The Bank of Ghana’s (BoG) recent reforms on the management of the country’s gold export revenue inflows have come under pressure as the policy is regarded as creating problems in the country’s forex market.
The distortions in the foreign exchange market are believed to exist not because the country lacks dollars, but because of how those gold dollars are being managed or monopolized by the BoG.
This is the view of the Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye, who believes that the recent central bank actions on gold forex inflows are premised on a dangerous misunderstanding of how gold revenues actually flow into the economy.
At the heart of the problem, Boakye argues, is the assumption of the BoG that Ghana loses value from gold simply because export proceeds do not pass directly through the Bank of Ghana. That belief, he says, ignores how the system has worked for decades.
In his article cited by The High Street Journal, he explains that historically, a large share of foreign exchange from the mining sector flowed through commercial banks, not the central bank. Those inflows quietly strengthened market liquidity, eased pressure on national reserves, and helped stabilise the cedi without heavy-handed intervention.
“Recent central bank interventions appear to be anchored on a flawed assumption that Ghana loses gold value simply because proceeds do not return through the Bank of Ghana. Historically, a significant share of foreign exchange from the mining sector returned through commercial banks. These inflows helped to moderate pressure on central bank reserves and supported overall market liquidity,” he narrated.
The balance created by the previous system, he says, based on the BoG’s flawed assumption, has been disrupted. By positioning itself as the main channel for gold-related foreign exchange, the central bank has effectively locked commercial banks out of a key source of dollars.
What once entered the market naturally is now concentrated in one place. The result, according to Ben Boakye, is a forex market that is tighter, more fragile, and increasingly dependent on central bank support.
This means that the very policy meant to protect the cedi is forcing the Bank of Ghana to do more work than necessary. With commercial banks starved of direct inflows from the gold sector, the central bank has had to inject billions of dollars into the market just to keep the currency stable.
This creates what Boakye describes as a self-reinforcing loop, a situation where policy choices create scarcity, scarcity demands intervention, and intervention deepens the central bank’s role even further.
The distortion, he says, is very profound. He recounts that multiple layers of pricing have emerged in the forex market. Central bank rates now sit far apart from the rates traders use to source dollars elsewhere. This gap fuels arbitrage, encourages speculation, and rewards those who can navigate the system, while businesses and ordinary importers face higher costs and uncertainty.
“By monopolising a major source of foreign exchange inflows, the central bank has effectively deprived commercial banks of direct flows from the gold sector. As a consequence, the Bank of Ghana has had to inject billions of dollars into the market to stabilise the currency, creating a self-reinforcing policy loop,” he noted.
He continued, “this is creating significant arbitrage between central bank rates and rates traders source dollars on the market on account of multi-staged FX pricing, instead of direct flows to the commercial banks.”
This argument from Ben Boakye suggests that a forex market works best when dollars flow through many channels, not when one institution tries to monopolize the tap. When commercial banks are cut off from natural inflows, the market loses depth, pricing becomes distorted, and confidence weakens.
For him, Ghana’s gold forex inflows are not the problem; the policy design is, and hence needs reconsideration.
