Ghana has enacted a law banning foreign participation in its gold trading market, a move aimed at increasing national revenue and regulating the mining sector. The Ghana Gold Board will oversee gold purchasing, with implications for illegal mining and environmental concerns.
Ghana Implements Ban on Foreign Gold Trading to Enhance Local Revenue
Ghana Implements Ban on Foreign Gold Trading to Enhance Local Revenue
In a bid to strengthen its gold market and curb illegal mining, Ghana has prohibited foreigners from participating in local gold trading, establishing the Ghana Gold Board as the sole authority.
Ghana has implemented a new ban prohibiting foreigners from trading in its local gold market, part of an initiative to elevate national revenue and regulate the mining industry more effectively. This decision follows the establishment of the Ghana Gold Board (GoldBod), which has been vested with exclusive rights in the gold mining sector. Prince Kwame Minkah, a spokesperson for GoldBod, announced that all non-Ghanaian traders must exit the local gold market by April 30, 2025, in a statement that underscores the country’s commitment to its new legislation.
As Africa's top gold producer and sixth globally, Ghana faces significant challenges from illegal mining practices colloquially known as "galamsey." The country is currently grappling with economic difficulties, including a high cost of living. Despite being the world's second largest cocoa producer, Ghana struggles to capture a fair share of chocolate profits. The rise in gold prices and high youth unemployment has spurred illegal gold mining, which has been a focal point in recent elections.
The recent legislation mandates that GoldBod acts as the exclusive buyer, seller, and exporter of gold produced within Ghana's artisanal and small-scale mining (ASM) sector. Although foreigners can request licenses to buy gold from GoldBod, they are barred from operating within the local trading chain. Additionally, local dealers must transition to compliance with the new regulations, which include a grace period, allowing operations to adapt before the directive's full enforcement next month. Transactions involving gold are mandated to occur in Ghanaian cedis, and pricing is to be tied to the exchange rates issued by the Bank of Ghana.
Finance Minister Cassel Ato Forson emphasized that the government allocated $279 million to facilitate the purchase and export of a minimum of three tonnes of gold per week, which aims to enhance foreign currency inflows and stabilize the local currency. However, Kwaku Effah Asuahene from the Chamber of Bullion Traders Ghana expressed concerns regarding the government's capacity to manage gold purchases effectively. He noted a preference for collaboration with foreign investors to bolster gold export operations.
While the new statute does not directly target illegal mining, it could complicate the sales process for illegal miners within Ghana, who have been linked to substantial environmental degradation; over 60% of the nation’s water bodies have been detrimentally impacted by such activities. Observers view this ban as a pivotal action from President Mahama's administration to impose stricter oversight and fulfill campaign promises against illegal mining.
Nana Asante Krobea, a consultant in mining governance, remarked that this law signals a decisive intent to address longstanding challenges in the sector, particularly related to foreign actors, predominantly Chinese, who have historically evaded local laws. If effectively enforced, he believes this approach could bolster governmental revenues and bring order to the tumultuous gold industry, which registered a remarkable 53.2% increase in gold exports to $11.64 billion last year, with nearly $5 billion stemming from legal small-scale mining efforts.
Recent shifts in global gold prices, climbing to $3,200 per ounce in light of ongoing trade tensions between the US and China, have further motivated stakeholders to seek effective management of Ghana's lucrative gold reserves.
As Africa's top gold producer and sixth globally, Ghana faces significant challenges from illegal mining practices colloquially known as "galamsey." The country is currently grappling with economic difficulties, including a high cost of living. Despite being the world's second largest cocoa producer, Ghana struggles to capture a fair share of chocolate profits. The rise in gold prices and high youth unemployment has spurred illegal gold mining, which has been a focal point in recent elections.
The recent legislation mandates that GoldBod acts as the exclusive buyer, seller, and exporter of gold produced within Ghana's artisanal and small-scale mining (ASM) sector. Although foreigners can request licenses to buy gold from GoldBod, they are barred from operating within the local trading chain. Additionally, local dealers must transition to compliance with the new regulations, which include a grace period, allowing operations to adapt before the directive's full enforcement next month. Transactions involving gold are mandated to occur in Ghanaian cedis, and pricing is to be tied to the exchange rates issued by the Bank of Ghana.
Finance Minister Cassel Ato Forson emphasized that the government allocated $279 million to facilitate the purchase and export of a minimum of three tonnes of gold per week, which aims to enhance foreign currency inflows and stabilize the local currency. However, Kwaku Effah Asuahene from the Chamber of Bullion Traders Ghana expressed concerns regarding the government's capacity to manage gold purchases effectively. He noted a preference for collaboration with foreign investors to bolster gold export operations.
While the new statute does not directly target illegal mining, it could complicate the sales process for illegal miners within Ghana, who have been linked to substantial environmental degradation; over 60% of the nation’s water bodies have been detrimentally impacted by such activities. Observers view this ban as a pivotal action from President Mahama's administration to impose stricter oversight and fulfill campaign promises against illegal mining.
Nana Asante Krobea, a consultant in mining governance, remarked that this law signals a decisive intent to address longstanding challenges in the sector, particularly related to foreign actors, predominantly Chinese, who have historically evaded local laws. If effectively enforced, he believes this approach could bolster governmental revenues and bring order to the tumultuous gold industry, which registered a remarkable 53.2% increase in gold exports to $11.64 billion last year, with nearly $5 billion stemming from legal small-scale mining efforts.
Recent shifts in global gold prices, climbing to $3,200 per ounce in light of ongoing trade tensions between the US and China, have further motivated stakeholders to seek effective management of Ghana's lucrative gold reserves.
