Importance Score: 65 / 100 🔴
Ghana Imposes Ban on Foreigners in Local Gold Trade to Boost Revenue
Accra, Ghana – In a move to strengthen national revenue and refine the mining sector, Ghana has prohibited all foreign nationals from engaging in its domestic gold market. The directive, aimed at bolstering the country’s control over its gold resources, follows the recent enactment of legislation establishing the Ghana Gold Board (GoldBod) as the sole authority for gold mining activities.
Foreign Traders Given Deadline to Exit
A spokesperson for GoldBod, Prince Kwame Minkah, stated that “All foreigners are hereby instructed to withdraw from the local gold trading market by April 30, 2025.” This statement follows the implementation of a new law earlier in April, granting GoldBod exclusive jurisdiction over the nation’s gold mining operations.
Efforts to Combat Illegal Mining
As Africa’s leading gold producer and the sixth largest globally, Ghana grapples with widespread unlawful gold mining, known locally as “galamsey.” This action is part of a broader strategy to address challenges within the gold sector and ensure that the nation benefits fully from its natural resources.
Economic Context and Challenges
The West African nation, rich in minerals, is currently facing significant economic headwinds, characterized by a high cost of living. Despite being the world’s second-largest cocoa producer, Ghana captures a limited share of the profits from the chocolate industry. The rise in illegal gold mining is exacerbated by escalating gold prices and high youth unemployment, despite ongoing military interventions aimed at curbing “galamsey” operations. This issue was a prominent point of discussion during the lead-up to the December elections.
Concerns over Foreign Involvement
Chinese nationals have been heavily involved in Ghana’s informal mining sector. Alongside Ghanaian individuals, they have consistently faced accusations of disregarding environmental protection measures. This ban aims to address these concerns and bring greater oversight to the sector.
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New Law Establishes State Control Over Gold Trade
Under the new legislation, ratified by Parliament last month and approved by President John Mahama on April 2nd, GoldBod is designated as the exclusive entity for purchasing, selling, and exporting all gold produced by the artisanal and small-scale mining (ASM) sector. While foreign entities can seek permission to buy gold directly from GoldBod, they are now excluded from operating within the local gold value chain.
License Revocations and Transition Period
Licenses for local gold dealers have been rescinded, but a transition period has been granted to facilitate a smooth implementation of the directive before it fully takes effect next month. During this interim, gold transactions will exclusively utilize the Ghana cedi, the national currency, with pricing aligned to the rates set by the Bank of Ghana.
Penalties for Illegal Gold Trading
GoldBod has issued a strong warning, stating that “it shall be considered a punishable offense for any individual to purchase or trade in gold within the country without proper licensing issued by the new board.” This measure underscores the government’s determination to enforce the new regulations and clamp down on unauthorized gold trading.
Government Investment and Objectives
The government has committed $279 million (£212 million) to empower GoldBod to purchase and export a minimum of three tonnes of gold weekly. Finance Minister Cassel Ato Forson explained that this initiative is intended to augment foreign exchange inflows and stabilize the local currency, contributing to broader economic stability.
Industry Response and Potential Challenges
However, Kwaku Effah Asuahene, Chairman of the Chamber of Bullion Traders Ghana, has voiced concerns regarding the government’s capacity to generate sufficient revenue to procure all available gold. Speaking to BBC, he indicated support for the initiative but expressed a preference for allowing partnerships between local traders and foreign investors to facilitate gold purchases and exports through GoldBod.
Impact on Illegal Mining Operations
Although not explicitly designed to target illegal mining, the new directive is expected to impede the ability of illegal miners to sell gold within the country. Ghana has been grappling with severe environmental degradation stemming from illegal mining activities, with over 60% of its water resources impacted.
Government Commitment to Regulating Gold Sector
This ban is widely regarded as the initial decisive measure undertaken by President Mahama’s administration to strengthen regulatory control over the gold sector and fulfill campaign pledges to combat “galamsey.” Mining governance consultant Nana Asante Krobea, speaking to AFP, noted that “It delivers a firm message to foreign actors – particularly Chinese operatives – who have for years circumvented domestic laws.” He added that effective implementation of the new law could significantly boost government revenue and “restore order to the chaotic gold sector.”
Gold Export Growth and Global Market Factors
Ghana’s gold exports experienced substantial growth, increasing by 53.2% to $11.64 billion last year, with nearly $5 billion attributed to legal small-scale miners. Gold prices recently surged to $3,200 per ounce due to trade tensions between the US and China, prompting investors to seek refuge in commodities amid global uncertainties. This global context further underscores the strategic importance of Ghana’s gold sector and the government’s efforts to manage it effectively.