Nigeria reaffirmed its commitment to strengthening its foreign reserves through a creative gold acquisition program that eliminates the need for dollar sourcing. The Solid Minerals Development Fund (SMDF) is leading this initiative, which began in August.
The goal is to boost Nigeria’s foreign reserves by utilizing locally extracted yellow metal, thereby reducing pressure on the naira and minimizing the demand for foreign exchange.
Dr. Oladele Alake, the Minister of Solid Minerals Development, made these announcements in Abuja during the 10th Nigeria Mining Week.
He emphasized the government’s determination to pursue the gold initiative “with vigor and dedication,” describing it as one of the most effective ways to enhance Nigeria’s economic stability. The initiative allows for gold to be bought from local artisanal miners using the local currency instead of relying on greenbacks to purchase gold from abroad.
The bullion asset will support local employment and economic activity, as payments to workers and miners will also be made in naira, which they will then spend locally.
The Federal government plans to allocate even more funding to this program in 2025, with the president showing strong support by authorizing significant financial backing. Additionally, the minister proposed a law that may prohibit local schools from charging tuition in foreign currencies, further aiming to reduce the domestic economy’s dependence on the dollar.
Mrs. Fatima Shinkafi, Executive Secretary of the SMDF, highlighted valuable lessons learned from the mining facility supported by the African Finance Corporation (AFC). “We underestimated the extent of misalignment and lack of readiness in the sector,” she stated.
She pointed out that even pre-feasibility assessments were challenging for many applicants, although SMDF does not require collateral or feasibility studies. “Too often,” she added, “people chase licenses and speculate based on rumors, such as ‘there’s gold in my grandfather’s backyard.’ This mindset needs to change. Mining is much more than just artisanal activities.”
Nigeria’s gold industry is defying international trends despite these challenges. “We are literally defying gravity as exploration funding in Nigeria rises while it declines globally,” she noted.
She cited international unrest, such as the war in Ukraine, conflicts in the Middle East, and tensions between the U.S. and China, indicating how investors are increasingly turning to gold as a haven.
Gold keeps hitting new highs
The bullion metal is retesting its all-time high and is predicted to finish the week positive for the ninth week in a row, and for the ninth week in a row, positive. Global geopolitical uncertainty, prolonged US government shutdowns, and US-China relational uncertainty are tempering investor appetite for risk-on assets.
Gold’s recent and more dramatic developments, a safe non-yielding asset, can be attributed to the prolonged geopolitical uncertainty, an anticipated dovish Fed, and recent economically weak US data.
The yellow metal is breaking new records day by day, exceeding another critical threshold by reaching $4,320 on Thursday.
Gold prices rose sharply amid growing anticipation of additional US interest rate reductions and escalating concerns over US-China trade relations.
The precious metal increased by 2.7% to reach $4,322 per ounce, while it gained around 58% on an annual basis. This is a critical pivot point as a break results in more aggressive selling. The yellow metal is supported by the expectations of the two US central bank rate cuts and the subsequent weakening of the dollar for the fourth day.
Dip-buyers are balancing the extremely overbought position with gold’s fundamentally supportive backdrop.
US President Donald Trump threatened to impose 100 per cent tariffs on Chinese goods in response to increased export restrictions on rare earths, which heightened trade tensions between the US and China in recent weeks.
Countries’ introduction of tit-for-tat port fees on ships connected to each other’s fleets heightened fears of a full-scale trade war. Furthermore, concerns that a protracted US government shutdown might have a detrimental effect on the economy have contributed to gold’s record-high prices.
The US Senate rejected a short-term funding bill from House Republicans that would have ended the government shutdown for the tenth time, demonstrating a congressional deadlock.
