Africa’s gold sector makes a major economic contribution to the continent. Given that many African nations have considerable gold reserves, the business has historically provided a significant portion of people’s income. However, the industry has recently faced a number of difficulties, such as legal troubles, environmental issues, and geopolitical tensions.
Gold has always been a safe asset and in the midst of the negative sentiments over investing, and fear of recession, gold prices continue to rise.
The precious metal, gold, first discovered over 4000 years ago by ancient Egyptians, has always been used as a store of value, a means of exchange to signify wealth. Nowadays, gold is important in the production of electronic machines.
Gold prices have risen expediently as a result of the collapse of Silicon Valley bank SVB, that happened on the 10th if march 2023. Coupled with fears of a predicted recession, investors, individuals and even central banks are stocking up on the precious metal in hopes that it would still maintain its value as the physical dollar weakens. The People’s Bank of China (PBoC) this year increased its gold purchases by 32 tonnes.
Although there are numbers of large, government approved mining operations in Africa, there are also artisanal proceeds from natural resources that could develop the continent’s economy.
From Nigeria to Ghana, India and South Africa and more recently in the news Senegal, artisanal miners continue to eat deep into the continents common wealth
Young and hopeful Africans travel to these countries and settle in the auriferous (gold-rich) regions that are riddled with high crime, mafia, prostitution and a hazardous atmosphere. They are willing to undertake the risk with the belief that they can strike enough gold to change their fortunes.
The value of gold is styled against the US dollars and while it grows stronger against other currencies, the price of gold rises.
According to Juerg Kiener, the managing director and chief investment officer of Swiss Asia capital, Gold prices could surge to 4000 dollars in 2023. It is currently trading at 2646 dollars.
Gold in western Africa comes from scattered localities in the forest and the savanna. It’s mostly found in grains and an occasional nugget.
The three most important auriferous (gold-rich) areas in Africa are Bambuk, which lies between the Senegal and Faleme rivers, Bure, around the upper Niger and the Akan region of Ghana, the Anyi and Baule regions of Cote D’Ivoire.
Since the Witwatersrand gold rush in 1886 that led to the creation of Johannesburg, South Africa, the revolution increased the growth rate of Johannesburg, beating Cape town which was over 200 years old at that time with the construction of the first railway line in the then province.
Africa’s gold production have continued to increase, growing into the second largest gold producing region after china but with very little impact on its economy
Africa is the birthplace of civilization, rich in all the things that the human species need to live and thrive upon, and yet still remains underdeveloped as a result of corruption, unfair concession agreement from multinationals over our numerous natural resources and government mismanagement of funds.
For gold, the royalty rate – tax on the gold mines – form the biggest government revenue source in the sector. The rate is currently between 3 to 6 percent dependent on the current price per ounce. This royalty rate is paid by mining companies
The issue of regulation is one of the major issues that the gold sector in Africa is currently experiencing. Many African nations’ laws governing the export and mining of gold are lax or ineffectively implemented. This has given rise to problems like smuggling of gold and illegal gold mining, which have a detrimental effect on the viability of the sector and the economies of the countries.
Environmental – The extraction of gold frequently results in the destruction of habitats and deforestation, resulting in the loss of key difficulty facing the gold industry in Africa. Gold mining uses a lot of water and chemicals, which damages biodiversity and pollutes the environment.
The gold business in Africa has also been damaged by geopolitical unrest. There has been a fall in production and income as a result of the continuous conflict and instability in several African nations, which has made it challenging to run mines and export gold.
Africa’s gold sector is still thriving despite these obstacles. The region’s many nations have worked to enhance environmental sustainability and regulation. In addition, the industry has seen more investment as a result of the rising demand for gold on global markets.
In conclusion, despite a number of obstacles, Africa’s gold sector continues to play a significant role in the region’s economy. To ensure the industry’s long-term survival and prosperity, more needs to be done to address regulatory problems, environmental challenges, and geopolitical tensions.
There remains a huge reform to be carried out in the mining sector across Africa to save her from the resource curse. Like the oil boom, the mineral resource industry projects an ample opportunity for Africa as the world moves away from oil.
Resource rich countries like Norway and Chile have made good use of their resources and currently run a highly developed state.
