Sunday, May 16, 2021

Nigeria targets $500m foreign reserves boost, moves to regulate illegal Gold sales

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Godwin Okafor
Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

Nigeria plans to stem illegal gold exports worth hundreds of millions of dollars a year to boost the country’s foreign reserves.

The program will regulate production by informal miners that currently provides no income to the state, said Fatima Shinkafi, executive secretary of the Presidential Artisanal Gold Mining Development Initiative.

As much as 18 tons of gold leaves Nigeria illegally every year and is shipped to Dubai, Shinkafi said in an interview. PAGMI’s plan is to shift most of that production, which is extracted by so-called artisanal miners and sold to middlemen, into a supervised supply chain that ends with bullion in a central-bank vault.

Regulating artisanal gold will help diversify Nigeria’s economy at a time when lower crude prices are adding pressure on President Muhammadu Buhari’s government to reduce Nigeria’s dependence on oil.

Persuading the informal gold-mining industry to come within the orbit of state oversight would not only generate much-needed tax revenue. It would also allow the central bank to stockpile the metal, according to the presidency.

Oil sales are Nigeria’s main provider of hard currency, accounting for about half of government revenue and 90% of export earnings. Although the price of crude has rebounded and stabilized since a sharp plunge in March, the collapse has forced Buhari’s administration to devalue the naira as a decline in revenue sapped external reserves.

Nigeria’s gross reserves currently stand at $35.9 billion.

The price of gold has soared in recent months, reaching a record $1,988.40 an ounce on Monday. At current prices, the PAGMI program could add about $500 million to foreign reserves annually, as well as contribute $150 million in taxes, according to Shinkafi.

“That’s a hell of an incentive for a country that is earning mostly from oil and agriculture,” she said.

With additional reports from Bloomberg

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