I am delighted to be at this official presentation of locally mined sourced gold bars by the Presidential Artisanal Gold Mining Development Initiative This laudable initiative will help support our efforts at enabling the creation of jobs for Nigerians, diversifying our revenue base, and in improving our foreign exchange reserves.
I will therefore like to thank all the stakeholders involved in the Presidential Artisanal Gold Mining Development Initiative for their painstaking efforts in developing a program that will enable improved sourcing and refining of high-quality gold bars, derived from minefields in Nigeria. Let me say that the PAGMI initiative, which was launched in 2019, is well timed when one considers the impact of COVID-19 on the global economy and indeed on the Nigerian economy. The impact of COVID-19 and the containment measures designed to slow the spread of the virus, has led to a slowdown in global growth, which is projected to decline into negative territory for the first time since the Great Depression. It has also led to a 40 percent drop in crude oil prices.
In Nigeria, the drop in crude oil prices has had a significant impact on government revenue, as well as on our foreign exchange earnings. In responding to this challenge, it is therefore paramount that we strengthen our efforts at implementing policies and programs that will enable greater diversification of the Nigerian economy. Enabling investment in the Solid Mineral sector, is a key part of the government’s economic diversification program. Given our current estimated gold reserves of over 200m ounces, most of which have not been exploited, developing sustainable programs that will catalyse increased investment in the extraction and refining of gold sourced from mines in Nigeria, is indeed vital.
This initiative will also support our job creation efforts particularly for artisanal miners, by providing them with a guaranteed off-take by the Central Bank of Nigeria.
Furthermore, efforts are being made to support artisanal miners in improving the standard of the gold that will be sold to the Central Bank, in order to ensure that they meet international benchmarks. In addition, the PAGMI initiative will enable the deployment of financing schemes that will help miners improve on the quality of their mining operations.
The gold buying program by the Central Bank will ensure that artisanal miners are no longer subjected to the volatility in gold prices that occurs in the absence of credible off-takers, which has often led to a significant loss in the value of gold sold by miners, as well as in encouraging illegal smuggling. It is estimated that Nigeria lost close to $3b between 2012 – 2018, due to illegal smuggling of gold. With the implementation of the PAGMI scheme which will result in the set-up of accredited gold buying centres, across key mining areas, artisanal miners and SMEs engaged in mining will be able to capture the value of their work.
It will also help support improved economic activities in our rural communities. As a result, we expect that close to 250,000 jobs would be created from improved gold mining operations.
These operations will help in diversifying our revenue base. The sale of gold by artisanal miners and SMEs at accredited centres will help the government in realising royalties and taxes from the sale of these assets. Improved mining operation could lead to the generation of over $500m annually in royalties and taxes. These Developments will also help in improving our foreign reserves by enabling the Central Bank of Nigeria to increase the amount of gold in its reserves. These gold assets which will be purchased in Naira, will not only help to bolster our international reserves, it will also provide a hedge against inflation and other economic volatilities associated with foreign currencies that are held in our reserves.
In addition to the potential revenue gains that will occur from mining operations, I am aware that efforts are being made to enable the set-up of gold refineries in Nigeria. These measures will lead to the creation of additional job opportunities across the gold value chain and also help our nation capture the additional value created from the gold refining process.
Let me also assure you that the Government will pay close attention to safety and environmental measures to protect our workers and our environment.
Distinguished ladies and gentlemen given the expected gains to the Nigerian economy that will result from increased gold mining operations, it is with great pleasure that I officially present gold bars derived from mines in Nigeria. Let me reassure Nigerians that the Government would continue to do its best to promote policies and programs that will engender improved economic growth and the creation of jobs for our teeming population.
Thank you for listening and God bless the Federal Republic of Nigeria.