Gold For Oil Program: Where Is The Gold Coming From?

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The Government of Ghana’s Gold for Oil (G4O) program commenced with the first consignment of about 40,000 metric tons of diesel on January 15, 2022, valued at about 40 million USD. The prime objective of the program is to use additional foreign exchange resources from the Bank of Ghana’s Domestic Gold Purchase (DGP) program to provide foreign exchange currency for the importation of petroleum products for the country, which currently stands at about 350 million USD per month.

According to the Gold for Oil (G4O) framework, the payment for oil supply is done through two channels; a barter trade where gold is exchanged for oil or through a broker who purchase gold from the Bank of Ghana and provide forex to pay for oil. The initiative when implemented fully will ease pressure on our forex reserve – most notably the dollar. This will afford some stability in the exchange rate market and thus, save the country from the rampant increase in fuel prices. The demand for foreign currency to fund our need for fuel imports weakens and undermines the cedi’s value, which contributes directly to the cost of fuel at the pump.

The Center for Democracy and Socio-economic Development (CDS) Africa recognizes and appreciates the government’s genuine efforts to shore up the country’s forex reserve. We believe this timely policy initiative will help to relieve the pressure on the cedi. We also agree the Program may help the small-scale gold mining industry in Ghana to become competitive.

Nonetheless, we wish to draw the government’s attention to the issue of the sourcing of the Gold needed for the implementation of the program. Under the arrangement, gold purchased through the Bank of Ghana’s DGP program will be mainly through the Precious Minerals and Marketing Company (PMMC). The Bank of Ghana has stated that PMMC will solely act as the nation's assayer, evaluating the gold to ascertain its ingredient and quality.

The major question that we want to ask is that “Does the Gold Aggregator and mining firms have the capacity to provide enough gold for this initiative?” Currently, the country consumes 350 million USD per month of imported oil amounting to about 4.2 billion USD per year. During the launch of the Bank of Ghana’s DGP Program, the Governor praised Ghana’s position as the largest producer of gold in Africa, yet the country’s gold reserves have remained unchanged at 8.77 tonnes.

It is important for the government to come up with a clear policy statement about this aspect of the program so that it does not become a fertile ground for illegal mining operations in Ghana. Currently, Ghana is battling with the issue of “galamsey” and its associated impact on water bodies, arable farmlands, and forests reserves. In 2022, the Ghana Water Company reported exorbitant hikes in operational costs owing to the activities of illegal mining operations on our water bodies. They explained that they have had to spend more on materials and treatment of water to ensure its wholesomeness for consumption.

CDS Africa believe that the success of the Gold for Oil program would depend on several factors, including a clear policy implementation guideline. In respect of this, we wish to call on the government and the Bank of Ghana to provide measures put in place to ensure that gold purchased under the policy is solely from legal mining entities within Ghana.


Dr. Frank Bannor

Senior Research & Policy Analyst


Dr. Abena Boateng

Director of Research




Africa Cds

We lead research, advocacy and initiatives to advance democracy and policies to bring about socio-economic development.

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