By: Philip TAKYI (Dr)
The Nilar is not a gold-backed currency system in which fiat money is partially supported by gold.
Instead, it is a gold-based currency system, entirely detached from conventional fiat monetary practices such as artificial credit creation, interest rate manipulations, and fractional reserve banking (Mises, 2011).
Unlike the United States dollar, which remains dominant among fiat currencies, the Nilar proposes a sound alternative grounded in commodity value rather than governmental monetary policies (Rickards, 2016).
While discussions about a BRICS currency have emerged, the likelihood of a gold-backed BRICS currency remains low (Eichengreen, 2019).
Therefore, the Nilar presents a viable alternative, not as a direct challenge to the U.S. dollar, but as a necessity for African economic and monetary stability.
Rationale for Implementing the Nilar
The adoption of the Nilar is not merely an economic decision but a moral and cultural imperative for African nations. The shortcomings of fiat monetary systems in post-neocolonial Africa have led to economic instability, inflation, and weakened capital formation (Ake, 1981).
Fiat currencies, which are subject to arbitrary government controls, have impoverished nations through inflationary policies and excessive debt accumulation (Selgin, 2008). Therefore, transitioning to a sound money system like the Nilar is critical for several reasons:
Economic Stability and Capital Formation: Fiat monetary systems have failed to provide African economies with the stability required for long-term growth. By contrast, a gold-based currency ensures value retention and fosters economic development (Rothbard, 1995).
Ethical and Structural Integrity: The reliance on fiat money allows for wealth confiscation through inflation, which is inherently unjust (Hayek, 1976). A gold-based currency system removes this structural injustice.
Economic Sovereignty and Independence: Western monetary policies often dictate African economies through currency devaluation and interest rate manipulation. The Nilar would provide an independent economic path (Ahiakpor, 2001).
A Path to Integrated and Thriving African Economies: Implementing a stable currency across African nations would encourage trade and investment, reducing dependency on foreign financial institutions (Ndikumana, 2017).
Steps to Implementing the Nilar
African policymakers must adopt a structured and pragmatic approach to implementing the Nilar. The following steps outline a roadmap for its adoption:
Official Announcement and Recognition
Governments must first announce the adoption of the Nilar as an official currency, without enforcing legal tender laws. Unlike fiat currencies, the Nilar does not require coercion for acceptance (White, 1999).
Governments should declare their acceptance of Nilars for payments of taxes and public services, thereby encouraging gradual adoption.
Establishing Denominations and Physical Attributes
The Nilar should be denominated based on gold weight, such as 1, 2.5, 5, 10, 20, 50, and 100 grams of fine gold (999.9).
Each coin or bar should display its weight and fineness on one side, with the issuing country’s insignia on the other (Selgin, 2018). For example, a Namibian Nilar could feature a martial eagle, while a Malian Nilar might display Mansa Musa.
Tokenization and Digital Circulation
The Nilar should be tokenized for digital circulation, ensuring that all issued digital Nilars are fully backed by gold reserves.
Banks and fintech companies involved in Nilar transactions must maintain a 100% reserve requirement, with independent audits verifying gold holdings (Ferguson, 2008). Fractional reserve banking must be banned to prevent monetary distortions.
Legal and Regulatory Framework
Governments should remove restrictive legal tender laws and eliminate artificial barriers that suppress monetary competition. Free enterprise in gold mining, minting, and transactions should be encouraged (Rothbard, 1995).
By reducing inflationary pressures and legal monopolies over money creation, economic activity will naturally align with gold-backed financial stability.
Prohibition of Monetary Inflation
Central and commercial banks must be prohibited from engaging in currency and credit creation. The Nilar system requires a shift away from arbitrary interest rate manipulations and centralized monetary policies (Hayek, 1976). As a result, African central banks should transition into Conversion and Minting Agencies (CMA) responsible for minting coins, bars, and minibars.
Ending Exchange Rate Controls and Restrictions
Legal tender laws and exchange rate manipulations must be abolished to allow free-market currency valuation. Exchange rates should be determined organically by supply and demand rather than artificial controls (White, 1999). This approach ensures that the Nilar coexists with other currencies like the U.S. dollar or the euro, facilitating a smooth transition.
Freeing Gold Markets
Most African nations currently lack significant gold reserves. Therefore, governments should remove tariffs, taxes, and other barriers restricting gold trade.
A liberalized gold market will encourage investment in gold mining and refining industries, increasing domestic gold reserves and improving economic sovereignty (Eichengreen, 2019). This measure would also generate employment and attract foreign capital.
Facilitating Business Innovations in Gold Transactions
As free gold markets develop, entrepreneurs and technology firms will innovate solutions for gold transactions. Businesses specializing in fraud prevention, certification, custodianship, secure transport, and storage will emerge, further integrating gold into the economy (Ferguson, 2008).
Market-Led Transition
Each African economy will transition at its own pace. Countries with existing gold industries, such as South Africa, may transition more rapidly than nations with limited reserves, like Cameroon. A free-market approach, rather than centralized government control, will ensure a smooth transition (Rothbard, 1995).
Debt Renegotiation and Fiscal Reform
Many African countries face unsustainable debt burdens. Before implementing the Nilar, governments should consider restructuring or defaulting on unsustainable external debts to avoid fiscal crises (Ndikumana, 2017).
Fiscal discipline is essential to prevent deficit spending, which is incompatible with a gold-based monetary system.
Gradual Phase-Out of Fiat Currencies
Governments with significant gold reserves can start paying local bondholders, contractors, and employees in Nilars. As the currency gains circulation, African fiat currencies should be gradually phased out. This transition must be market-driven to prevent economic shocks (Selgin, 2018).
How to transition Ghana’s GOLDBOD concept into a Nilar Model
The Gold Board (Gold BOD) concept in Ghana for example and the Nilar Model are interconnected in their shared goal of establishing a stable, gold-based monetary system for African economies:
The Gold BOD functions as a regulatory body that oversees gold production, refining, storage, and trade. In the Nilar Model, which relies on gold as a direct currency rather than as a backing asset, a Gold BOD would ensure that the gold supply chain remains transparent, efficient, and free from artificial market distortions.
For the Nilar system to function, gold reserves must be available for conversion into Nilars. The Gold BOD can play a crucial role in acquiring, managing, and verifying gold reserves, ensuring that enough gold is minted into Nilars to support economic transactions.
A key risk in any gold-based monetary system is market manipulation by private actors or foreign entities. The Gold BOD, by regulating trade policies and monitoring gold transactions, can protect the Nilar from external currency manipulation and speculative attacks, ensuring its long-term viability.
One of the main objectives of the Nilar Model is to create a self-sustaining gold economy. The Gold BOD can implement policies that incentivize gold mining, refining, and related industries, ensuring that African nations have a steady gold supply to support the expansion of the Nilar currency.
Since the Nilar Model requires 100% gold backing, the Gold BOD can establish strict auditing and verification mechanisms to ensure that Nilars are genuinely gold-based and not subject to fractional reserve practices. This aligns with the Nilar’s principle of eliminating fiat-based inflation and artificial credit creation.
The Gold BOD could negotiate international agreements to facilitate the recognition of Nilars in global trade, allowing African nations to use their gold-based currency for imports and exports. This would reduce reliance on fiat currencies like the U.S. dollar or euro, strengthening Africa’s economic sovereignty.
If the Nilar Model integrates digital gold tokens, the Gold BOD can act as an independent auditor, ensuring that digital Nilars maintain a one-to-one backing with actual gold reserves. This would prevent digital inflation and maintain trust in the Nilar as a stable means of exchange.
The Gold BOD and the Nilar Model are complementary—the Gold BOD provides the regulatory framework, market stability, and oversight necessary for the Nilar Model to function effectively.
Without a well-managed gold supply chain, the Nilar’s viability as a currency could be compromised. Therefore, African nations seeking to implement the Nilar should also consider establishing a Gold BOD to safeguard economic stability, ensure gold-backed monetary integrity, and promote Africa’s financial independence.
Conclusion
The implementation of the Nilar represents a fundamental shift away from fiat monetary instability towards economic sovereignty and financial integrity for African nations.
By adopting a gold-based currency, African economies can break free from external monetary dependencies and establish a sustainable path to economic growth.
The transition, however, must be executed through free-market principles, fiscal discipline, and strategic policy reforms. Only then can Africa achieve long-term financial stability, prosperity, and economic liberation.
References
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Eichengreen, B. (2019). Globalizing capital: A history of the international monetary system. Princeton University Press.
Ferguson, N. (2008). The ascent of money: A financial history of the world. Penguin Books.
Hayek, F. A. (1976). Denationalization of money: The argument refined. Institute of Economic Affairs.
Mises, L. V. (2011). The theory of money and credit. Liberty Fund.
Ndikumana, L. (2017). The role of foreign aid in post-conflict countries. University of Massachusetts Press.
Rickards, J. (2016). The road to ruin: The global elites’ secret plan for the next financial crisis. Portfolio.
Rothbard, M. N. (1995). The case for a 100 percent gold dollar. Ludwig von Mises Institute.
Selgin, G. (2008). Good money: Birmingham button makers, the Royal Mint, and the beginnings of modern coinage. University of Michigan Press.
Selgin, G. (2018). The men, the gold, and the banks. Independent Institute.
White, L. H. (1999). The theory of monetary institutions. Blackwell Publishers.
