Towards Developing an all inclusive Gemstone & Jewelry Industry in Nigeria

1Towards Developing an all Inclusive Gemstone and Jewelry Industry in Nigeria
Lotanna Amina Egwuatu, Mina Stones
Lotanna Amina Egwuatu(GIA GG, AJP)

This page intentionally left blank

Con-
tent
Content
Foreward 5
Executive Summary 6
Solid Mineral Distribution 7

Gemstone & Jewelry Manufacturing In Nigeria 8
Past Initiatives 9
Policies 10
Outcomes 10
All Inclusive Gemstone & Jewelry Industry 11
Low Start-up Costs 12
Traceability of Gemstones 12
Financial Accountability 12
Stakeholder Attraction 12

Recommendations 13
Stage 1 13
Stage 2 14
Stage 3 15
Other Recommendations 15
Conclusion 16

4 Towards Developing an all Inclusive Gemstone and Jewelry Industry in Nigeria

ForewordForeword01
O
ver the last ten years I have been
privileged to work and travel as an ethical
gemstone jeweller. During this period of
my life, I have met many artisanal miners in Nigeria’s
most remote locations: from the bushes of Kaduna
and its environmental friendly small-scale mining
communities, to the sites located in many parts of
Nasarawa and Niger states. I have seen the many
challenges both men and women face in trying to set
up their mines and make a decent livelihood from the
metals and minerals they mine. It is not an easy job
being a miner, without doubt it is made much harder
when policies and regulations seem to work against
you.
I believe the reserves of the land should profit the
people of the land; the gemstone manufacturing
potential of Nigeria could be a global game changer in
international gem and jewellery production that could
lift many out of poverty. This document will underline
the present lost prospects and what we stand to
gain in the future. I have no doubt that a Nigerian
processed mambilla sapphire or copper-bearing
tourmaline would be a powerful product that will be
a game changer when put out in the international
markets.
The recommendation in this report, and in particular,
that of an all-inclusive gemstone industry that
benefits all stakeholders in the Nigerian Gemstone
and Jewellery industry is possible. What is now
required is for the Nigerian government to step up
to the challenge and create the right legislative
environment for this to happen. I remain optimistic
that this will come to pass.
Lotanna Amina Egwuatu (GIA GG, AJP)
Creative Director, MINA STONES

ExecutiveExecutive Summary02
T
he gemstone industry in Nigeria is highly
untapped for many reasons. Prior to
the October 2015 Nigeria Gemstones
and Jewelry Exhibition (NGJE), a white paperwas
presented showcasing the Nigerian gemstone
and jewelry value chain, which documented
the start of a new direction for the industry.
Central to the vision was the increased awareness of
the availability of some of the world’s most sought-
after gems. Issues along the supply chain including
poor mining techniques and lack of beneficiation
were also highlighted. This deeper awareness has
also created the expectation that the stakeholders
want a functioning infrastructure that will enable the
industry to thrive. The conclusion of the report came
with a call to brands to embrace that vision by asking
the question of how the gemstone value chain can
maximize benefits for the country and her populace.
Withtherightstructuresputinplace,awell-functioning
gemstone industry in Nigeria is highly feasible
and is of utmost economic importance as it can be
an avenue to get a reduction in the unemployment
rate; Thailand for instance, has a population of
approximately 60 million people with over 25
million working within the gemstone value chain.
This document highlights some issues the industry
currently faces and proffers some attainable possible
solutions to tackle them.ppen. I remain optimistic that
this will come to pass.

Solid Mineral Distribution in Nigeria
Towards Developing an all Inclusive Gemstone and Jewelry Industry in Nigeria

Gemstone
& Jewelry
Manufac-
turing In
Gemstone
& Jewelry
Manufacturing
In Nigeria
03
N
igeria is endowed with
abundant mineral resources
that have the potential to
generate foreign exchange earnings
for the country. Nigeria is home to
various precious stones and metals
such as Gold, Silver, and Platinum.
Amongst the precious gemstones
found in Nigeria are the Mambilla
Sapphires which have been compared
to the famed Kashmir Sapphires
found in some parts of the North-
West Himalayas known for their
unparalleled beauty and vivid blue
colour and Copper bearing Tourmaline,
which are compared to the Paraiba
tourmalines found in Brazil. These
gemstones are rated to be of very
high value at (thousands of dollars per
carat) in the international market. It is
also speculated and as shown in the
map above that diamonds are also
present in the country. The value of a
gemstone increases when it is cut and
polished, however, gemstones mined
in Nigeria are being exported mainly
as raw gems without value addition.
The value variance between uncut
and cut gemstones is 1:100 in many
cases¹. The value increases even more
significantly when the gemstones are
set in jewellery, that is, when they have
a metal setting.
Nigeria as we all know has not
been able to profit significantly from
this value addition despite several
interventions, as investments and the
skills for cutting, polishing and jewelry
making in the country is still very low.
In order for the country to generate
foreign exchange from the Gemstone
Industry, there is a need, amongst
others, for the government to support
this sector.
¹ Ali Consultants (2006), “Pre-Feasibility Study for
Gemstones, Production, Processing and Marketing”,
Commissioned Study Report, Employment and Research
Section, Government of Pakistan, Islamabad.

Past Initiatives
Despite interventions by the Nigerian
government and the World Bank who
introduced the Sustainable Management
of Mineral Resources Program (SMMRP) in
2004 and others, the lapidary and jewelry-
manufacturing sector in Nigeria remained
virtually non-existent until 2009, when a
Lapidary was set up at the Nigeria Institute
of Mining and Geoscience (NIMG) in Jos. This
project was slated to train over 500 gemstone
cutters within 5 years which currently account
for the little percentage of cut gems that are
being sold. Till date, it is unknown if the 500
individuals were actually trained. In 2015, the
first ever Gemstone & Jewelry exhibition and
seminar took place, which brought foreigners
from far and wide to buy and trade gemstones
and Jewelry. The program ended with a list of
recommendations to help build the industry
and a plea to the government to support these
types of trade shows which attract buyers and
cutters from all over the world. However, since
the event in 2015, not much has been done
to make Nigerian gemstones more attractive
to the international market. High levels of
rough stone smuggling continue to undermine
potential value-addition within Nigeria, whilst
the unregulated nature of gemstone mining
and production impedes the success of
programs designed to engage with the sector
and add value.
Very little jewelry making currently takes place
in the country due mainly to shortage of skills
and adequate technology.
Figure 3.1
Unpolished Mambilla Sapphire
Figure 3.2
Polished and Cut Sapphire
² Sustainable Management of Mineral Resources Project, World Bank
(2004)

Policies
According to a World Bank report in 2012,
the Nigerian government has identified the
potential in the establishment of a gemstone
processing industry to generate revenue for
the country and create jobs. However, as of the
time of this white paper, there does not seem
to be an official policy in place to guide the
gemstone and jewelry manufacturing industry.
Inconsistencies in government policies
for mining make it difficult for prospective
investors in the industry, thereby hindering
growth.
Outcomes
Generally, Nigeria has not been able to profit
from this industry even with the several
interventions proffered. One main issue
that consistently impedes the growth of the
Nigerian lapidary and Jewelry manufacturing
industry is the continuous illegal transfer of
gemstones (mainly in their unrefined state) out
of the country. According to Ojeka Patrick, the
Director of Artisanal and Small-Scale mining,
approximately 80% of gemstones mined in
the country are exported illegally . Gemstone
buying centres were set up by the government
to counter this but the lack of trust by both
buyers and sellers in the government has
rendered this very ineffective.
Diamond
12 - 14 Billion
Jade
3 - 6 Billion
Emeral/Ruby/Sapphire
1.5 - 2.5 Billion
Other Colored Gemstones
250 - 750 Million
Figure 3.3
Estimated Global Rough Gemstone Sales, 2015 ³
³ Figure 3.3: this chart indicates the sales of gemstones in the global
market. Nigeria can use it the above figures to understand the importance
of gemstones in the world market. Governing the Gemstone Sector:
Lessons from Global Experience
4Ojeka Patrick (2015)

All Inclu-
sive Gem-
All Inclusive
Gemstone
& Jewelry
Industry
04
T
he idea is for Nigeria to have
an all-inclusive value chain
to benefit from vertical
integration in the gemstone and
jewelry industry. Small-scale artisanal
miners produce about 85% of the
world’s coloured gemstones. This is
mainly because it is uncommon to find
a single deposit sizeable enough to
validate the cost of setting up a large-
scale mining operation. Therefore,
in order for Nigeria to reap the full
benefit of its gemstone resources
both medium-scale and small-scale
approaches need to be considered. In
the case of Jewelry manufacturing, it
is of utmost importance in generating
enhanced exports to ensure increased
production and consistent availability
of raw materials.
According to Gemological institute
of America and information gathered
at the African Gems and Jewelry
Exhibition and Seminar, very few are
skilled and even fewer are globally
trained within the industry in Nigeria, it
will therefore be beneficial to support
people with the right skills to have
control over majority of the value chain.
This will also help set up a structure
that will allow for closer monitoring and
evaluation of the gemstone and jewelry
industry by having checks to ensure
global standards are met amongst
other things.
Development of the whole value chain
will create more jobs for the citizens and

importantly, these jobs would be largely dispersed,
favouring the locals, thus providing openings for
individuals to earn a living without having to seek jobs
in foreign lands. Some other advantages are:
Low Start-up Costs
The start up costs accompanying small-scale/
artisanal mining is minimal. Feeding, transport to the
site and purchase of a few tools is all that is required.
This means that it does not require a high number
sale before the individual is making a profit and the
Traceability of
Gemstones
With regards to demand, the notion that a gemstone
can be traced to the individual miner who collected
it carries with it a premium, that allows gemstone
and jewelleries to sell for a higher margin than
a non-traceable gemstone. International buyers
(middlemen, cutters and jewelers) indicated that the
idea of buying Nigerian gemstone, which is free of
many of the ethical hurdles, directly from Nigerians
makes it most appealing.
Financial Accountability
One of the key questions we encountered when
talking to Nigerian government officials was, “how we
ensure accountability and make sure that tax revenue
is collected on the sale of gemstones and jewelry
by individuals?” This is a valid concern but with the
appropriate institutional support, small-scale mining
would have an important role to play in facilitating
financial accountability in the gemstone and jewelry
sector. As such, we propose the following three-
phase approach as a way of operationalizing financial
accountability in the gemstone sector in Nigeria.
Stakeholder Attraction
The growth of the gemstone industry can lead to be
an added source of annual income. Take for example
the Israeli Diamond Exchange attracts about 330,000
visitors to that country yearly, providing employment
for over 20,000 families and contributing an annual
income of an estimated $800m to the nation.
PRODUCTION
JEWELRY MANUFACTURING RETAIL
CUTTING & POLISHING
Polish Trading
Wholesale
Rough Trading
Figure 4.1
Gemstone Value Chain ⁵
⁵ Figure 4.1 shows the summary of gemstone value chain process,
Governing the Gemstone Sector: Lessons from Global Experience , (May
2017)
government is receiving revenue.

Recom-
menda-
tions
Recommendations05
B
elow are suggestions that may aid the
government in improving the overall
structure of the gemstone mining industry.
These recommendations are proposed in three
stages.
Phase 1
Stage one would involve giving unrestricted private
mining rights to Nigerians and the creation of an
Export and Trade Agency, with which all gemstone
and jewelry sales should be registered. This simple
process has been shown to be successful in countries
such as Sri Lanka.
Confirming that all local and overseas sales are
disclosed at the Export and Trade Agency enables
accountability, traceability and permits the relevant
authority to oversee sales and collect tax revenue.
The Export and Trade Agency would also postulate
regulations, in that it could suspend rights for anybody
who breaks the rules.
Another benefit of guaranteeing that all gemstone and
jewelry exports are registered at the export house is
that it allows the relevant body to oversee and compare
the handover prices being paid. This would go some
way towards enabling government revenue collection
from international buyers, and overcoming the risk of
artificially low transfer prices.
Under this model, the government would potentially
receive income from the following sources:
• Income tax payable by those collecting and selling
gemstones and jewelry. All sales would have to
be registered at the export office, ensuring that
the correct amount of tax paid is an attainable
objective.
• Royalty payment on the export of gemstones and
jewelry, this would result in another stream of
government revenue, payable by the international
buyers.
⁶Boost trade in Sri Lanka through reforms and access to information, World
Bank (September 2017)
Formation
of TRADE AGENCIES
1

Phase 2
A tactical implementation of stage one will lead
to the expansion of secondary industries. These
would include cutting/polishing workshops,
gemstone traders, final product jewelry designers,
valuation houses and trade shows. Based upon our
conversations with local miners, the same people
collecting the gemstones may also cut, polish and
trade. However, it is equally likely that individuals
may prefer a specialization within the value chain.
This will create additional employment across the
industry in Nigeria.
Due to initial initiatives to develop local capacity in
gemstone identification and transformation, there
is already a core group of people with cutting and
polishing skills. Furthermore, courses are available
at the Century Cuts and NIMG college. There are
also plans to make some of these courses available
in the major Nigerian languages for miners and other
adherents to be able to access information.
Another activity that is likely to arise is that of gem
valuation. Gem pricing can be subjective and in order
to ensure both parties obtain a fair price, it is often
useful to have a third-party valuation on which to base
the asking price. This is something that will develop
with greater awareness of the value of gemstones.
Furthermore, as gemstone industries develop within
Optimization
of the VALUE CHAIN
2a country, technical support can be provided by
organizations such as GIA when they open offices
in a country. This is also another potential source of
revenue.
A call for world-trained professionals (local and
international) who understand the gemstone and
jewelry manufacturing business on a global level is
of utmost importance to facilitate these strategies.
Action should be taken to promote the gemstone
and jewelry sector globally, to guarantee there is
a demand and interest, which could also boost
investment.
Government partnerships with private certified
companies in this industry should have a significant
role in setting up regulations, policies and commercial
processes for gemstone and jewelry trade and
export thereby creating a friendly environment for
the gemstone and jewelry industry to thrive. Securing
availability of raw material is of utmost importance in
generating enhanced exports. The major gemstone
producing countries, which need to be targeted
through bilateral engagement to secure reliable and
adequate long-term supply are Kenya, Botswana,
Angola, Namibia, South Africa, Democratic Republic
of Congo (DRC) and Zimbabwe as per Kimberley
Process Certification Scheme (KPCS) guidelines.
⁷ Kimberly Process Certification Scheme, 2017.

Phase 3
Phase three would involve forming cooperatives,
associations and small scale companies in order to take
advantage of funding opportunities and exclusive rights
to certain areas. These collective organizations would
be required to adhere to Nigeria’s gemstone & jewelry
legislation.
One of the reservations faced when offering the idea of
clusters revolves around the notion that people may try
and circle around the process and smuggle gemstones
the opportunity to this in-turn allows of world-trained
who understand business in workshops, 100%
concessions. This represents an opportunity for the
Nigerian government to develop an inclusive, efficient
and prosperous economy, without excessive costs to
begin the process.
Other Recommendations
• There should be an all-inclusive social and financial
feasibility study on the creation of a Nigerian
Gemstone & Jewelry industry. The study should act
as the foundation for the implementation of stage
one and two.
• Establish a National Gemstone & Jewelry
Export House, which entails hiring consultants/
professionals in the gemstone and jewelry industry
whose mandate will be to evaluate taxes and tariffs,
and to document data, for all jewelry, gemstones
sales, both rough and polished. The set up would
guarantee that gemstone value is equitably priced
and serve to control and monitor prices in view of
maximizing export earnings for the benefit of the
Nigerian people.
Association
& TRADE GROUPS
3

Conclu-
sion
Conclusion06
P
rior to the October 2015 Nigeria
Gemstones and Jewelry
Exhibition (NGJE), a white paper
was presented showcasing the Nigerian
gemstone and jewelry value chain, which
documented the start of a new vision for
the industry. Central to the vision was the
increased awareness of the availability of
some of the world’s most sought-after gems.
Issues along the supply chain including poor
mining techniques and lack of beneficiation
were also highlighted. This deeper
awareness has also created the expectation
that the stakeholders want a functioning
infrastructure that will enable the industry
to thrive. The conclusion of the report came
with a call to brands to embrace that vision
by asking the question of how the gemstone
value chain can maximize benefit for the
country. With the right structures put in
place, a well-functioning gemstone industry
in Nigeria is highly feasible and is of utmost
economic importance as it can be an avenue
to get a reduction in the unemployment
rate, taking a cue from Thailand which has
a population of approximately 60 million
people with over 25 million working in the
gemstone industry.
Nigeria’s coloured stones are regarded
to be of a high quality in its raw state and
even more so when refined. According
to Umar Bamali, (former Director/Chief
Executive Officer Nigeria Institute of Mining
and Geosciences - NIMG) over 500 times
more revenue can be earned from refined
gemstones than from raw ones.
The government has a role to play in the
development of this industry as a policy
maker and also in ensuring that access
to finance is a thorough and transparent
process, as this is the major issue limiting
the development of the industry.
The Nigerian government needs to ensure
that policies it sets in place are followed
through to the end. Training lapidaries with
current beneficiation techniques and proper
certifications that meet world standard,
could help Nigeria export expertise to other
countries in need of skilled artisans.

Lotanna Amina Egwuatu (GIA GG, AJP)
amina@minastones.com
+2348099444117
minastones
mina_stones

Towards Developing an all inclusive Gemstone & Jewelry Industry in Nigeria

Recommended

Recommended

More Related Content

Similar to Towards Developing an all inclusive Gemstone & Jewelry Industry in Nigeria

Similar to Towards Developing an all inclusive Gemstone & Jewelry Industry in Nigeria (20)

Recently uploaded

Recently uploaded (20)

Towards Developing an all inclusive Gemstone & Jewelry Industry in Nigeria