Ghana’s Gold Export Trade In The Limelight

Recent public statements made by the Managing Director of the Precious Minerals Marketing Company Limited (PMMC) on gold exports in Ghana are interesting and call for candid discussions on the gold export sector of Ghana’s economy. The Managing Director’s statements related to lapses in the gold exports sector of Ghana and sought to imply that gold exports from Ghana are largely illegal when in reality that is not the case. The truth is that since 2000 private companies have been permitted to engage in gold exports in Ghana through licenses issued by the Ministry of Lands and Natural Resources and Minerals Commission. The Precious Minerals Marketing Company Ltd. (PMMC) has therefore no legal monopoly over exports of gold in Ghana. The PMMC is rather in competition with private companies who have licenses to export gold from Ghana. The reality on the ground is that because PMMC is poorly managed, it is currently unable to compete with private licensed gold exporters resulting in the current Managing Director aggressively lobbying government to make it the sole exporter of gold.
The nature of the gold export business requires huge capital outlays for the purchase of gold from producers. Private exporters usually have access to the huge funds required to make purchases for exports far more than the PMMC. Against this background, it would not be prudent policy to compel licensed private operators who have raised huge capital to fund their export businesses to surrender export rights to PMMC which is their competitor in the gold export business.
A more prudent policy would rather be for government to focus on regulations for ensuring that all exports of gold passes through official channels ie Bank of Ghana.
Indeed Bank of Ghana has recently introduced some new measures designed to ensure that gold exporters do their business through official channels by submitting requisite export forms at Bank of Ghana. The controversy with the recent measures announced by Bank of Ghana is the requirement that private licensed exporters channel their exports through PMMC their competitor. The exporters obviously have kicked against this requirement and are right to do so. PMMC cannot be a referee in a competitive match in which it is one of the teams on the field. If this directive is for the purpose of ensuring that PMMC provides assaying and valuation services for Bank of Ghana, then it is problematic due to PMMC’s status as an exporter of gold. In this regard, the Ghana Standards Authority may be better placed to handle this role in that it would most likely be accepted as an independent institution which is not in competition with the exporters.
PMMC has to some extent contributed to the chaotic situation in the gold trade industry of the Ghanaian economy. It has licensed foreign purchasing agents and authorized them to engage in the purchase of gold from small scale miners. This has paved way for foreigners to directly engage in gold purchases from small scale miners and galamsey operators in Ghana, and therefore opened the door for foreigners to directly compete with locals in the purchase of gold from small scale miners.
The best way forward is for government to ban foreigners from directly purchasing gold from small scale miners and galamsey operators. Government should also come up with stringent regulations to ensure that funds received from outside for gold exports from Ghana are channeled through Bank of Ghana in order to check money laundering in this sector.
Generally there should be proper official controls on gold trade in Ghana-without necessarily stifling competition-since it is a sector which if properly managed could bring huge returns to the economy. However the approach being championed by the PMMC Managing Director is certainly not the way to go. It is controversial and problematic in that PMMC is not legally mandated to be the sole exporter of gold in Ghana. In any event is PMMC’s fight for sole gold export and certification rights applicable to foreign mining companies based in Ghana who do the large share of gold exports in Ghana? The PMMC Managing Director should rather focus on the purchase of gold from small scale miners and the jewellery business of the company which seems to be retrogressing under his watch.
God bless our Homeland Ghana.
Report By:
Mensah Dekportor (Hamburg – Germany)
Email: [email protected]