The virtual presentation of Nigeria’s first ever locally produced gold bar recently marks a productive beginning of a journey to an era of gold economy. ABAH ADAH writes:
Upon assumption of office in 2015 for first term in office, the present administration of President Muhummadu Buhari prioritised the solid minerals and agriculture sectors as the key sectors that would drive its economic diversification agenda. The solid minerals (mining) sector which was highly productive and contributing significantly to the country’s GDP up to the 1970s became suddenly abandoned during the oil boom by successive governments as all attention was focused on the huge income accruing from the newly discovered product-petroleum. Consequently, the sector remained dormant and undeveloped for over three decades, even as the country is endowed with over 40 assorted solid minerals including silver and gold.
In the quest to revamp and reposition the sector to diversify the economy, various programmes and interventions had, at one time or the other, been put in place by the federal government in the last five years. One of such is the Presidential Artisanal Gold Mining Development Initiative (PAGMI)
PAGMI is an Artisanal Support Programme for miners of gold in Nigeria, being implemented by the Solid Minerals Development Fund (SMDF) under the oversight of the Ministry of Mines and Steel Development. It was approved by President Muhammadu Buhari in 2019 to foster the integration and formalisation of artisanal gold mining activities in the country with Kebbi and Osun as the first pilot states in focus.
The catalyst for the initiative is the provision of access to markets for the artisanal miners through a National Gold Purchase Programme and the deployment of enhanced mining methods at artisanal and small-scale mining sites.
To this end, a biometric data capturing exercise for proper registration and enrollment of the first batch of artisanal miners to benefit from the programme was flagged off in Yauri LGA of Bauchi State in February.
On the 9th June, 2020, the federal government commissioned the Dukia Gold & Precious Metals Refinery Project, and the nationwide Dukia-Heritage Bank Gold and Precious Metals Buying Centres which is part of a valuable collaboration with the private sector as the Central Bank of Nigeria (CBN) joined forces with Thor Explorations Ltd, a Canadian company that sees Nigeria as a new frontier for a gold rush at a period gold miners face the dearth of new discoveries across the globe.
During the virtual commissioning of the project, the Vice President, Prof. Yemi Osinbajo, said Nigeria has potential reserves of 200 million ounces of gold and that the launch of the expansive project, Dukia Gold, would create new opportunities for Nigeria to mine her gold reserves properly, trade responsibly and refine locally.
This is happening 18 months after foundation stone of the first ever gold refinery in Nigeria was laid in Mowe, Ogun State in December, 2018, thus underscoring the readiness of the federal government to harness the rich gold reserve in the country through mainstreaming of the hitherto popular artisanal gold mining and beneficiation of the precious metal, a move industry watchers say will engender a gold boom for the country in the near future if sustained.
A statement obtained prior to the historic presentation of the first 100 per cent Nigerian made gold bar from the office of the Executive Secretary of the Fund, Hajiya Umar Shinkafi, projected some of the dividends the country stands to reap, especially in the area of revenue generation, job and wealth creation in line with the mandate of PAGMI.
“On a large scale, SMDF estimates that the federal government of Nigeria could realise an annual average of $150 Million in taxes, $25 million and $500 million in royalties courtesy of PAGMI,” the statement read, adding that over 500, 000 new formalised mining jobs are could be created.
On Thursday, 16th July, 2020, Nigeria made history as the world witnessed a virtual presentation of the first locally Produced gold bar in Aso Rock courtesy of PAGMI.
CBN presented a check of N268 million for 12.5kg gold bar which was mined and refined according to the London Bullion Market Association(LBMA) standards required for use as a reserve instrument by the apex Bank.
Speaking at the event, President Buhari reiterated his administration’s commitment to combat illegal mining activities, while expressing concern that Nigeria lost $3b to gold smuggling in 6 years (2012 to 2018).
The President said the implementation of the PAGMI scheme would result in the establishment of accredited gold buying centres across key mining areas as artisanal miners and SMEs engaged in mining would be able to get value for what they mine.
‘‘These operations will help in diversifying our revenue base as the sale of gold by artisanal miners and SMEs at accredited centers will help the government in realizing royalties and taxes from the sale of these assets,” he said.
The President assured Nigerians that the initiative would help support government’s efforts at enabling creation of jobs for Nigerians, boosting the nation revenue base, and improving foreign exchange reserves.
“In Nigeria, the drop in crude oil prices has had a significant impact on government revenue, as well as on our foreign exchange earnings. In responding to this challenge, it is therefore paramount that we strengthen our efforts at implementing policies and programmes that will enable greater diversification of the Nigerian economy”, he added.
The President disclosed that efforts are being made to support artisanal miners and ensure that there is improvement in the standard of the gold that would be sold to the Central Bank, and that they meet international benchmarks.
According to the President, the improved artisanal gold mining being desired could create 250, 000 jobs for Nigerians and $500 000 annually in royalties.
“The gold buying programme by the Central Bank will ensure that artisanal miners are no longer subjected to the volatility in gold prices that occurs in the absence of credible off-takers, which has often led to a significant loss in the value of gold sold by miners, as well as in encouraging smuggling”.
“It will also help support improved economic activities in our rural communities. As a result, we expect that about 250,000 jobs would be created and $500 000, realised from improved gold mining operations”, he further explained.
The Hon. Minister of Mines and Steel Development, Arc Olamilekan Adegbite in his welcome remarks, said the event was a milestone on the way to positioning the country into gold trade.
He said President Buhari is the first President to walk the talk in respect of the diversification of the country’s economy by approving extra budgetary allocation of N30billion in 2017 to the sector as an intervention fund.
The Minister explained that the PAGMI initiative is a pilot programme to develop a gold ecosystem that would serve as a pilot for gold trading in Nigeria. “The essence is to formalise artisanal gold miners in Nigeria and through registered and recognised buying centers, takes off their mined gold, aggregate and refine it to London Bullion Market Association (LBMA) standard and the CBN will be the off taker.”
He explained PAGMI was to start with five (5) states as pilot, that is Zamfara, Kebbi, Niger, Kaduna and Osun States but the government is currently giving priority to Kebbi and Osun States, adding the that the gold that was presented to the President was from Kebbi State.
The advantage of this according to him is that CBN can buy gold in Naira and use that gold to shock up its deposit base, that is its foreign currency reserved in dollars.
Kebbi State Governor, Atiku Bagudu in his remark said the gold purchase programme would eliminate illegality and criminality in the sector.
Recall that banditry and kidnapping in the North West states of Zamfara, Kebbi and Sokoto have been linked to illegal mining.
According to Bagudu, many states including Kebbi have people in the artisanal good mining sector for decades but this is this first time they are being energised by a National Programme.
He said now the miners will be supported by a steering committee to include those artisanal miners that are eager to do their activities, but they have been doing so illegally, with health hazards to themselves, damage to the environment, and because of its illegality, it brings insecurity.
“So this energises state governors and gold producing communities across Nigeria and I believe this is an initiative that will see us through more individually and collectively in this gold production and ensure that people benefit from it,” he noted.
On his part, Central Bank Governor, Godwin Emefiele said the launch of the programme will increase the revenue base of the country.
“Like you all know, for several years and decades we have been talking about the need to diversify the revenue base of the Nigerian economy; and we can today that that has been actualised in the sense that other than receiving dollar revenue from proceeds of sale of crude oil, we have today received into our reserves through the purchase of this 12.5kg purified gold bar into our reserves,” he noted.
Gold, a slightly reddish yellow precious metal, has been used as a neutron reflector in nuclear weapons and for coinage, jewelry, and other arts throughout recorded history. It is highly valued above silver and bronze among other precious metals due to its higher and more stable value.
In the past, a gold standard was often implemented as a monetary policy, but gold coins ceased to be minted as a circulating currency in the 1930s, and the world gold standard was abandoned for a fiat currency system after 1971.