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Emiko: Gold Can be the Game Changer for Nigeria.
In this interview, the Executive Vice-Chairman of Kian Smith Refinery, Nere Emiko speaks on how Nigeria can diversify to become a gold economy, highlighting its enormous gains. She also talked about her company’s new project SanuCoin a digital platform for gold and silver retail, and other pertinent industry issues. Nume Ekeghe presents the excepts;
Congratulations on the launch of SanuCoin, can you speak on what led you to develop this technology and journey in the gold mining industry?
Kian Smith started in 2011. We started out as a gold exploration company and slowly got into mining and we accidentally entered the space of organising artisanal mining and working with them as well as optimising our small-scale mining and trading gold. So along the lines, we designed a gold buying program that is Organisation for Economic Cooperation and Development (OECD) compliant and addresses responsible sourcing and this output became feed for our refinery which we started.
We started refining gold medallions, bars, and cubes that we call savings products that are very popular among women; one, two, and five-gram cubes. These products were released in 2020 & 2021. We launched them with the gold West African market gold durbar in Kano in August 2020, in Ouagadougou in October 2020, in Dakar in December 2020 and in Lagos Love Gold in February 2021. We also launched and announced our Kian Smith expansion into Dubai during the recently concluded Dubai World Expo, where our gold medallions and products were featured in the Nigeria pavilion. With all the feedback, market responses and full integration of the value chain, we are now finally releasing ‘Sanu’ our gold buying app.
The truth is this is the second version. SanuCoin v.1 was released during the lockdown of 2020. Our vision then was to have this gold buying app that allows you to buy gold in really tiny fractions. To enable people buy gold and silver on the blockchain because the blockchain is really what gives the credibility of a one-to-one match for physical gold, because with that you know that we really have what we say we have. You can match your tokens in an audit on the blockchain, matching it with the audits from our partners that have custody of the gold. That was our plan for 2020. Our pride was to have a made-in-Nigeria product for the world because there was and there still is nothing like it. BitMama was the only one brave enough to take on the project. However, the Securities and Exchange Commission (SEC) released regulations for crypto, blockchain and tokenization and also the CBN blocked cryptocurrencies so we just had to redesign Sanu to remove a lot of the innovation.
So Sanu is actually about three years old, but we could not release version 1.0 or version 1.2 in 2020 or 2021 and it had to be redesigned by an American tech team. So now we finally release Sanu version 2.0 which allows you to buy gold or silver and you can pick it up at Union Bank our partner and Custodial Bank. Sanu also gives you the option to pick-up gold in Dubai and London. With Sanu, you can own a fraction of gold or silver with as low as N100 Naira, and you can keep buying gold until you’re able to afford a product that you can pick up at the Bank. We are very excited to launch this, there is no product like this anywhere in the world. It now gives not just Nigerians but all Africans the opportunity to access London Bullion Market Association (LBMA) gold that usually they would never have been able to access without FX. We have accomplished this in partnership with the StoneX Group, a world leading precious metals trading firm. Now LBMA gold can be accessed in Nigeria with the Naira.
What is the vision behind SanuCoin, what is your target and how much of an impact do you think it would have on people who want to buy gold in Nigeria?
The gold value chain of Nigeria and West Africa needs to be built and integrated. Part of building a value chain and establishing Nigeria as a gold market is eventually getting the people to buy gold. The statistics of Kano’s Sabon gari market before COVID-19 in 2019, showed an average of 20,000 unique buyers coming in to buy gold from all over West Africa. Despite this great potential, the gold value chain and market dynamics in Nigeria is disjointed. Unless you are in the mining or trading space, access to gold is difficult. Goldsmiths, jewelers and retailers wanting gold can’t access small volumes of gold safely.
One of the things we are trying to establish is the gold buying capacity of Nigerians. Nigerians are well known in the gold markets of Dubai, Italy, India, and Singapore but because we do not have an organised retail market. FX restrictions from the present tight monetary policy and adhering to responsible sourcing compliance, adds complications to the gold market. All these things make it difficult to quantify the potential of Nigeria to become a reputable gold market. However, we have always known that part of the key to strengthening the value-chain and really developing investments in gold is bringing out the Nigerian gold retail markets, getting Nigerians to buy gold, and getting gold to the people.
Once Nigeria begins to establish data of gold consumption in households whether gold as bars, coins or jewelry, then it would become clear to the World Gold Council, the Nigerian Bureau of Statistics and other trade data analysts the buying power of gold in Nigeria. We will now see the volume of gold that Nigerian buy and see that Nigeria has the potential to in like say 10 years we can begin to be recognized as a gold market in Africa and slowly be reckoned with the likes of Southeast Asia and Dubai, in buying capacity for gold.
Another discovery through our gold markets the last few years has been the realization that a lot of people would really love to access gold for savings, not just jewelry. So with Sanu, you have the option to vault your gold with Union Bank as the custodial bank or with our vault partners outside Nigeria. So Sanu just takes all those issues people have had and reasons, why it’s been risky to buy gold. The bottlenecks to accessing gold have now been removed.
We really believe that we have the product that gives gold to the people. Everywhere we’ve gone in the last few years people always just keep asking and saying that this gold you say you are refining that you’re selling where is it? The same thing actually happening for Burkina Faso which is number two in West Africa after Ghana for gold production. Believe it or not but most people in Burkina Faso had never seen gold. Yet Burkina Faso has several airstrips dedicated to daily evacuation of gold.
So a lot of what you find that is happening in our region is there are wealth and mineral resources that we are producing, but we can’t access and this is a way of now giving Nigerians, West Africans, and Africa anyone the opportunity to access gold. Apart from jewelry, it is almost impossible to access gold refined to international standard in our local currencies. We have done all the work to now give the people access to gold in small retail quantities they want, giving empowerment to women and giving gold to the people.
You mentioned Burkina Faso and how much of an impact gold play in their economy and for Nigeria whose economy is desperately trying to divert from oil, is gold an option for Nigeria and what exactly should the Federal Government do to capitalise on assessing the gains from gold?
So there are so many ways that gold can work for the economy of Nigeria. If you look at Dubai, London, Singapore & Mumbai, they have deep gold economies but they don’t produce gold. They have just unlocked gold as part of the economy which is pretty much what we are trying to do here for West Africa. The Central Bank of Zimbabwe just released a gold coin they are retailing through local banks and beyond for their citizens. Not only are they combating inflation, the bandwagon effect of the ancillary services it creates, financial products that banks can create, it all leads to a gold economy that the whole nation benefits from. It would be a real game changer for Nigeria if we develop the gold value chain. Its not just about mining, because if you’re just mining it like Burkina Faso, your economy doesn’t have the full economic benefits. Dubai doesn’t mine it, they don’t need to mine it, and they don’t deal with environmental factors but I assure you that Dubai’s economy is bigger and stronger, and more powerful than the Burkina Faso economy, the people who are producing the gold. How much more potential for Nigeria that mines gold and is one of the biggest economies in Africa.
So, I would emphasize more really on full value-chain development and establishing a broad market and economy around gold. Also, some things may seem counterintuitive to the government but it would require unlocking policies that allow market liberation for a season to bring the market above ground and allow exponential growth. Then begin to tighten it to prune and correct it. This is how the Dubai gold market was established. While it’s very tempting to only focus on the short term which is immediate revenue generating from maximizing taxation, it will take a long-term view to develop Nigeria’s gold economy. A more liberalized policy approach is needed for a window of about five years to really allow the bandwagon effect of the market on the economy.
Lastly, there is the potential that gold could give some release on FX demand for those looking for an avenue to save their money and avoid currency inflation. If people can buy gold, maybe they wouldn’t need to be looking for FX and there wouldn’t be such huge pressure on the FX reserves. Now that SANU gives retail access to gold, we will test out this theory.
We definitely believe that there will be a major impact from gold on the economy. We participated with the ERGP in 2018 and have been working closely with the Ministry of Mines and Steel Development. The ministry has constituted a gold roundtable with several interlinked agencies where they periodically sit to dialogue on policy issues surrounding gold. We are optimistic that more synergies of different agencies and ministries would go a long way towards establishing the gold value chain.