Vice President Dr Mahamudu Bawumia has described the Bank of Ghana’s decision to purchase locally produced Gold as a game-changer, which will provide stronger macroeconomic management and shore up the value of the country’s currency.
Addressing participants at the Ghana Gold Expo 2021 (Ghana Mining Week ’21), a mining policy forum, in Takoradi, Vice President Bawumia said the benefits of having a healthy amount of physical Gold in a country’s reserves are varied and enormous.
He said the launch and implementation of the Domestic Gold Purchase Programme (DGPP) by the Bank of Ghana and the Community mining programme would be a catalyst for formalising the artisanal small scale sector.
Vice President Bawumia said DGPP by the central bank and other programmes by PMMC, including the Ghana Revenue Authority, set everybody’s mind at ease regarding the volume and value of Gold legitimately exported and reserved.
“Ghana is Africa’s largest gold producer, having overtaken South Africa in 2019. But Ghana’s extracted gold assets are based on the royalty take, limited dividends and corporate income tax.
Dr Bawumia said these fiscal gains are typically taken in cash, and about 80% paid into the Consolidated Fund.
The Bank of Ghana holds a moderate amount of physical Gold of 8.7 tonnes as part of its reserves. “For nearly three decades, almost 60 years, we have not added an ounce to our reserve holdings.
But Gold, the Vice President indicated, has become the cornerstone of central banks’ modern reserve management.
Central banks have become the third force behind jewellery and technology and investment sectors in the global gold demand in the past decade.
Dr Bawumia expressed delight with the decision the Central Bank had taken to purchase locally produced Gold, a suggestion he made to the BOG, in that regard, a year ago.
The Bank of Ghana, Dr Bawumia said, spent a whole year carefully studying the entire gold production value chain and putting in place the necessary internationally acceptable procedures and had, since June 2021, begun a Gold Purchase Programme.
“The benefits are enormous and we can only hope and encourage the Bank to continue with this initiative,” he stated.
According to the World Gold Council, central banks are expected to acquire a record level of about 670 tonnes to boost their reserves. Gold has now become the cornerstone of Central Banks’ reserve management.
In 2020, amid the Covid-19 pandemic, Turkey was the largest annual gold buyer, adding 134.5 tonnes to its official gold reserves, followed by India (93.8 tonnes), United Arab Emirates (22 tonnes) and Qatar (9.18 tonnes).
Ghana’s entire gold reserves, at 8.7 tonnes, is equivalent to only 6.9 per cent of South Africa’s gold reserve holdings of about 125.3 tonnes, despite being the largest gold producer in Africa and sixth in the world.
The South African Reserve Bank has managed and held gold reserves since 1925 and purchases nearly all locally-produced Gold. Other significant players in the financial sector, such as the IMF and the World Bank, also hold large reserves of Gold.
The BoG intends to focus its purchasing plans on artisanal small-scale mining, accounting for 50% of Ghana’s gold production.
The Community Mining Schemes initiated and implemented by the government provided the miners with equipment and new technology to extract Gold from the ore without using zero mercury or cyanide.
Each Community Mining Scheme engages 3,000 miners. With a projected 100 of such schemes by the end of the year, youth unemployment is expected to reduce.
Rex Mainoo Yeboah, ISD