Yesterday, President Muhammadu Buhari officially presented locally mined gold bars made by the Presidential Artisanal Gold Mining Development Initiative (PAGMDI) to the CBN for which they paid the sum of N268m for 12.5kg of gold. At the event, the President announced that the PAGMDI scheme which was inaugurated in 2019 is expected to:
• Create 500,000 new jobs in the mining sector.
• Generate US$500m per annum in royalties and taxes to the Federal Government.
• Set up of accredited gold buying centres across key mining areas.
In 2019, the PAGMDI scheme was set up to integrate and formalise artisanal gold mining activities into Nigeria’s legal, economic, & institutional framework, address structural & institutional factors such as rural poverty, lack of alternative livelihoods and difficulties in meeting legal & regulatory requirements. At the presentation, the President stated that the PAGMDI scheme would help reshape gold mining activities in Nigeria and prevent loss of value to illegal miners & smugglers. According to the President, Nigeria has lost about US$3.0bn to gold smuggling between 2012 – 2018. The President also stated that the success of this initiative is expected to diversify the country’s revenue base, strengthen the quality & quantity of Nigeria’s Foreign reserves as well as provide a hedge for volatility in
currencies held in the reserves.
The advent of the novel coronavirus pandemic has led to a significant decline in Nigeria’s key Revenue source as crude oil price dipped while compliance with OPEC+ cuts have strained production. Furthermore, the ripple effects of the economic slowdown have impacted tax revenues. Thus, the age-long clamour to diversify the Federal government’s revenue base has begun to take centre stage for the umpteenth time.
The mining sector in Nigeria is one of several sectors which the Federal Government can explore to diversify its revenue sources. However, attempts to revive this sector has been plagued by bureacracy, policy inconsistency, incoherent workplans, poor funding and more importantly, lack of will on the part of political leaders. Nigeria’s gold reserves estimated at about 200m ounces presents a huge potential for expanding government revenue and
broadening the scope of the nation’s foreign exchange reserves.
We laud the initiative and we hope the PAGMDI framework can be effective in reviving gold mining activities in Nigeria. Currently, only the initiative’s objectives and pilot states have been made public. Key details on strategic processes to achieve desired objectives are yet to be known. We restate our position that if Nigeria is to exit the cyclical downturns associated with crude oil prices, the Federal Government must ensure the successful implementation of revenue-based consolidation measures such as this.
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.