Central banks in sub-Saharan Africa are accelerating their gold purchases as a hedge against growing macroeconomic instability in the United States and rising global geopolitical risks.

“While South Africa has historically maintained gold reserves, several sub-Saharan African countries are currently establishing domestic gold purchasing programs to capitalize on abundant local gold reserves,” Edith Mutethya wrote on Wednesday. “Leading this trend is Ghana, which has already launched its domestic gold purchasing program.”

West African countries are seeing a surge in both the quantity and value of their gold reserves, with Ghana’s total gold reserves increasing 255% from 8.7 tonnes to over 31 tonnes between the second quarter of 2022 and the first quarter of 2025, according to BMI, a unit of Fitch Group. Earlier this year, Ghana signed an agreement with nine mining companies to directly purchase 20% of their gold production at a 1% discount to the London Bullion Market Association (LBMA) price.



Ghana’s rapidly growing gold reserves have also had a strong positive impact on the local currency. Surging gold prices have made the Ghanaian cedi one of the world’s best-performing currencies against the dollar, said Orson Gard, senior analyst on BMI’s Sub-Saharan Africa country risk team.

“We’re seeing similar moves across the region, with Tanzania last year moving to pay in local currency based on prices published daily by the country’s mining commission,” Gard said.

Nigeria launched its own national gold-buying program last year and has passed legislation to strengthen the central bank’s ability to acquire domestically produced gold, BMI data showed.

“This year, several other markets have taken similar steps, with Namibia and Rwanda taking concrete steps to diversify their reserves into gold, and the central bank governors of Kenya and Uganda publicly raising similar ideas,” Gard said.

Meanwhile, in Burkina Faso, the government has nationalized gold mines and established a national gold reserve with the goal of holding at least 5% of annual domestic production, while Zimbabwe recently relaunched its gold-backed currency, Zimbabwe Gold, in an effort to stabilize the country's financial system.

“It does suggest that there is growing confidence across the region in terms of gold’s ability to support stability,” he noted.

But Gard warned that these new national gold accumulation strategies are not without risk, as a sudden drop in the global gold price could have a huge impact on sub-Saharan African countries. These countries have seen their gold reserves increase rapidly as a share of their total reserves, with many starting to accumulate gold at relatively high prices.

He said that in the medium term, a gradual unwinding of gold price gains could expose these markets to long-term losses, which would not only erode reserve adequacy but also undermine the credibility of central bank policies in these countries.

Gard said Ghana, Tanzania and Uganda are particularly vulnerable to a sharp drop or prolonged period of weak gold prices because these countries rely heavily on gold exports for foreign exchange earnings, in addition to actively increasing their reserves.

"Lower gold prices will directly erode the value of these countries' reserves while also reducing export revenues, which in turn will weaken overall foreign exchange inflows," he said.

Another key challenge to this strategy is liquidity, as it is difficult to quickly convert gold into more liquid assets such as foreign currency or short-term securities , which is why many central banks have historically held gold in major financial centers abroad to simplify convertibility.


Spot gold daily chart Source: Yihuitong

At 13:30 Beijing time on August 7, spot gold was quoted at $3379.18/USD.