11 Economic Insights on Ghana and Gold

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We live in vast world – yet in some ways, it is quite small. I was reminded of this last week when I found myself in a random conversation with a complete stranger who lives in Ghana. Oh, the wonders of Google Hangouts.

Here’s what I initially discovered about Ghana. This small nation in West Africa has a population of 25.9 million and is richly endowed with an abundance of natural resources like diamonds, manganese ore, bauxite and oil. But Ghana is better known for is it’s mother-lode of gold deposits, making it Africa’s 2nd largest gold producer, after South Africa.

Curious about this, I mined for further information about the significance of this precious metal for Ghana’s economic fortunes. Here are 11 nuggets that I was able to unearth:

  1. Ghana has consistently been ranked in the top ten of gold production worldwide.
  2. Ghana’s mining industry accounts for over 5% of the country’s GDP. Gold makes up over 90% of the total mineral exports, and it represents nearly 50% of the country’s revenue.
  3. Because of its heavy dependence on gold exports, Ghana’s economy has been tepid. This is due to the overall price decline of gold from $1,900 per troy ounce in 2011 to below $1,200 in 2015.
  4. Obuasi, a gold mine that has been in operation since 1897 after it was launched by three Ghanaian merchants, has struggled of late amid this fall in gold prices. Today, miners have to dig deeper and manage expenses more closely just to stay afloat.
  5. With gold-mining weighed down by record levels of debt as well as prices that are near a five-year low, a growing number of Ghanaian miners are fearful of having their employer merge with others just in order to survive.
  6. Many parts of Ghana remain unexplored in terms of potential gold production. This particularly holds true for the northern Upper West region of this resource-rich country.
  7. A major policy emphasis on the part of the government is ensuring that modern and environmentally-friendly extraction methods are being used so that the surrounding ecosystem doesn’t become irreparably damaged; this may lead to the closing of some mining operations and an ensuing reduction in exports.
  8. Although known as an epicenter of global gold production, Ghana (like its neighbor Nigeria) has struggled with an energy crisis, meaning that the majority of its citizens have no electricity. This is due to the nation’s lack of infrastructure capital, compounded by broken promises from the government in addressing the issue. Ghanaians affectionately call this DUMSOR (meaning ‘on’ and ‘off’), because of the highly unpredictable energy supply.
  9. In addition to the aforementioned fall in gold prices, other factors that are adversely impacting the Ghanaian economy include a sharp currency depreciation as well as rising inflation and interest rates.
  10. In 2013, Ghana deported thousands of Chinese nationals involved in the illegal mining of gold
  11. Aside from gold, Ghana is the world’s second largest producer of cocoa, behind Ivory Coast. Cocoa is Ghana’s third largest export after oil and gold.

IMG_4587I have some bonus nuggets, but you’ll have to wait a bit for these because my new-found Ghanaian friend promised me some insider insights when we next chat online. I’m sure they will be worth their weight in gold.

 

 

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