved to manage business operations. This is demonstrated in improved record keeping, conflict management, maintenance of machinery, financial management and profit sharing. Incremental Employment Generated: Evidence shows that many of the Grantees have witnessed increased direct and indirect employment at the mine sites. For example, their workforces have expanded in line with higher levels of operation and production Gender Empowerment and Mainstreaming: The Project deliberately targeted some women groups or cooperatives: They were given grants to upgrade their mining operations and this scheme brought about economic empowerment for those women who otherwise would have been vulnerable. The study on Gender Mainstreaming was already being used as a complement to focus government toward social inclusion in solid minerals development efforts. Reduction of Child Labor at Mine Sites: The Project embarked on campaigns against Child Labor at Mine sites by educating ASM operators on the danger and legal implications of child labor. Strengthened ASM Cluster: During the implementation of the grant scheme, Beneficiaries of crushing plants formed a production cluster by pooling their resources together, with joint efforts in management, production, maintenance and marketing of their products. Value Addition to Solid Mineral Products: There are instances of beneficiaries who are engaged in value addition to minerals mined. The Project provided some communities with access to health, good water and educational services.

52

Reduction in Water Borne Diseases in Contaminated Communities: Fifteen (15) boreholes were provided in Yar Galma, Dareta and environs, Zamfara State, where the incidence of lead poisoning occurred in 2010. This contributed to the reduction of water contamination in the communities. Social Accountability and Inclusion: In terms of social accountability and social inclusion, great improvement was recorded. Many of the communities visited had various developmental associations that organized their activities democratically and were quite inclusive.

53

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders No comments were received.

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Annex 9. List of Supporting Documents Documents in the Project file:

• Aide Memoires • Implementation Status Reports • Quality Assessment of the Lending Portfolio, Reissued report, December 2008

Other Documents: • Chukwuezi, B. (2010). Draft Report on the Social Safeguards Audit of the Sustainable

Management of Mineral Resources Project Sub-Components. Sustainable Management of Mineral Resources Project.

• Ifeadiro, V. (2012). Gender Mainstreaming. Sustainable Management of Mineral Resources Project.

• Eyre, J. M.; Agba, A. V. (2007). Nigeria - An Economic Analysis of Natural Resources Sustainability for the Mining Sector Component. (World Bank, Washington, DC) https://openknowledge.worldbank.org/handle/10986/7941

• Federal Ministry of Solid Minerals Development. (2012). Sustainable Management of Mineral Resources Project. Mining Sector Environmental and Social Assessment - Annexes. Abuja, Nigeria: MMSD.

• Federal Government of Nigeria. (2010). Nigeria Vision 20: 2020 – The First National Implementation Plan (2010-2013) – Volume II: Sectoral Plans and Programmes. (Abuja, Nigeria)

• Federal Government of Nigeria. (2009). Nigeria Vision 20: 2020 – Economic Transformation Blueprint. Abuja, Nigeria: National Planning Agency.

• Federal Ministry of Solid Minerals Development. Sustainable Management of Mineral Resources Project. Technical Assistance Services for Environmental and Social Audit of the Sustainable Management of Mineral Resources Project (Final Report). Abuja, Nigeria: MMSD.

• International Development Association (IDA) (2012). Second Phase of the Rural Access and Mobility Project (RAMP-2), Report No. 65586-NG. Washington, DC: World Bank.

• Jorgensen, T., Tychsen, J., Appel, P.W.U., and Hassan, U.A. (2011). Improving ASM Operations in Nigeria - Trainers Guide. Copenhagen, Denmark: Geological Survey of Denmark and Greenland (GEUS)

• McMahon, G. (2010). The World Bank’s Evolutionary Approach to Mining Sector Reform. Extractive Industries for Development Series No. 19. Oil, Gas, and Mining Unit Working Paper. Washington, DC: The World Bank.

• Ministry of Mines and Steel Development (MMSD) (2012). Sustainable Management of Mineral Resources Project. Mining In Nigeria - Breaking New Grounds – The Story of SMMRP Intervention. Abuja, Nigeria: MMSD.

• Ministry of Mines and Steel Development (MMSD) (2012). Road Map for the Development of Solid Minerals and Metal Sector. Abuja, Nigeria: MMSD.

• Ministry of Mines and Steel Development (MMSD) (2010). Sustainable Management of Mineral Resources Project. Changing Face of Nigeria’s Mining Sector. Abuja, Nigeria: MMSD.

• Ministry of Mines and Steel Development (MMSD) (2008). Nationwide Baseline Study on the Development of Artisanal And Small-scale Mining In Nigeria – Final Report.

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• Ministry of Mines and Steel Development (MMSD) (2007). Nigerian Minerals and Mining Act, 2007, Abuja: MMSD.

• Ministry of Mines and Steel Development (MMSD) (2004). Sustainable Management of Mineral Resources Project. Resettlement Policy Framework (RPF). Abuja, Nigeria: MMSD.

• Mobbs, P.M. (2010). USGS, Science for a changing world. 2008 Minerals Yearbook. Nigeria [Advance Release]. Reston, VA: U.S. U.S. Geological Society, U.S. Department of the Interior. Accessed October 12, 2012 at: http://minerals.usgs.gov/minerals/pubs/country/2008/myb3-2008-ni.pdf

• Mobbs, P.M, (2011). USGS, Science for a changing world. 2010 Minerals Yearbook. Nigeria. Reston, VA: U.S. U.S. Geological Society, U.S. Department of the Interior. Accessed October 12, 2012 at: at: http://minerals.usgs.gov/minerals/pubs/country/2010/myb3-2010-ni.pdf)

• National Planning Commission (NPC)(2004). National Economic Empowerment and Development Strategy. Meeting Everyone’s Needs. Abuja, Nigeria: NEEPC.

• Project Management Unit, Sustainable Management of Mineral Resources Project (SMMRP). (2012). Sustaining the Achievements of the World Bank/IDA-funded Mining Project.

• Tychsen, J., Appel, P.W.U., Hassan, U.A., Jorgensen, T., and Azubike, O.C. (2011). ASM Handbook for Nigeria. Copenhagen, Denmark: Geological Survey of Denmark and Greenland (GEUS)

• Tychsen, J., Hassan, U.A., Wasir, B.A., Kjaer, O.F., and Greve, B.E. (2011). Scoping Study on the Nigerian Mining Sector. (Copenhagen, Denmark: Geological Survey of Denmark and Greenland (GEUS)

• World Bank (2011). International Development Agency. Country Partnership Strategy Progress Report for the Federal Republic of Nigeria for the Period from FY10-13. Report No. 63505-NG. Washington, DC: World Bank. Accessed on October 12, 2012 at: http://documents.worldbank.org/curated/en/2011/09/15155986/nigeria-country-partnership-strategy-progress-report-fy2010-fy2013

• World Bank (2009). Country Partnership Strategy for the Federal Republic of Nigeria for the Period FY10-FY13. Report No. 46816-NG. Washington, D.C.: World Bank.

• World Bank (2008). Country Partnership Strategy Progress Report for the Federal Republic of Nigeria for the Period FY05 –FY09. Report No: 42771-NG. Washington, D.C.: World Bank.

• World Bank (2005). World Bank Group and Department for International Development International Development (UK). Country Partnership Strategy for the Federal Republic of Nigeria (2005-2009). Report No. 32412-NG. Washington, DC: World Bank. Accessed on October 12, 2012 at: http://documents.worldbank.org/curated/en/2005/06/6140410/nigeria-country-partnership-strategy

• World Bank (2004). Memorandum of the President of the International Development Association and The International Finance Corporation to the Executive Directors on a World Bank Group Second Joint Interim Strategy Progress Report for the Federal Republic of Nigeria. Report No. 29060-UNI. Washington, DC: World Bank. Accessed on October 12, 2012 at: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/08/13/000160016_20040813161425/Rendered/PDF/290600UNI.pdf

• World Bank. (2004). Project Appraisal Document - Republic of Nigeria - Sustainable Management of Mineral Resources Project (SMMRP). Report No: 30697-NG. Washington, D.C.: World Bank.

World Bank (2004). Striking A better Balance - The World Bank Group and Extractive Industries: The Final Report of the Extractive Industries Review – World Bank Group Management Response. Washington, D.C.: World Bank.

http://minerals.usgs.gov/minerals/pubs/country/2010/myb3-2010-ni.pdf

http://minerals.usgs.gov/minerals/pubs/country/2010/myb3-2010-ni.pdf

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NIGERIA

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

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N IGERIASELECTED CITIES AND TOWNS

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