The Upper Chamber (Senate) of Nigeria’s National Assembly has initiated legislative moves to raise the gold value of the nation’s foreign reserve assets to 30% from the current 4%.
A Bloomberg Africa’s report indicated that the moves were partly aimed at diversifying the reserves away from over reliance on the United States Dollar (USD) towards a more sustainable commodity.
According to the report, a draft bill now before the Senate proposes a series of policies that would designate the Central Bank of Nigeria (CBN) as the automatic purchaser of all gold mined in the country.
If the new bill sails through and is passed, the informal gold mining industry, which currently is contributing minimally to the nation’s Gross Domestic Product (GDP), will be integrated into the formal sector and fall under the jurisdiction of the CBN.
To operationalize the proposed Act, the Senate is proposing the establishment of a Gold Reserve Authority to supervise the nation’s gold reserves management and bring more structure and oversight functions in the gold reserves management.
Apart from setting up the Gold Reserve Authority, the bill also proposes that the CBN Governor should lead a newly formed gold reserve management committee, which will be responsible for making major decisions as they relate to the handling and allocation of the gold reserves.
According to the proposal in the upper chamber of the National Assembly, the composition and functions of the gold reserve management committee will be similar to the CBN’s Monetary Policy Committee (MPC).
It would be recalled that last month, the Minister of Solid Minerals Development, Dele Alake, while presenting a batch of gold bars under the National Gold Purchase programme to President Bola Tinubu, disclosed that Nigeria’s gold bars transactions which were purchased local miners contributed over $5 million to the nation’s foreign reserve assets.
The minister hinted that the Federal Government would be purchasing more gold bars from local miners as a strategic step towards enhancing the exchange rate of the Naira against foreign currencies.
Alake enthused: “I am proud to announce that this first commercial transaction (of the gold bars) has resulted in a substantial increase of over US$5 million in Nigeria’s foreign reserves assets, the refinement of over 70 kilograms of gold to the London Bullion Market Good Delivery Standard, and the successful aggregation of locally mined gold, injecting around N6 billion into the rural economy.”
