During a recent interview with the president Bola Tinubu, Dele AlakeNigeria’s Minister of Solid Minerals Development, revealed that the national program to purchase gold from domestic producers has increased the country’s foreign exchange reserves by more than $5 million. Central Bank of Nigeria (CBN). This initiative, set up to exploit the country’s economic potential, is starting to show promising results.
During this audience, the minister presented to the Head of State gold bars linked to the first commercial transaction carried out within the framework of the presidential initiative for the development of artisanal gold mining. This symbolic gesture marks an important step in the implementation of this strategy, which aims to integrate artisanal miners into the formal economy from the country.
As our colleagues at the Ecofin Agency, in 2020, the Nigerian authorities launched a program allowing the CBN to purchase gold from artisanal miners by paying in naira. This initiative was designed not only to increase foreign exchange reserves, but also to combat illegal mining plaguing the country. Nigeria, which has significant untapped gold reserves, is seeking to maximize the economic benefits of this valuable resource.
“ The program increased the country’s foreign exchange reserves and showed that using the Nigerian naira to purchase a liquid asset traded in U.S. dollars, such as gold, is a viable strategy. This transaction also highlighted the potential of the national gold purchase program to strengthen fiscal and monetary stability“ said Minister Alake
Illegal mining is a major problem in Nigeria, preventing the country from taking full advantage of its natural wealth. The gold purchase program aims to offer a legal and profitable alternative to artisanal minersthereby reducing illegal activities while increasing country’s foreign exchange reserves.
The purchase of gold by Central Banks from local producers is a strategy that has met with success in several African countries in recent years. It allows these institutions to strengthen their foreign exchange reserves and improve the effectiveness of their monetary policies. Nigeria, in adopting this approach, is following a trend that has proven effective on the continent.
