The successful completion of the first commercial transaction under the National Gold Purchase Programme (NGPP), a centralised off-take scheme, has strengthened Nigeria’s bid to diversify and deepen its gold reserves by purchasing gold in local currency to engender economic confidence, enhance currency stability, and boost non-oil export and foreign reserves. Accordingly, industry experts and stakeholders are calling for efforts to build on the gains of the scheme to deepen investment in solid minerals. DAMOLA KOLA-DARE reports.
Chief Executive Officer of Tobit International, a firm that deals in gold bars, Frank Ebhodaghe, will never cease to proclaim his fascination with the gold industry. “Gold is not just a commodity; it’s a symbol of value, wealth, and heritage. I saw the potential to make a significant impact, not just financially, but by creating opportunities and empowering others through what we do at Tobit International,” he declared.
The occasion was a seminar in Lagos, recently, where Ebhodaghe, in his engaging presentation reiterated that “Gold’s enduring appeal lies in its ability to shield against inflation and currency devaluation, making it a must-have for individuals and businesses alike. Unlike other investments, gold rarely depreciates; while its price fluctuates, it has consistently appreciated over time, often outperforming traditional assets during crises.”
The Tobit International CEO did not stop there. He said despite the challenges of the gold industry, including fluctuating prices and geopolitical factors, “The world will always need gold. Whether it’s for technological advancements, investment portfolios, or fashion, gold is timeless.” He, therefore, made a strong case for building on the gains of the National Gold Purchase Programme (NGPP) and deepen investment in solid minerals.
The NGPP, now widely acknowledged as a major milestone in the President Bola Ahmed Tinubu-led administration’s bid to diversify the economy under the Renewed Hope Agenda, is a centralised off-take scheme supported by a decentralised aggregation and production network of artisanal and small-scale miners and cooperatives. The Minister of Solid Minerals Development, Dr. Dele Alake, recently presented the first commercial transaction under the NGPP to President Tinubu.
While presenting gold bars to the President, Alake said they were sourced from artisanal and small gold miners and refined by an agency of the ministry, the Solid Minerals Development Fund. The successful completion of the first commercial transaction clearly demonstrates the Programme’s effectiveness. It has also increased the nation’s foreign reserves assets and shown that using the Nigerian naira to purchase a liquid asset traded in United States dollars, such as gold, is a viable strategy.
Giving more insight into the commercial transaction that now gladdens the hearts of Ebhodaghe and other stakeholders in the Nigerian gold industry’s value chain, Alake revealed that the first commercial transaction had delivered over $5 million increase in Nigeria’s foreign reserves assets, 70+ kilograms of gold refined to the London Bullion Market Good Delivery Standard and successful aggregation of locally mined gold thereby injecting about N6 billion into the rural economy.
The Executive Secretary of the Solid Minerals Development Fund, Fatimah Shinkafi, also said through the efforts of the National Gold Purchase Programme under the Ministry of Solid Minerals Development, Nigeria has joined a group of countries strengthening their gold reserves by purchasing gold in local currency to engender economic confidence, enhance currency stability, and create an enabling environment for foreign investment.
In 2018 when the NGPP commenced, under President Muhammad Buhari’s administration, it was referred to as the Presidential Artisanal Gold Mining Development Initiative (PAGMDI), with some of its purchase sold to the Central Bank of Nigeria (CBN). The then Minister of Mines and Steel Development, Dr. Kayode Fayemi, said the scheme aimed to equip artisanal miners, provide extension services and off-take of all gold produced by participants in the scheme.
Ultimately, the focus, according to Fayemi, was to boost the country’s foreign reserves and the value of the naira against other currencies. Now, nearly a year since the current Minister of Solid Minerals Development, Dr. Alake presented the first commercial transaction under the NGPP to President Tinubu, stakeholders in the industry and the economy have been counting the gains of the gains of the scheme,in which the President described as “Another concrete step toward the diversification process under the Renewed Hope Agenda.”
Indeed, the gains of the NGPP transcend the gold industry itself. For instance, the Nigerian Export Promotion Council (NEPC) announced early this year that solid minerals and agriculture drove non-oil exports by 20.79 per cent in 2024, reaching a total of $5.456 billion. NEPC stated that the amount, representing an increase of $938.442 million, exceeded the $4.517 billion the government got in 2023.
The significant growth, according to the Executive Director of NEPC, Nonye Ayeni, demonstrated the resilience and diversification of Nigeria’s export sector from crude oil, a shift poised to reduce the country’s overdependence on oil revenue. Ayeni also mentioned that the Council aimed for a 30 per cent growth target this year.
She said: “Despite the economic realities and the global economic downturn, the council through collaborations with other relevant agencies and institutions has contributed to economic diversification with an impressive non-oil performance of $5.456 billion in 2024. It is worth noting that this reflects a significant increase of 20.79 per cent compared to the regular figure of $4.517 billion for the preceding year of 2023.”
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Ayeni said the surge in non-oil exports was boosted by improved economic activity in the agriculture, manufacturing, and solid minerals sectors. “This achievement can be attributed to the active diversification of the economy through the non-oil sector with emphasis on promoting agriculture, solid minerals and manufacturing. It is also by the positive impact of the current Federal Government’s effort to enhance trade through effective policy implementation, both fiscal and financial policies.”
With the solid minerals sector particularly gold coming on strong, propelled by the NGPP, it is hardly surprising that experts and operators, including Ebhodaghe are now calling for consolidation of the gains of the scheme to further boost non-oil export, enhance Nigeria’s foreign reserves and stabilise the naira. Ebhodaghe, for instance, emphasised the need to deepen investment in the gold industry, noting that despite some of the challenges of the industry, there will always be demand for gold.
To drive home his point, Ebhodaghe, at the seminar, narrated a story: “Three years ago, two friends, Emeka and Tunde, each with 500 million naira, embarked on a friendly wager to see whose investment would yield more. Emeka purchased a luxurious house in Lekki Phase 1, banking on Lagos’s booming real estate market. Tunde, however, chose gold bars from Tobit International, believing in the long-term value and security that gold provides.”
“As the years went by, the real estate market was met with unexpected challenges. Economic fluctuations and regulatory changes led to a decline in property values, leaving Emeka with a significant loss on his investment. On the other hand, Tunde’s gold bars appreciated in value. The price of gold surged due to global economic uncertainty, and Tunde found himself not only recovering his initial investment but also making a substantial profit.”
This scenario, the Tobit International boss said, highlights the importance of understanding market dynamics and the potential risks associated with different types of investments. He said while real estate can offer high returns, it is also subject to market volatility and various external factors that can affect property values. Gold, on the other hand, has a long-standing reputation as a safe haven asset, often sought after during times of economic distress.
Beyond its reputation as a safe haven asset, Ebhodaghe also noted that trading in gold has the potential for job creation, stressing that it must have been envisioned in the earlier Presidential Artisanal Gold Mining Development Initiative (PAGMI), where gold mining in Nigeria was expected to generate about $150 million in taxes; $25 million in royalties, and $500 million in the form of accretion to the country’s foreign reserves on an annual basis. The sector was also projected to generate about 250, 000 new jobs.
Interestingly, “Nigeria,” he said, “has an estimated gold reserves of about 200 million tonnes spread across states such as Zamfara, Oyo, Osun, Kogi, Kwara, Kaduna, Bauchi, Abia, Edo, among others. Gold is acceptable worldwide and is an addition to assets that are tradable in the country. It will bring great value to the Nigerian economy and financial market as it will deepen the market and provide more opportunities to market players.”
While pointing out that “In business, it’s important to not only focus on short-term gains but to invest in sustainability,” Ebhodaghe said. “Our mines are not just about extracting resources but also about preserving the land for future generations. This is why we invest heavily in local communities, providing jobs and fostering economic growth.”
He called for efforts to ensure that the illegal exportation of Nigeria’s gold to Dubai, United Rab Emirates (UAE) is addressed. He said to tackle gold smuggling in Nigeria, a multifaceted approach is required, including law enforcement, security sector reform, and community engagement. He noted that enforcing the law, identifying and prosecuting individuals involved in illegal trade, and reforming the gold mining and security sectors are very important.
The entrepreneur, while emphasising the significance of fostering community partnerships to gather intelligence, said the UAE is by far the main destination for African smuggled gold. He said, for instance, that from 2012-22, some 2,569 tonnes of African gold worth around $115 billion reached the country.
He noted that each year, between 321 and 474 tonnes of artisanal gold are produced in Africa without being declared, equating to a value of between $24 billion and $35 billion. Ebhodaghe urged the UAE to bolster customs controls on gold imports, in particular to ensure that the gold has been correctly declared in the country where it was mined.
“There should be regulations around hand luggage and more transparency on the true origin of imported gold,” he stressed, adding that collaboration with other countries to strengthen regulations and policies to curb the menace was imperative. He also called for increased and tighter controls to combat smuggling.a
