The Bank of Ghana (BoG) has commenced buying gold from domestic producers in a move to diversify the central bank’s foreign reserves.
Speaking at the launch of the BoG Gold Purchase Programme, Dr. Ernest Addison, Governor, stated that the central bank is targeting to double its gold reserves over the next five years
With Ghana being one of the lead producers of the yellow metal in Africa, the central bank governor said there are numerous benefits that building gold reserves would yield to the bank and the economy as a whole.
“The domestic gold purchase programme will pave the way for BoG to grow its foreign exchange reserves to foster confidence, enhance currency stability, [and] create a more attractive environment for foreign direct investments and economic growth. This programme will also enable the bank leverage its gold holdings to raise cheaper sources of financing to provide short-term foreign exchange liquidity,” Dr. Addison said.
The governor added that the gold acquisition programme is not only an efficient way of growing the foreign exchange reserves of the country, but it will also supplement the traditional ways in which Ghana has built reserves over the years.
According to Dr. Addison, the programme will transform the small-scale gold mining sector, as it has the potential to guarantee operators a fair purchasing price for their gold and provide an incentive to formalise and move away from damaging environmental and social practices.
The governor also envisaged that the programme would improve small-scale miners’ ability to sell into formal gold markets and thereby reduce their vulnerability to illegal actors in the domestic and international gold supply chains.
Gold purchasing scheme
The bank will buy domestically produced gold from selected gold aggregators and mining firms and pay in the local currency at the prevailing market price.
The bank will buy both refined and unrefined gold from selected companies. The unrefined gold will be assayed by the Precious Minerals Marketing Company (PMMC), the national assayer.
The bank has also engaged other domestic mining firms in collaboration with the Ghana Chamber of Mines to buy refined gold from their refineries.
Currently, only one gold aggregator has been selected for the programme, after an independent due diligence was conducted.
In the near term, however, other gold aggregators will be eligible to participate in the programme once a roadmap is developed to ensure they meet the governance, risk, compliance and supply chain requirements.