Ghana's New Gold Market Law Puts Foreign Traders on Notice

Ghana, Africa’s leading gold producer, has introduced a significant policy change aimed at fortifying the integrity of its gold market and increasing national revenue amid rising economic challenges.

Ghana has taken a bold step by banning all foreign traders from its local gold market as part of an initiative to enhance revenue and regulate the mining sector. This decision follows the adoption of a new law that grants a newly established state entity, the Ghana Gold Board (GoldBod), exclusive rights to oversee gold mining activities. In a statement, GoldBod's spokesperson, Prince Kwame Minkah, announced, "All foreigners are hereby notified to exit the local gold trading market not later than 30th April, 2025."

As Africa's largest gold producer and the sixth largest globally, Ghana is grappling with significant challenges related to unregulated gold mining operations, commonly known as "galamsey." The West African nation, amidst prevailing economic hardship and a rising cost of living, aims to reclaim its economic fortune. While Ghana stands as the world's second-largest cocoa producer, it sees minimal gains from chocolate exports. The surge in gold prices coupled with youth unemployment has intensified illegal mining operations in the country, despite military efforts to curb them.

The recent legislation, which was passed by parliament and signed by President John Mahama, positions GoldBod as the sole buyer, seller, and exporter of gold derived from the artisanal and small-scale mining sector. Although foreign traders can apply to purchase gold directly from GoldBod, they are no longer permitted to engage in local gold transactions. This policy also revokes the licenses of local dealers but offers them a transitional grace period before fully implementing the ban.

Transitioning to the new policy, gold transactions will now be conducted solely in Ghana cedis, based on the latest Bank of Ghana rates. GoldBod has emphasized that dealing in gold without a valid license is a punishable offense under the new regulations. The government has earmarked $279 million (£212 million) to enable GoldBod to secure and export a minimum of three tonnes of gold weekly, with hopes that this initiative will enhance foreign exchange inflows and stabilize the local currency.

However, concerns from industry stakeholders, such as Kwaku Effah Asuahene, chairman of the Chamber of Bullion Traders Ghana, have emerged regarding the government's ability to generate sufficient revenue for the gold purchases. While there is backing for the initiative, Asuahene suggested that allowing collaboration with foreign investors could enhance their ability to purchase gold and facilitate exports through GoldBod.

The comprehensive regulation is expected to complicate the sale processes for illegal miners, indirectly affecting the clandestine gold trade. Ghana has long suffered from severe environmental degradation due to illegal mining, with over 60% of its water bodies already impacted.

This ban is considered a pivotal move by President Mahama’s administration to establish stringent controls over the gold sector, delivering on commitments to combat galamsey activities. Nana Asante Krobea, a mining governance consultant, highlighted the importance of applying this law effectively to improve government revenues and restore order to the gold industry.

Amid all of this, Ghana’s gold exports rose to $11.64 billion last year, with legal small-scale miners contributing nearly $5 billion to this figure. Recent spikes in gold prices—reaching $3,200 per ounce—have been driven by global trade tensions, prompting increased investor interest in securing gold as a stable asset.

For further coverage on this unfolding situation, stay tuned to metaworld.media.