According to the World Bank, almost half the world’s population—around 3.5 billion people—is living on less than $6.85 a day, which is the poverty line for upper-middle-income countries. At a more extreme level, almost 700 million people are currently living on less than $2.15 a day, the poverty line for low-income countries. There was significant progress in sustainable development between 1990 and 2015, with more than a billion people lifted out of extreme poverty. This was a monumental achievement, driven primarily by strong economic growth in China and India, that brought the wealthiest and least-well off economies closer in income levels. Nevertheless, extreme poverty has become increasingly concentrated in Sub-Saharan Africa or places affected by conflict and fragility. As the map below shows clearly, the entire Sahel region falls under this category. And besides Afghanistan all those countries are found in sub-Saharan Africa.

This nagging discrepancy whereby the Sahel region is one of the richest in the world in terms of its natural resources and home to the world’s poorest inhabitants is mind-boggling. Given the extent of violence in the region and the political turmoil that accompanies the Sahel gold rush, must we conclude that gold trade must always remain a sordid and bloody business?

Other countries on the African continent have displayed a more equitable gold trading model, one which is more heavily regulated and benefits those countries’ economies much more. As the largest gold producer on the continent, Ghana partakes in Africa’s gold rush while also finding new ways of protecting its national interests. According to the local statistics agency, in the second quarter of 2024 Ghana’s GDP has grown by 6.8 percent, the fastest growing rate in five years. Nevertheless, Ghana continues to cope with great quantities of gold smuggled from its territory (see chart below). Consequently, Ghana has recently ramped up its efforts to curb illegal mining and cope with smuggling, with the newly appointed government declaring its plans to launch a national Gold Board to “streamline gold purchases from small-scale miners, increase earnings and reduce smuggling”. In so doing, Ghana can ensure that its economy will directly benefit from Gold mined in its territory.

Source: The Economist

Another feature of the Sahel gold rush is the growth of Dubai as a refining hub. Gold exports from the United Arab Emirates (UAE) went up more than 60-fold between 2002 and 2022; gold is now the most valuable export from the UAE after hydrocarbon products. The Global Initiative Against Transnational Organised Crime, an NGO based in Geneva, argues that Dubai’s “no questions asked” approach to African gold encourages illicit trade. In 2022 around two-thirds of the African gold imported into the UAE was smuggled from African countries, according to Swissaid. To counter its dependency on foreign refineries and the associated loss of revenue, Ghana opened in August 2024 its first commercial gold refinery in which the government holds a 20% stake. With a local refinery at its disposal, Ghana can now garner more profit from the gold that is mined in the country while also creating more local jobs. It seems that there are, after all, ways to utilize the gold trade as a sustainable vehicle for the promotion of national interests and the general improvement of the living conditions of the local population. Investments in local infrastructure, the creation of new jobs, and higher tax revenues, are all positive outcomes stemming from the gold trade industry that can stimulate local growth and contribute to the development of local economies.

As a recent report by the IMF shows, while the rest of the world continues to grapple with ageing populations, Africa’s population is booming. By 2030, it is expected that half of all new entrants into the global labour force will come from sub-Saharan Africa, requiring the creation of up to 15 million new jobs annually. By 2045, Sub-Saharan Africans will comprise a larger work force than that of either India or China!

But where will all these jobs come from? As the following chart shows, this challenge is particularly acute in fragile, conflict-affected, low-income economies like in the Sahel. Politically fragile areas like the Sahel account for nearly 80 percent of Africa’s annual job creation needs, but those areas have struggled the most to create new jobs. Currently, the lack of local jobs and continuous political violence drive the young population to emigrate in masses. But there will come a time when African countries will need to create these jobs locally for their growing populations. The mining sector is not necessarily the worst place to start.

Gold trade doesn’t have to be exploitative. The Sahel now faces a choice: remained trapped in the cycle of foreign exploitation—Wagner Group being the latest iteration—or follow Ghana’s example in breaking free from foreign dependency and combat illegal gold trade. The deep-seated sociopolitical, economic, and military tensions that have long plagued the Sahel region clearly exceed gold trade. However, the recent gold rush may provide us with ways to envisage a future where gold becomes the conduit for sustainable economic development. As a source for positive change in the region rather than an impediment. Trading gold sustainably and responsibly is the only way to ensure that the astronomical wealth that is stored beneath the earth may be used for the benefit of those who live above it.

To find out more on how to participate in responsible gold trading in Ghana, please check out ERC page.