Nigeria to boost revenue by capturing illegal gold sales to increase reserves

Nigeria to boost revenue by capturing illegal gold sales to increase reserves

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

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

As much as 18 tons of gold leaves Nigeria illegally every year and is shipped to Dubai, Shinkafi said in an interview. PAGMI’s plan is to shift most of that production, which is extracted by so-called artisanal miners; and sold to middlemen, into a supervised supply chain that ends with bullion in a central-bank vault.

Regulating artisanal gold will help diversify Nigeria’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.

Persuading the informal gold-mining industry to come within the orbit of state oversight would not only generate much-needed tax revenue. It would also allow the central bank to stockpile the metal, according to the presidency.

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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.

“That’s a hell of an incentive for a country that is earning mostly from oil and agriculture,” she said.

Meanwhile, the pump price of Premium Motor Spirit (PMS) may increase in the coming days following the ex-depot price increase announced by the Petroleum Products Pricing Regulatory Agency (PPPRA) on Tuesday, August 4.

The ex-depot price determines the cost of lifting the product; from the Nigerian National Petroleum Corporation (NNPC) by depot owners and terminal operators.

This pronouncement by the PPPRA means the product ex-depot has increased to N138.62 per litre for August.

The implication is that the product pump price will be between N149 and N150 per litre for this month.

Abubakar Maigandi, the Vice- President of Independent Petroleum Marketers Association of Nigeria (IPMAN), told journalists that PPPRA has not informed the markets on the new retail price despite the increase in the ex-depot price.

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