Why is CBN Increasing Its Gold holding

The Central Bank of Nigeria (CBN) has been hitting the right notes lately with its effort to increase its reserves, which have now effectively crossed the $50 billion mark, the first time in 13 years.

In the last 24 hours, the apex announced that it increased total gold holdings to $3.5 billion after taking delivery of responsibly sourced gold refined to London Bullion Market Association (LBMA) Good Delivery standards and adding it to its foreign reserves.

The gold, sourced in Nigeria, according to the apex bank, was aggregated by the Solid Minerals Development Fund (SMDF) through the National Gold Purchase Programme (NGPP).

CBN said the programme involves local miners and operates within a responsible sourcing framework aligned with the Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidelines and the World Gold Council’s London Principles.

Why Central Banks Hold Gold

Central banks accumulate gold as part of their official reserves for several strategic reasons:

• Store of value and safety. Gold is a hard asset that retains value over long periods, especially when fiat currencies weaken. This makes it a common hedge against inflation and currency volatility.
  • Liquidity and market depth. Gold is globally recognised and can be sold or used as collateral in markets worldwide.
  • Portfolio diversification. Central banks diversify their reserves to reduce reliance on any single asset, such as US Treasuries or foreign currencies. In recent years central banks have been increasing gold allocations relative to other assets. • Geopolitical and monetary risk management. During economic uncertainty, gold helps preserve purchasing power when other assets may lose value.

These roles help explain why gold still matters for sovereign reserve managers in a modern monetary system.

Global Central Bank Gold Holdings

According to the World Gold Council and related data: Central banks collectively hold tens of thousands of tonnes of gold as official reserves. Estimates indicate around 36,000 tonnes globally held by central banks as of recent data.

Top 10 Countries by Central Bank Gold Reserves (tonnes)

(latest IMF / World Gold Council data as of late 2025)

These figures are typically reported in tonnes of gold, not USD value. They represent physical gold bullion held by central banks.

Central bankers globally have been adding to gold holdings over recent years as part of portfolio diversification and risk management.

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Nigeria’s Gold Holdings

Nigeria’s official gold holdings are modest in comparison:

Converted to tonnes, Nigeria’s gold holding is still small relative to the global leaders listed above.

In Africa, Nigeria ranks below several peers in gold holdings. Examples include:
• Algeria: ~173.6 tonnes
• Libya: ~146.7 tonnes
• Egypt: ~128 tonnes
• Ghana: ~31 tonnes
• Morocco: ~22.1 tonnes

According to Finance in Africa, Collectively, total African central bank gold reserves are estimated at just over 700 tonnes, roughly 2% of global gold holdings.

 

How Nigeria’s Holdings Compare

Category	Example	Estimate
Global gold holdings (top central banks)	US / Germany / China, etc.	Thousands of tonnes each
Global total (central banks)	All central banks	~36,000 tonnes
Nigeria (CBN)	Gold reserves	~21.37 tonnes (valued ~USD 2.6–3.5bn)
Nigeria vs global	Share of global	Negligible share (<0.1%)
Africa overall	Central bank gold holdings	~700+ tonnes

This comparison shows Nigeria’s current gold reserves are very small relative to the largest central banks globally and modest within Africa’s gold reserve landscape.

 

Relevance of Nigeria Increasing Gold Holdings

Integrating the information above, the Central Bank of Nigeria’s strategy makes sense for these reasons:

• It can diversify reserve composition away from heavy holdings of foreign currency toward physical assets that hold value.
  • Buying gold without deploying foreign currency preserves FX reserves, an important consideration for a country with limited external assets.
  • Holding LBMA‑standard refined gold enhances credibility and ensures global market acceptance.
  • The move aligns with global trends of central banks increasing gold holdings in uncertain economic environments.

However, from a global-scale perspective, Nigeria’s reserves still remain small.