Ghana Implements Foreign Trade Ban in Gold Market to Enhance Local Economy

Ghana's new legislation restricts gold market operations to local actors, aiming to combat illegal mining and stabilize the economy, while potentially limiting foreign influence in the lucrative sector.

Ghana has recently taken significant steps to bolster its economy by banning foreign nationals from trading in the local gold market. This decision comes on the heels of a new law that grants sole authority over gold trading to a government entity called the Ghana Gold Board (GoldBod). According to Prince Kwame Minkah, a GoldBod spokesperson, foreigners must exit the local gold market by April 30, 2025.

As Africa's leading gold producer and the sixth-largest globally, Ghana faces challenges related to illegal gold mining, locally known as "galamsey." Rising gold prices and youth unemployment have led to an increase in illegal mining activities, despite military efforts to suppress such operations. This issue was a focal point in political campaigns ahead of the December elections.

The new regulations come as part of efforts to address the sector's illegalities and strengthen national revenues. Although the law allows foreigners to apply for licenses to buy or off-take gold from GoldBod, they are barred from participating in the local value chain. Local dealers have had their licenses revoked but will receive a grace period for a smooth transition.

During this transition, gold transactions will be conducted in Ghanaian cedis at rates determined by the Bank of Ghana. The new GoldBod has been allocated $279 million (£212 million) to facilitate the purchase and exportation of gold, with aims to source at least three tonnes weekly. Finance Minister Cassel Ato Forson believes this initiative will improve foreign exchange inflows and stabilize the local economy.

Some local stakeholders have expressed concerns regarding the government's capability to generate sufficient revenue to sustain gold purchases. Kwaku Effah Asuahene, chairman of the Chamber of Bullion Traders Ghana, indicated a preference for partnerships with foreign investors instead of a total ban.

Although not specifically aimed at curtailing illegal mining, the directive may hinder the ability of illegal miners to liquidate their gold. The illegal mining sector has been associated with severe environmental degradation, impacting over 60% of Ghana's water bodies.

This ban signals a concerted effort by the administration of President John Mahama to regulate the gold sector more tightly and fulfill promises made during the election campaign against illegal mining practices. Nana Asante Krobea, a mining governance consultant, has noted that if effectively enforced, this new law could enhance government revenues and impose order on a previously chaotic industry. In the past fiscal year, Ghana’s gold exports surged by over 53%, totaling $11.64 billion, with nearly $5 billion attributed to legal small-scale mining operations.

The surge in gold prices, which recently reached $3,200 per ounce due to ongoing trade tensions between the United States and China, has added urgency to these new regulations, as investors are increasingly drawn to the safety of gold amid fluctuating market conditions. As the Ghanaian government navigates these challenges, the implications of its bold moves will be closely observed both locally and internationally.