The Alliance for Social Equality and Public Accountability (ASEPA) has asked the government to rescind its decision to purchase oil from the world market using gold. Instead, it called on the government to put in place measures to strengthen the local currency that had depreciated against the US dollar by 50 per cent this year. Mr Mensah Thompson, Executive Director of ASEPA who made the call, said barter trading gold for oil would deplete the country’s forest reserve. He said this while addressing a news conference on the 2023 Budget Statement and Economic Policy of the Government, in Accra.
Mr Mensah Thompson
Ghana is currently witnessing an onslaught on its natural resources due to a high level of unfriendly human activities such as illegal mining, illegal logging, and illegal farming within its forest reserves and this is becoming a source of worry to members of the public. The country continues to lose several hectares of fertile forestlands across the country, especially within the last decade. The Tano Nimiri, Tano-Offin, Numiri, Kobro, Oda, Jimira, and Atewa forests, including many others in the Ahafo, Western, Ashanti, and Eastern regions have all suffered large-scale deforestation due to illegal mining. In 1901, Ghana’s total forest reserve cover stood at 8.2 million hectares but is now estimated to be less than 1.6 million hectares according to the Forestry Commission. The rate of deforestation based on the trend has been pegged at an unsustainably high rate of 65,000 hectares per annum. Between 2015 and 2018, galamsey-driven deforestation increased from 13,456 hectares to 29,275 hectares. As of 2018, the total extent of forest degradation in protected forest reserves affected by galamsey was about 1058 ha. This is according to data from the Centre for Remote Sensing and Geographic Information Services (CERSGIS). Given the prevailing rate of deforestation, it is estimated that there will be no natural forest in Ghana by the year 2035.
Gold for fuel
The government last week disclosed that it intends to purchase oil from the world market using gold instead of the dollar due to the depreciation of the cedi against the US dollars. Official data also shows that Ghana’s gross international reserves have fallen from $9.7 billion at the end of 2021 to around $6.6 billion at the end of September 2022. Mr Thompson explained that gold was a commodity that had extremely high price volatility on the world market and indicated that should the value of the commodity (gold) decline on the world market, government would require more gold to make the purchase. “The sad situation about this is that Ghana has an oil refinery which has been abandoned since 2017.” He added: “The volatility of gold prices set another stage for the fast depletion of the mineral resources the country has if the prices of the commodity fall.” A few days ago, Vice President Mahamudu Bawumia said Ghana's intention to use gold to buy oil should not be misinterpreted as being against the use of the US dollar. He said it is just a measure to help strengthen the cedi. At the AGI Awards night in Accra, Dr Bawumia explained: "To address this fundamental challenge that we all face of depreciation and its impact on fuel and utility prices and food and so on, the government has opted to implement a policy of using our gold to buy oil products" “If we implement it as we have envisioned, it will fundamentally change our balance of payment and significantly reduce the persistent deprecation of our currency,” he added. “This has been misrepresented as Ghana being against the use of the US dollars in International transactions. This is not the case. We are not on any mission against the use of the dollars in international transactions, far from it. In fact, we want to accommodate all US dollars in our reserves. But we have a specific issue to deal with oil imports and the prices of fuel, food, and transport and utilities that’s essentially what we are targeting,” Dr Bwumia noted. The vice president recently announced the gold-for-oil via Facebook. “As part of measures to operationalise the government’s use of gold to purchase oil products, the Minister of Lands and Natural Resources, Mr Samuel A. Jinapor has just issued the following directives”, wrote the Vice President. The directives include: 1. Effective 1 January 2023, all large-scale mining companies (as agreed with the Bank of Ghana) shall sell twenty per cent (20%) of all refined gold at their refineries to the Bank of Ghana (in Ghana cedis) before the export of the gold. The Bank of Ghana and the Precious Minerals Marketing Company (PMMC) will coordinate with the large-scale mining companies to ensure compliance with this directive. 2. Effective 1 January 2023, all Community Mining Schemes (CMS) shall sell their gold outputs to the government through PMMC. All mining licences for CMS shall include a clause mandating licencees to sell their gold output to the government. 3. Effective 1 January 2023, all licensed small-scale gold miners shall sell their gold to the government through PMMC. All small-scale gold mining licences shall include a clause mandating licencees to sell their gold to the government. 4. The gold to be purchased by the Bank of Ghana and the PMMC will be in cedis at a spot price with no discounts. The directives, according to the Vice President, would also help local gold refineries obtain gold supplies from PMMC to support their operations, as they work toward obtaining the required London Bullion Market (LBMA) certification.