20% BoG Stake In Gold Refinery Not Enough To Stabilize Cedi – Prof John Gatsi
Dean of the University of Cape Coast (UCC) Business School, Prof John Gatsi, has said the Bank of Ghana’s 20% stake in the newly established local gold refinery – Royal Gold Ghana Limited – may not be enough to be able to stabilize the cedi.
According to him, although refining gold locally is progress for the economy, as it will provide some jobs, contribute to currency management, and increase earnings through exports, it will, however, not be the solution to current and future volatility and instability of the cedi.
In a Facebook post on Thursday, Prof Gatsi quipped that 80% ownership of the local gold refinery by Central Bank’s Indian partners means 80% of the profit to be made from the operations of the refinery may be subject to repatriation to India as the case is for other foreign direct investments in the country such as those in mining, telecommunication, and large shopping malls and that the net effect of the repatriation of profit from the country doesn’t favour stability of the cedi.
Prof Gatsi further argued in his Facebook post that, the dollar is the strongest currency in the world simply not because America holds the largest gold reserve or has refineries, but because of the structure, accountability, transparency, productivity, inclusive growth, and inclusive opportunities in the country.
Ghana opened its first commercial gold refinery in the capital on Thursday, August 8, 2024.
This is part of an effort by Africa’s leading gold producer to add value and earn more from the precious metal, which has been mined for centuries.
The Royal Ghana Gold Refinery, with the capacity to process 400 kilogrammes (kg) of gold per day, will source gold dore from small-scale and artisanal miners before acquiring licenses to process gold from large-scale miners.
The refinery is a partnership between Rosy Royal Minerals of India and Ghana’s central bank, with a 20% stake.
Ghana’s Vice President, Mahamudu Bawumia, has announced an ambitious plan to anchor the value of the cedi to gold if he secures the presidency in the upcoming December elections.
This proposal marks a significant shift in the nation’s monetary policy and could position Ghana as the first African country, after Zimbabwe, to back its currency with gold in an effort to stabilize the exchange rate.
Speaking in Accra, Dr Bawumia outlined his vision for a new foreign exchange regime management act, aimed at mitigating the cedi’s persistent depreciation against the US dollar.
The cedi has lost 23.3% of its value against the greenback this year, making it one of the world’s worst-performing currencies, according to Bloomberg data.
Read Full Text of Prof Gatsi’s Post on Facebook:
