A bold push by government to formalize artisanal gold mining and boost gold exports could come at the expense of the country’s vital agriculture sector, global credit rating agency S&P Global Ratings has warned.
As part of a broader economic strategy to tap into rising global gold prices, the government established the Ghana Gold Board (GoldBod) with a sweeping mandate to purchase, assay, grade, and export gold from small-scale miners. The move aims to curb illicit trade, increase foreign exchange earnings, and stabilize the economy. However, S&P says this pivot could have unintended consequences particularly for cocoa farming, a cornerstone of Ghana’s rural economy and its second-largest export earner.
“The government’s initiative to purchase gold from artisanal miners is formalizing the trade and significantly boosting exports, particularly in the context of high gold prices. However, this has negative implications for the agricultural sector, especially cocoa farming”, The agency noted.
The concern is that the growing allure of gold mining, now incentivized by formal government backing, could lead to labor shifts and land conversion away from cocoa cultivation, threatening long-term productivity in agriculture. Small-scale miners often operate in areas traditionally used for cocoa farming, raising fears that land and workforce competition could erode gains in the cocoa sector, which supports millions of livelihoods.
Beyond the gold initiative, S&P also assessed Ghana’s broader economic performance, noting signs of fiscal recovery in the face of significant challenges. The agency said the government’s fiscal deficit in 2024 remained broadly aligned with the revised budget on a cash basis. However, on a commitment basis factoring in unpaid obligations the deficit ballooned, exceeding the budget by 3.7 percentage points of GDP due to the accumulation of arrears owed to suppliers and contractors.
Despite these setbacks, the country’s external position is improving. Ghana recorded its largest-ever current account surplus in 2024, reaching $3.58 billion, or 4.4% of GDP, thanks to strong export growth and rising remittance inflows. The trade surplus, buoyed by high gold prices and increased export volumes, helped rebuild Ghana’s foreign exchange (FX) reserves, which climbed by $2.8 billion to nearly $4.6 billion.
S&P concluded that while the government’s aggressive economic repositioning is delivering short-term gains in FX buffers and trade balance, the long-term risks particularly to agriculture must be carefully managed to avoid undermining broader development goals.
