A bill for an Act to make provisions for Nigeria Gold Reserve Industry Framework received overwhelming support as it passed second
By Haruna Salami
A bill for an Act to make provisions for Nigeria Gold Reserve Industry Framework received overwhelming support as it passed second reading at Senate plenary on Wednesday.
Leading the debate on the Bill, the sponsor, Senator Akpoti-Uduaghan, Natasha (Kogi Central) said its aim is “to improve the value of Nigerian currency and as well serves as a hedge against inflation and ensure stability of the economy vis-à-vis our monetary system and policy.
This Bill was read for the first time in this Chamber on Thursday, 22nd February 2024.
The Kogi Central Senator said Gold reserves are critical for the economic stability of a country, acting as a reliable store of value, particularly during financial uncertainties.
“The gold standard was a global practice in the late 1800s and a significant part of the 1900s. During that era, countries backed the value of their paper money with gold by establishing a fixed exchange rate between their currency and a specific amount of gold.
“Before the fall of the Naira, that we are now experiencing the negative effects, one Naira was equivalent to one Dollar or even greater at a time. This was because the value of the Naira was measured against Gold. By virtue of Section 2 of the Financial Agreement (Decimal Currency) Act (the Act that established the useof the Naira), “the parity of the Naira shall be equivalent to 1.24414 grams of fine gold,” A gram of gold is currently approximately $75.70, this was the strength of the Naira before its fall”.
She said section 24 and 25 of the Central Bank of Nigeria Act, the Central Bank of Nigeria is mandated to maintain a reserve of external assets consisting of goid coin or bullion at all times and to endeavour to maintain external reserves at levels considered by the Bank to be appropriate for the economy and monetary system of Nigeria.
“Regrettably, this mandate is being observed in the breach as Nigeria has maintained only a reserve of about 21.37 metric tonnes of gold acquired in the late sixties and early seventies. This is in spite of Nigeria’s abundant gold resources. Currently, our total gold reserves are worth a little over One Billion Dollars ($1 Billion). This pales into insignificance when compared with countries like the United States with 8,133.46 metric tonnes of gold, Germany with 3,352.65 metric tonnes and China with 2,235.39 metric tonnes, or, nearer home in Africa, Algeria, Egypt and South Africa who hold gold reserves in multiples dozens higher than Nigeria.
Some key aspects and benefits of the Nigerian Gold Reserve Bill that merit Senate collective attention and support are:
“The Nigerian Gold Reserve Bill represents a proactive step towards harnessing and maximizing the potential of our gold reserves. By establishing a robust framework for the harnessing, exploitation, and marketing of gold, this Bill, if passed, will not only strengthen Nigeria’s position in the global gold market but, also, ensure responsible and sustainable practices that benefit our economy and communities.
“Specifically, the Bill seeks to establish the Nigeria Gold Authority (NGA) that will be charged among other things, with the administration of Nigerian Mining Act with regards to our gold resources thereby creating a robust gold reserve industry for the country, and enhancing the exploitation and sales of gold within Nigeria that will not only enhance the engagement and earning power of artisanal local miners but also ensure the maintenance of a strong Gold Reserve Ratio, as bulwark for strong and resilient economy that will create jobs in Nigeria through the gold industry.
“The Bill presents a significant opportunity to drive economic growth and diversification by creating a conducive environment for investment in the gold sector, that can attract both domestic and foreign investors, stimulate job creation, and boost revenue streams for the government.
She said, “recognizing the importance of environmental sustainability, the Bill incorporates stringent regulations to minimize the ecological footprint of gold mining and processing activities. It emphasizes reclamation and rehabilitation efforts to ensure the long-term health of our natural ecosystems.
She said countries like Brazil, Russia India, China, and South Africa (BRICS) are shining examples of how strategic utilization of gold reserves can yield significant economic benefits. For the most part of 2023, the BRICS coalition has risen as a significant force in the global economy. The alliance made impressive strides in de-dollarization of the global economy. The BRICS is using gold to facilitate a shift in global demand away from the US Dollar.
“Central Banks globally, have been increasing reserves held in gold as a hedge against currency volatility and geopolitical risks. The Reserve Bank of India, for instance, which has 822.09 tones in reserve, even holds 50% of this gold reserve domestically, through similar legislative frameworks as being proposed in this Bill
“The exceptional quality of gold found in Nigeria signifies a substantial growth opportunity especially given the global demand for gold in various sectors. By capitalizing on gold’s intrinsic value, Nigeria can position itself as a key player in the global market.
Some of the specific benefits of the bill include “economic diversification, foreign investment and revenue generation, job creation, currency stability, infrastructure development, environmental protection, community development, global competitiveness, regulatory clarity and transparency and strategic national reserve”.
