170% Gold Price Surge Boosts Nigeria’s Reserve Ambition

A sharp 170 per cent surge in global gold prices is strengthening Nigeria’s resolve to diversify its foreign reserves through locally sourced gold, as analysts say the move could make the naira unshakable if at least 10 percent of the nation’s reserves are held in gold.
The global price of gold has jumped from about $1,500 per ounce in 2021 to around $4,144 per ounce as of October 23, 2025, reflecting the impact of inflationary pressures, rising global debt, and heightened investor demand for safe-haven assets.
Nigeria, with over 600,000 ounces of proven gold deposits spread across Zamfara, Kebbi, Niger, Kaduna, Osun, and Kwara States, is looking to turn this trend into an economic advantage by building up its gold-backed reserves through the National Gold Purchase Programme (NGPP).
Under the initiative, the Central Bank of Nigeria (CBN) uses naira to buy gold from licensed local miners and refineries, which is then added to the nation’s foreign reserves. The minister of solid minerals development, Dr. Dele Alake, has repeatedly stated that the programme will strengthen the naira by converting local wealth into internationally recognized assets.
“The adoption of the National Gold Purchase Programme will reduce Nigeria’s reliance on foreign exchange to acquire reserves. We are building strength from within — converting our own natural assets into national wealth,” Dr. Alake explained recently.
Analysts say the strategy could be transformative if properly executed. According to Abuja-based economist, Dr. Chris Umeh, a gold-backed reserve would provide a natural hedge against the naira’s volatility.
“If Nigeria converts even 10 per cent of its reserves into gold, the naira will be unshakable. Gold retains its value in times of inflation and market uncertainty. It’s the ultimate stabiliser,” Umeh told NATIONAL ECONOMY.
He added that countries such as Russia, China, and Turkey have used similar gold strategies to strengthen their currencies and reduce exposure to the U.S. dollar, urging Nigeria to follow suit.
However, despite the potential, experts warn that Nigeria’s gold sector remains heavily informal, with weak refining capacity, limited traceability, and widespread illegal exports.
A mining consultant and mineral economist, Engr. Tunde Salami, said Nigeria cannot benefit fully from gold unless it builds robust refining and certification infrastructure.
“Without refining capacity, we’re only scratching the surface of gold’s economic potential. Every ounce exported illegally or sold in raw form is a loss of value to the nation. Nigeria must refine locally and store gold as part of its reserve assets,” he stated.
Salami emphasised that investor confidence in the gold sector depends on policy stability, clear mining titles, and stronger institutional coordination between the Ministry of Solid Minerals Development, the Ministry of Finance, and the Central Bank.
“Capital always goes where there is stability and protection. Once the government guarantees secure mining rights and transparent regulation, investors will bring in the funds for large-scale gold mining and refining,” he added.
In 2020, the CBN, through the Presidential Artisanal Gold Mining Development Initiative (PAGMI), made its first gold purchase — a refined bar worth ₦268 million, which was added to the nation’s external reserves. Experts say replicating such transactions at scale could transform the reserves landscape.
Economist and policy analyst, Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), said the integration of gold into Nigeria’s reserves could serve as a “silent stabiliser” for the economy.
“If the CBN integrates locally mined gold into its reserves, it will ease demand pressure on the dollar and enhance the naira’s credibility. Ghana and South Africa have shown how gold can be used to strengthen local currencies, Nigeria can do the same,” Yusuf said.
A financial economist at Nnamdi Azikiwe University, Dr. Felix Echekoba, said the initiative will only succeed if the government enforces traceability, transparency, and compliance in the gold value chain.
“We need to formalise artisanal mining, enforce licensing, and strengthen the regulatory framework. Gold must be traceable from mine to refinery to vault. Without those systems, we’ll keep losing billions in smuggled gold,” he noted.
Echekoba added that building refining infrastructure is key to transforming gold from an informal commodity to a national strategic asset.
A Lagos-based gold trader, Mr. Musa Haruna, said that formalising the gold sector would uplift rural economies and empower thousands of artisanal miners currently trapped in informal trade.
“If the government sets up buying centers and refineries in mining communities, we’ll see fairer prices and better income at the grassroots. Gold has the power to create jobs, reduce poverty, and support the economy beyond oil,” he explained.
Similarly, mining consultant Engineer Lukas Akpoti, said the federal fovernment must prioritise traceability and local refining if gold is to serve as a reserve asset.
“We cannot build national reserves with raw gold leaving the country illegally. Nigeria needs refineries, modern certification systems, and export documentation so that our gold works for our economy and not for smugglers,” Akpoti emphasised.
Another analyst, Dr. Paul Okorie, said building even 10 per cent of Nigeria’s reserves in gold would offer long-term stability and serve as a cushion against oil price shocks.
“Gold is globally recognised and as good as holding dollars. If Nigeria builds even 10 per cent of its reserves in gold, it will strengthen the naira’s long-term position and provide a financial shield against global commodity volatility,” he said.
Financial economist at Auchi Polytechnic, Mr. Zakari Mohammed, said investors are watching Nigeria’s next move closely.
“Investors will come once they see consistency and policy clarity. Nigeria has the gold, but it needs to show discipline. A transparent gold purchase programme, backed by proper reserve management, could change the country’s economic story,” he said.
He, however, cautioned that without fiscal alignment and accountability, the programme could lose credibility.
“If the gold purchase scheme becomes opaque or politicised, it will add little value. But if managed transparently, it could help stabilise the naira and attract confidence,” Mohammed added.
Stakeholders have therefore urged the government to fast-track the establishment of gold refineries and bullion reserves, while encouraging private sector partnerships through the Solid Minerals Development Fund (SMDF) and state-led gold buying centers.
According to Dr. Alake, the National Gold Purchase Programme will empower the CBN to buy gold directly from Nigerian miners and refiners in naira, store it as part of the nation’s foreign reserves, and use it as a hedge against currency volatility.
Economists agree that as Nigeria’s oil revenues fluctuate and foreign investment inflows remain subdued, gold represents the next strategic frontier for reserve diversification.
“Gold is Nigeria’s new oil,” said Dr. Umeh. “If we refine, regulate, and retain it, it could redefine our macroeconomic future.”