Ghana’s gold sector is currently facing a significant challenge related to its trade practices, with a report highlighting a staggering loss of approximately $11 billion (or 112.99 billion cedis) due to rampant smuggling activities. According to a detailed analysis by Reuters, this issue is intricately tied to the country’s artisanal mining sector, which is struggling to navigate the complexities of the gold market.
The investigation indicates that the majority of Ghana’s smuggled gold is making its way to the United Arab Emirates (UAE), with a particular focus on Dubai, a city known for its booming trade in precious metals. In fact, a detailed examination of trades between 2019 and 2023 revealed a staggering 229 tonnes (t) of undeclared gold exports, leading to a financial gap of $11.4 billion. Such figures underscore the extent of the challenges that Ghana faces within the gold trade and the pressing need for regulatory reform.
Ulf Laessing, the head of the Sahel program at the Konrad Adenauer Foundation, has pointed out a critical loophole in the system: gold transported by hand to Dubai does not require declaration. This lack of oversight contributes significantly to the smuggling crisis, allowing gold to flow freely out of Ghana without proper documentation or taxation.
The journey of smuggled Ghanaian gold often begins with transportation to neighboring Togo before making its way to Dubai, although routes through Burkina Faso and Mali have also been noted. These illicit transportation networks not only undermine Ghana’s economy but also complicate law enforcement efforts aiming to curb such activities. A senior official from Ghana’s Minerals Commission confirmed that these statistics reflect a “notorious fact,” acknowledging the scope of the problem.
The Ghanaian Finance Ministry has yet to officially respond to the Swissaid report’s findings. Still, the document does not shy away from highlighting some of the often-criticized fiscal policies that have exacerbated the smuggling issue. Introduced in 2019, a 3% withholding tax on artisanal gold exports initially led to a notable decline in declared exports, fueling further smuggling activities.
However, there has been a recent shift in policy. The tax was reduced to 1.5% in 2022, and by March 2023, it was eliminated altogether by the finance minister. This change has resulted in a partial reversal of the trend, with an increase in declared artisanal gold exports. Despite these efforts, the report estimates that approximately 34 tonnes of Ghana’s gold production in 2023 went undeclared, aligning closely with the total documented artisanal production for the year.
On a more positive note, the Ghanaian government is aiming to double output from small-scale and artisanal mining operations. The government forecasts annual revenues reaching 139.41 billion cedis from this burgeoning sector, emphasizing the importance of addressing the issues surrounding gold smuggling and the untapped potential of Ghana’s gold resources.
