Amid the concerns that the Ghana Gold Board (Goldbod) is buying its gold at a discount to the dissatisfaction of the small-scale miners, a leading voice in Ghana’s extractive sector has poured cold water on such claims.
There is the allegation that the newly established Goldbod is shortchanging local gold producers by buying gold at discounted rates, forcing small-scale miners to prefer to sell to the Chinese and the Indians at a higher price despite the risks involved.
Dr. Steve Manteaw, Co-Chair of the Ghana Extractive Industry Transparency Initiative (GHEITI), has described the claim as either a display of “sheer ignorance or deliberate mischief.”
“This is sheer ignorance or mischief on display. GoldBod is not buying gold at a discount. I say this on authority, as Co-Chair of the Ghana Extractive Industry Transparency Initiative and an expert on the subject,” he indicated.
The critics of the situation argue that there is a vast difference in the price of gold currently and the pre-Goldbod era, suggesting a “foul play.”
But in his explanation of the prevailing situation, he maintained that the facts are simple economics and not issues of any foul play as alleged.
He illustrated the point with a practical example that during the previous administration, when the cedi was trading around ₵17 to a dollar, the international price of gold was converted at that rate, which meant miners received more in local currency.
Today, with the cedi appreciating to about ₵12 to a dollar, the same dollar price of gold translates into fewer cedis for local miners.
“The difference between the local gold price in the pre-GoldBod era and now is accounted for in forex differentials. Under the previous government, the Cedi depreciated to about GHC17 to the dollar. At that time, the international price of gold was multiplied by 17, and so the miners were getting more in Cedi terms,” Dr. Steve Manteaw indicated.
He added that, “Today, the Cedi has appreciated to about GHC12 to the dollar. This means the international price will be multiplied by 12, and so the miners will be getting less in Cedi terms than previously. This is a basic economic principle that has eluded the speaker. What’s annoying is that he speaks as if he’s an authority on the subject, misleading listeners and viewers.
His explanation emphasizes a key distinction many may overlook. Miners are not being cheated; rather, the exchange rate movement changes the local equivalent they receive for the same dollar price. In essence, the stronger the cedi, the fewer cedis miners get when their gold earnings are converted.
The GoldBod initiative, rolled out earlier this year, is part of the government’s efforts to stabilize the economy by maximizing the revenue from the small-scale mining sector. While critics continue to scrutinize its design and execution, experts like Dr. Manteaw insist that misinformation about how miners are paid only muddies public understanding of the policy.
For Dr. Manteaw, the price of gold on the world market has been increasing; however, the strong cedi is what changes everything for the miners who get less in cedi terms due to the appreciation of the currency.
