Nigeria Proposes Gold Standard to Control Inflation with $34.8B Reserves


Nigeria Aims to Increase Gold Reserves to 30% of $34.8 Billion Total

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2.Draft Bill Proposes Central Bank as Sole Buyer of Nigerian Gold
3.Gold Currently Makes Up Only 4% of Nigeria’s $34.8 Billion Reserves

Nigerian lawmakers are proposing a significant expansion of the central bank’s authority to utilize gold to strengthen the nation’s reserves and support the economy.

A draft bill before the Senate outlines several policies that would designate the central bank as the automatic buyer of all gold produced in Nigeria, with the aim of increasing the gold component of Nigeria’s external reserves to at least 30%. As of the end of November, gold accounted for only 4% of the nation’s reserves, which currently stand at $34.8 billion.

Nigeria, Africa’s most populous nation, is facing inflation at a more than 28-year high, driven by recent economic reforms that partially lifted petrol subsidies and removed the naira’s peg against the dollar. Over the past 12 months, the naira has declined by approximately 70% against the dollar.

The proposed bill also includes the establishment of a Gold Reserve Authority and calls for the central bank governor to lead a gold reserve management committee, similar in structure and function to the bank’s monetary policy committee. The Central Bank of Nigeria has not yet commented on the proposal.

Gold mining in Nigeria is predominantly informal and contributes minimally to the economy. The bill, building on a 2019 central bank gold purchase program, aims to formalize the industry and legally mandate the central bank’s role in gold purchases.

Since taking office in May 2023, President Bola Tinubu has focused on transforming Nigeria’s mining industry, particularly by attracting investors to the country’s low-grade lithium deposits. The bill, sponsored by an opposition member, must be debated before it can be sent to President Tinubu for approval or veto. It remains uncertain whether the president will support this proposal or prefer one from his administration.

Nigeria heavily relies on its oil and gas industry for foreign exchange earnings. However, issues such as vandalism, theft, and declining investments have hindered production, prompting efforts to diversify the economy. According to the National Bureau of Statistics, the mining and quarrying sector grew by 6.3% in the first quarter compared to the previous year, and analysts see potential benefits in the central bank holding more gold.

“We believe that continued accumulation of gold over the long term will strengthen Nigeria’s foreign exchange reserve portfolios, positively impacting inflation and reducing foreign exchange volatility,” analysts at CardinalStone Research in Lagos stated in a note on Monday.

Godwin Okafor, The Naija247news
Godwin Okafor, The Naija247news
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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