In a landmark move for Nigeria’s fiscal policy, the Central Bank of Nigeria (CBN) has officially integrated responsibly sourced, locally refined gold into the nation’s foreign reserves. This acquisition has bolstered the country’s total gold holdings to a valuation of $3.5 billion, marking a pivotal shift in the federal government’s reserve diversification strategy.
The gold, refined to the London Bullion Market Association (LBMA) Good Delivery standards, was aggregated through the National Gold Purchase Programme (NGPP). This initiative, managed by the Solid Minerals Development Fund (SMDF), successfully formalizes local mining activities into a framework that meets global ethical and technical benchmarks.
Strengthening the Naira via Mineral Wealth
Speaking at a strategic workshop focused on mineral economics, CBN Governor Olayemi Cardoso revealed that the bank utilized a unique “Naira-for-Gold” model. By purchasing the gold in local currency at prices linked to LBMA benchmarks, the CBN has managed to grow the nation’s assets without depleting its existing foreign exchange (FX) stocks.
“Global reserve management strategies are evolving, with central banks prioritizing resilience amid geopolitical and market uncertainties,” Cardoso stated. “Gold is increasingly viewed as a critical hedge against inflation and volatility in the global economy.”
The Governor emphasized that this transaction supports macroeconomic stability and reserve accretion while shielding the economy from external shocks.
A Model for Responsible Sourcing
The program’s success hinges on its alignment with international best practices, specifically the OECD Due Diligence Guidelines and the World Gold Council’s London Principles. By integrating artisanal and small-scale miners into a transparent supply chain, the SMDF has ensured that Nigeria’s “monetary-grade” gold is free from the ethical concerns often associated with the sector.
Fatima Umaru Shinkafi, Executive Secretary of the SMDF, noted that the delivery of LBMA-standard gold is a testament to the strength of the organization’s formalization framework and supply chain due diligence processes.
International and Institutional Support
The initiative has drawn praise from global industry leaders. Kurtulus Taskale Diamondopoulos of the World Gold Council commended the synergy between the CBN as the sole off-taker and the SMDF as the supply chain manager. She described the partnership as a “strong model” for other nations looking to formalize their gold sectors.
Furthermore, Samaila Zubairu, President and CEO of the Africa Finance Corporation (AFC), reaffirmed the corporation’s commitment to financing Nigeria’s mineral sector. He stressed the importance of accurate data and processing infrastructure to further improve gold recovery rates and attract high-ticket investments.
Strategic Objectives of the NGPP
Moving forward, the Domestic Gold Purchase Programme is set to remain a pillar of Nigeria’s long-term economic stability. The central objectives include, enhancing reserve quality to shift focus toward liquid, high-value assets like gold, reducing vulnerability by minimizing dependence on foreign-denominated assets, and economic resilience by utilizing mineral wealth as a primary driver of national wealth.
By transforming underground mineral wealth into a transparent, liquid reserve asset, the CBN is positioning Nigeria to better navigate the complexities of the 21st-century global financial landscape.
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