The Central Bank of Nigeria (CBN) is increasingly turning to domestically sourced gold to strengthen the country’s external buffers, expanding its reserve portfolio through a strategy analysts say could gradually reshape how Africa’s fourth largest economy manages its strategic assets.
The apex bank confirmed this week that it has received locally mined gold refined to international standards into its foreign reserves, pushing Nigeria’s total gold holdings to $3.5 billion. The bullion meets the London Bullion Market Association (LBMA) Good Delivery standard, the globally recognised benchmark that determines whether gold bars are acceptable for settlement in the international bullion market.
Beyond its reserve diversification implications, the development is notable for the mechanism used to secure the gold. The CBN acquired the bullion in naira through a local supply chain tied to the country’s growing formal mining industry. The structure provides policymakers with a pathway to accumulate strategic reserve assets while avoiding further strain on foreign currency reserves amid ongoing external pressures.
In a statement confirming the development, the CBN said the gold was responsibly sourced within Nigeria and refined to international quality standards before being incorporated into the country’s reserve portfolio.
“This brings the CBN’s total gold holdings to $3.5bn, marking a significant step in its reserve diversification strategy,” the bank said.
Central banks traditionally accumulate reserve assets by purchasing foreign currencies or internationally traded commodities using hard currency. Nigeria’s approach differs in that it uses its domestic mineral resources to expand reserves while conserving scarce dollars.
Olayemi Cardoso, the CBN governor explained that the central bank purchased the bullion in local currency under the National Gold Purchase Programme (NGPP), a framework designed to integrate artisanal and small-scale miners into formal supply chains.
Speaking during a workshop on strategies to maximise the economic benefits of minerals in Nigeria held recently, Cardoso said the structure allows the CBN to accumulate reserve assets in a way that strengthens both macroeconomic stability and domestic industry.
“The structure allows the apex bank to build reserves without using foreign currency while strengthening the country’s gold holdings,” Cardoso said.
Under the programme, gold produced by local miners is aggregated through the Solid Minerals Development Fund (SMDF), which oversees the supply chain and ensures that the metal meets internationally recognised responsible sourcing standards.
Once refined to LBMA specifications, the gold is purchased by the CBN at prices linked to global benchmarks.
Economists say the arrangement effectively converts domestic natural resources into internationally recognised reserve assets.
Beyond the immediate reserve implications, the initiative is also intended to bring structure and transparency to Nigeria’s largely informal mining sector.
For decades, artisanal mining activities across the country have operated outside formal regulatory systems, limiting government revenue while exposing communities to environmental and security risks.
The National Gold Purchase Programme seeks to change that by establishing traceable supply chains that allow miners to sell their output through formal channels.
Fatima Shinkafi, executive secretary of the Solid Minerals Development Fund, said the successful delivery of LBMA-standard gold demonstrates the effectiveness of the framework designed to formalise the sector.
According to her, the programme’s due diligence processes ensure that gold entering the supply chain complies with international standards.
“The successful delivery of LBMA-standard gold demonstrates the strength of the fund’s formalisation framework and supply chain due diligence processes,” Shinkafi said.
Nigeria’s move comes at a time when central banks around the world are increasing their gold holdings amid persistent global economic uncertainty.
Gold has historically served as a hedge against inflation, currency depreciation and geopolitical risks; factors that have become increasingly prominent in recent years.
Cardoso noted that many central banks are now prioritising economic resilience in their reserve management strategies.
“Gold has regained prominence in reserve portfolios due to its ability to hedge against inflation and financial market volatility,” he said.
The CBN governor stressed that the initiative reflects a move to align Nigeria’s economic strategy with evolving global trends in commodity supply chains and industrial development.
Nigeria’s gold purchase framework has drawn positive attention from international industry bodies.
Kurtulus Taskale-Diamondopoulos, director of Central Banks and Public Policy at the World Gold Council, said the Nigerian Gold Purchase Programme aligns with global standards governing responsible artisanal gold sourcing.
According to her, the initiative follows the twelve London Principles, which guide ethical sourcing practices within the global gold industry.
She noted that the partnership between the CBN and the Solid Minerals Development Fund could serve as a template for other countries seeking to formalise their mining sectors while strengthening national reserves.
“The partnership between the CBN as sole off-taker and the SMDF as fiscal and supply chain manager provides a model for other countries seeking to establish similar programmes,” she said.
Despite the progress, experts caution that Nigeria’s gold sector still faces significant structural challenges.
The country’s proven gold reserves remain modest compared to those of many peer economies, and limited exploration data continues to constrain large-scale investment.
Samaila Zubairu, president and chief executive officer of the Africa Finance Corporation (AFC), emphasised the need for improved geological mapping and stronger mineral processing infrastructure.
According to him, better data and modern processing facilities would not only increase gold recovery rates but also attract international investment into the sector.
Such investments could also help reduce the environmental footprint of mining operations while improving the reliability of supply for initiatives like the central bank’s gold purchase programme.
Similarly, Nere Emiko, executive vice chairman of Kian Smith Gold Company, called for stronger policy support to expand exploration activities and improve transparency across the industry.
She noted that Nigeria’s gold reserves remain relatively low relative to many resource-rich nations and urged policymakers to accelerate efforts aimed at building strategic reserves.
Emiko also advocated for the development of commodity exchanges that could provide transparent pricing mechanisms and support the growth of Nigeria’s mineral markets.
The addition of domestically sourced gold comes amid improvements in Nigeria’s external reserve position.
According to data released earlier by the CBN, net foreign exchange reserves rose to $34.80 billion at the end of 2025, representing a 772 percent increase from the $3.99 billion recorded at the end of 2023.
Net reserves increased from $23.11 billion in 2024 to $34.80 billion in 2025, while gross external reserves climbed to $45.71 billion, up from $40.19 billion.
