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Nigeria launches plan to capture illegal gold sales to increase revenues

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Published on: June 16, 2023

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

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

According to the Bloomberg report as much as 18 tons of gold leaves Nigeria illegally every year and is shipped to Dubai.

Through PAGMI, most of the production that is extracted by artisanal miners and then sold to middlemen, will be shifted into a supervised supply chain that ends with bullion in a central-bank vault. This will help diversify the country’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.

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.

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