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Nigerian lawmakers want central bank to fight inflation with gold

Section: Daily Dispatches

By Nduka Orjinmo
Bloomberg News
Tuesday, July 9, 2024

Nigerian lawmakers are proposing a dramatic increase in the central bank's power to use gold to shore up the nation's reserves in defense of the economy.

A draft bill before the Senate puts forward a raft of policies that would enshrine the bank as the automatic off-taker for all the gold produced in the country, alongside a goal to make the precious metal at least 30% of Nigeria's external reserves.

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Gold at the end of November only accounted for 4% of the nation's reserves, which currently stand at $34.8 billion.

Africa's most populous nation is battling inflation that's at a more than 28-year high following economic reforms that partially lifted petrol subsidies and removed the currency's peg against the dollar, with the naira declining around 70% against the dollar in the past 12 months.

Lawmakers propose setting up a Gold Reserve Authority. They also want the central bank governor to chair a gold reserve management committee, whose composition and functions closely mirrors the monetary policy committee of the bank, in a document seen by Bloomberg. 

The Central Bank of Nigeria didn't immediately respond to requests for comment.

Gold mining in Nigeria is largely informal and makes only a tiny measurable contribution to the economy. The bill, which follows a 2019 central bank gold purchase program, would enshrine its role into law while bringing the industry into the formal sector. ...

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