Ghana must avoid ‘resource nationalism’ to benefit from gold, says economist

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The gold-mining town of Obuasi, Ghana in 2019. Ghana was formerly called the Gold Coast because of gold found in the Obuasi and Ashanti regions. REUTERS/Francis Kokoroko.
Rising gold prices and the dwindling appeal of South Africa as a production source should be the perfect backdrop for Ghana to extend its lead as Africa’s biggest producer of the yellow metal.

Gold has risen about 30% over the last 12 months even as mining majors have sought to diversify away from South Africa, due to problems such as electricity supply, labour relations and diminishing yields from deep mines.

It looks like a perfect scenario for Ghana. Fitch Solutions expects gold production in Ghana to grow 9% in 2021, after COVID-19 held back 2020 growth to just 2%. But the threat of resource nationalism under re-elected president Nana Akufo-Addo could undermine his country’s ability to keep pole position.

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Resource nationalism is not unique to Africa and is also faced by mining investors in Russia or South America. Yet Ghana’s need to raise cash from royalties as fast as possible may reduce its attractiveness to majors. Akufo-Addo’s re-election as president will mean a continuation of the agenda to monetise future royalties, posing risks to mining investment in Ghana, says Fitch.

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