(Ecofin Agency) - In recent years, central banks in several African nations, including Nigeria and Ghana, have started gold-purchasing programs. These programs boost foreign exchange reserves and aim to address a problem that has cost governments $435 billion in 2022.

In a November 18 report, the World Gold Council (WGC) urges the G7, G20, and World Bank to support these central banks’ gold-purchase initiatives. The report presents the programs as a "game changer" in combating illegal gold mining. Countries like Tanzania, Uganda, Ghana, and Nigeria have already launched initiatives to buy gold from local producers to strengthen their central banks' foreign exchange reserves. 

The report, "Silence is Golden—A Report on the Exploitation of Artisanal Gold Miners to Fund War, Terrorism and Organised Crime," suggests that these mechanisms can help include more artisanal and small-scale gold miners (ASGM) and prevent their production from funding organized crime and illicit activities.

The authors note that central bank purchasing programs can support the formalization of ASGM by guaranteeing a fair purchase price, encouraging environmentally sustainable practices, facilitating access to legitimate financing, and offering responsible communities certainty of supply.

Today we have released a new report, written in partnership with the Rt. Hon Dominic Raab, on the exploitation of artisanal and small-scale #gold miners to fund war, terrorism and organised crime. Read it here: https://t.co/4g3aYFPoLO pic.twitter.com/jFBbkoQV4i

— World Gold Council (@GOLDCOUNCIL) November 18, 2024

In Tanzania, authorities have decided to purchase 20% of the gold held by miners and traders at international market prices. With gold prices reaching record highs recently, this move ensures producers earn a good income. The report shows that from 1997 to 2011, the value of gold mined through artisanal and small-scale mining (ASGM) in the Philippines increased from 4.5 billion pesos ($76.6 million) to 34.6 billion pesos ($589.4 million) due to a purchasing program supported by a refinery certified by the London Bullion Market Association. 

Similarly, in Mongolia, ASGM gold sales rose from 0.01 tons in 2012 to over 12 tons in 2017 under a similar program. According to the Swiss NGO SWISSAID, illegal gold exports from Africa reached 435 tons in 2022, valued at $30.7 billion, with most of this gold coming from artisanal and small-scale mines.

Emiliano Tossou

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