{Financial} analysts are calling on the Central Bank of Nigeria (CBN) to extend its gold reserves and diversify its overseas asset holdings, together with contemplating crypto-based devices, as international uncertainty continues to reshape central {bank} methods.
The push for diversification gained renewed consideration on the current Comercio Companions H2 {Economic} Outlook occasion, the place main economists and treasury executives highlighted the advantages of non-traditional belongings amid inflationary stress and geopolitical volatility.
In keeping with official information, the CBN held 687,402 troy ounces of gold on the finish of 2024, unchanged from the earlier yr.
Nonetheless, the worth of this reserve almost doubled to N2.77 trillion, up from N1.28 trillion in 2023, fueled by a bounce in gold’s market worth from $2,062.98 to $2,624.39 per ounce.
This acquire of over N1 trillion displays not solely the asset’s resilience but additionally a broader worldwide pattern of central banks growing gold purchases in response to {economic} instability.
Talking on the occasion, Professor Joseph Nnanna, Chief Economist on the Development Bank of Nigeria, mentioned increasing home gold reserves may assist industrialization and job creation.
“Shopping for extra gold isn’t nearly hedging danger, it drives industrial development,” Prof Nnanna mentioned. “When central banks buy domestically produced gold, it prompts the complete worth chain, from mining to refining to manufacturing.”
He argued that gold gives a multiplier impact by encouraging funding in home provide chains and constructing capability for value-added industries like jewellery and electronics.
Prof Nnanna additionally referred to as for broader diversification past the {bank}’s present mixture of gold and U.S. {dollars}, including that publicity to crypto belongings, stablecoins, and various currencies may assist shield reserves towards future shocks.
“Holding solely fiat currencies just like the greenback, which has misplaced worth just lately, is dangerous. Gold continues to understand, and including rising asset lessons can enhance resilience,” he defined.
Zeal Akaraiwe, CEO of Graeme Blaque Advisory, emphasised the strategic want to scale back dependence on U.S. greenback holdings, citing geopolitical dangers.
“Our skill to commerce or settle transactions hinges on political decisions made in America, not simply {economic} logic,” Akaraiwe warned. “As soon as political choices have an effect on settlement programs, nations start to search for alternate options.”
He praised China’s twin foreign money mannequin as a blueprint for safeguarding {financial} sovereignty. China’s CNY (home yuan) and CNH (offshore yuan) system, he mentioned, has allowed it to have interaction in international finance whereas defending its inside economic system.
“China anticipated these vulnerabilities years in the past and took steps to defend its {financial} system. Different nations, together with Nigeria, should now observe go well with.”
