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The government of Ghana has implemented a ban on foreign entities participating in its local gold trading market, a strategic move aimed at enhancing national revenues and better regulating the mining sector.
This decision comes on the heels of a newly enacted law that designates the Ghana Gold Board (GoldBod) as the sole authority responsible for the management of gold mining within the nation.
Prince Kwame Minkah, a spokesperson for GoldBod, announced, “All foreigners are hereby notified to exit the local gold trading market not later than April 30, 2025.”
As the largest gold producer in Africa and the sixth largest globally, Ghana faces significant challenges in combating illegal mining practices, commonly referred to as “galamsey”.
Currently grappling with economic difficulties marked by soaring living expenses, the country also ranks as the second largest cocoa producer in the world, yet it reaps minimal profits from the chocolate industry.
The surge in youth unemployment, coupled with rising gold prices, has intensified illegal mining activities, despite ongoing military operations intended to curb them. This issue emerged as a crucial topic during the recent electoral campaign.
Chinese nationals, alongside local miners, have been frequently criticized for neglecting environmental protection measures while exploiting the nation’s resources.
Under the newly established legislation approved by Parliament last month, GoldBod holds exclusive rights to buy, sell, and export all gold produced by the artisanal and small-scale mining (ASM) sector.
While foreign investors can apply for the purchase of gold directly from GoldBod, they are prohibited from engaging in the local gold market.
In conjunction with these changes, existing licenses for local gold traders have been revoked, although stakeholders have been granted a grace period to ensure a smooth transition before the new regulations take effect next month.
During this transitional phase, all gold transactions must be conducted in Ghana’s national currency, the cedi, and will be valued in line with the Bank of Ghana’s rates.
GoldBod has warned that it will consider unauthorized gold trading activities as a punishable offense.
To support this initiative, the government has allocated $279 million to GoldBod, aiming to purchase and export a minimum of three tonnes of gold weekly.
This strategy is designed to strengthen foreign exchange earnings and stabilize the local economy, according to Finance Minister Cassel Ato Forson.
However, concerns have arisen from Kwaku Effah Asuahene, chairman of the Chamber of Bullion Traders Ghana, about whether the government can generate sufficient revenue to support its gold purchasing commitments.
Asuahene expressed that while they endorse the government’s plans, a collaborative approach involving foreign investors would have been preferable for purchasing and exporting gold through GoldBod.
Although the primary objective of GoldBod is not to tackle illegal mining directly, these new regulations may impede illegal miners’ ability to sell gold within the country.
Environmental destruction resulting from illegal mining operations has been extensive, with more than 60% of Ghana’s water bodies reported to be contaminated.
This ban marks a significant initial action taken by President Mahama’s administration to implement stricter controls and regulations in the gold sector, as part of a commitment to combat illegal gold mining.
Nana Asante Krobea, a consultant specializing in mining governance, noted that this measure sends a potent message to foreign entities, particularly those from China, who have disregarded local laws for extended periods.
He emphasized that, if effectively enforced, the new regulations could enhance government revenues and instill a greater sense of order within the gold mining sector.
Last year, Ghana’s gold exports surged by 53.2%, reaching $11.64 billion, with nearly $5 billion attributed to legal small-scale miners.
Recently, gold prices soared to $3,200 per ounce, driven by escalating trade tensions between the US and China, prompting investors to seek stability in gold amidst the prevailing uncertainties.
Source
www.bbc.com