Operational Faultlines Appear In CBN’s Alleged ‘Zamfara Gold’ Purchase Deal

Tha alleged purchase of N5 billion gold from Zamfara state may have provoked deeper arguments on the operational limits of the Central Bank of Nigeria (CBN).

 Besides raising the propriety of the action in a federal system of government, some analysts see it as the apex bank going beyond its operational mandate or delving into other extraneous areas at the expense of its core mandate.

Their arguments are predicated on the disturbing economic indicators typified by rising inflation, unemployment and dwindling disposable income, among others.

Some posers by the analysts bother on the fact that purchasing the gold from a state which falls under the exclusive list amounts to government buying back its own goods, which some regard, in financial terminology, as ‘insider dealing or round-tripping’.

“It’s like what happened in the banking industry some few years ago whereby, the banks were buying back their funds with CBN through investment in treasury bills at the expense of real intermediation,“ says an analyst who pleaded for anonimity.

Joseph Onu Silas, a human rights lawyer and Activist, had recently written the CBN seeking cancelation of the alleged deal.

Silas, in a letter addressed to the CBN Governor, Godwin Emiefele, said he was surprised by such action taken by the bank, describing it as “illegal” and a waste of “scarce public funds”

“I am worried that Central Bank of Nigeria under your leadership is tending towards becoming a commercial bank and even more worrisome is that the Central Bank of Nigeria has acted in total disregard of Nigerian laws and has displayed its penchant to waste scarce public fund in the placement of this illegal gold purchase order” he said

The human rights lawyer said section 1(4) of the CBN Act, 2007 which permits the bank to acquire, hold and dispose of movable and immovable property does not extend to engaging in a business venture such as the purchase of gold neither does section 2 of the Act which sets out objectives of the bank include “commerce or trading in gold”
He added that the Nigerian Minerals and Mining Act, 2007 makes it clear in section 1(1) and (2) that: (1) the entire property in and control of all mineral resources in, under or upon any land in Nigeria, its contiguous continental shelf and all rivers, streams, and watercourses throughout Nigeria, any area covered by its territorial waters or constituency and the Exclusive Economic Zone is and shall be vested in the Government of the Federation for and on behalf of the people of Nigeria. (2) All lands in which minerals have been found in commercial quantities shall, from the commencement of this Act be acquired by the Government of the Federation in accordance with the provisions of the Land Use Act.

Governor Bello Muhammad Matawalle of Zamfara had recently disclosed that CBN will give the State Government N5 billion to supply gold to the apex bank. 
He said his administration had established a gold reserve for the state.
“This strategic decision is part of the effort to prop up the economy of the state and guarantee the economic and social wellbeing of our people now and in the future. It is also the first of its kind by any state in the federation.
“For a start, we have purchased 31 kilogramme of gold, wholly mined and refined by our artisanal miners. We will subsequently continue to buy gold from our local miners so as to gradually improve the reserve. The precious metal would be deposited in a bank.
“Even though our state like other states of the federation is grappling with competing demands from the public and the resources at our disposal are meagre, we feel it is of utmost significance to invest in the future of our people,” Governor Matawalle said.

He further explained that the recent collapse of the oil market had further shown the need to diversify the state’s economy as a safeguard from the uncertainties of the market.
“The establishment of the gold reserve, therefore, is part of the relentless effort by my administration to diversify the state’s economy.”

However, responses from both the federal and state governments do not seem to help to douse the tension generated from the deal particularly from the Niger Delta region, who are now calling for control over their resources. 

Speaking on Channels television, Sunrise, on Tuesday, Silas Onu faulted Zamfara state acting as a middleman in the alleged deal saying, ‘it is problematic as the supervisory ministry of mines and power supposed to be.’

Adding, he insisted that “ The money is supposed to go to the federation account..FG buying its own goods is bad. Artisan miners are illegal miners and the knowledge of selling to bandits  also raises problem of security. The state is only responsible for  providing the enabling enviroment.”

Olu Adedayo Senior Special Assistant to the minister of mines and steel acknowledged that Zamfara. in conjunction with FG is out to mop up the gold being illegally mined and sold to bandits.

Speaking in measured tone. Adedayo said Cbn can only buy refined gold, adding,  “I’m not aware the state has gold reserve.“

John odubela, a Senior Advocate of Nigeria (SAN) also insisted that mining is an exclusive right of the Federal Government.           “It’s rather absurd to see state govt’s involvement..CBN’s action, looking at it, is bringing out disturbing circumstances and signals. The Attorney General of the Federation (AGF) should come out to clear the air.

FG grants Licences to companies to explore mineral resources. Zamfara having gold reserve in nigeria, how legal?

The legal luminary insists that the law vests power in FG and state govt can be involved in a venture with a company with FG permission. Oil, minerals and mines under FG exclusive list.“

But, Special Adviser to Governor  Matawalle on Media, Alhaji Zailani Baffa reportedly denied such deal.

Baffa in a statement said, “The attention of the Zamfara State Government has been drawn to a shocking and disappointing reaction in the media where a known lawyer displayed ignorance of law regarding the recent revelation made by Governor Bello Mohammed (Matawallen Maradun) over mining in the state.
“The lawyer, Mr Joseph Onu Silas, has accused the Central Bank of Nigeria of violating its constitutional boundaries to trade in gold with the Zamfara State Government. He further accused the state government of claiming to own the gold deposits in the state.”
However, Baffa said the CBN did not enter into any trade agreement with the state government as claimed by the lawyer.
Rather, he said, “The fact is that the CBN, just like in agriculture, is willing to invest in mining, as part of its Anchor Borrowers’ Programme whereby the apex bank will invest an amount for the state government to supply it with the gold as proceeds of the investment.
“This is aimed at boosting the mining sector in the country which is within the provisions of the scheme.”
Baffa further explained that “the state government is not directly mining the gold by itself”.
He added, “It will rather purchase the gold from the mining companies registered by the Federal Government in the state.
“All Nigerians are aware that the Federal Government is in the process of re-registering qualified companies allowed to mine mineral resources in the state on its behalf, just as obtains in the oil sector, which Mr Silas mentioned. ”

 “The implications of Baffa’s submission is that he is telling the whole world that CBN’s involvement is in line with the mandate of the Anchor Borrowers Programme, (ABP) and I can only say that this is a revelation possibly known to only him in a deal that FG is even yet to re-register companies that could serve as Special Purpose Vehicle. (SPV). May be the public will be saved by a redefinition of CBN’s role in the economy,“ says one of the analysts.