Ghana savours post-Brexit gold rush


ACCRA, Ghana – As stock markets tumbled and international investors panicked in the wake of the United Kingdom’s decision to withdraw from the European Union in June, Kwame Ofei was smiling. He sympathized with the economies that would soon face setbacks and the political ramifications that would inevitably follow, but he also knew his gold business would flourish with so much uncertainty about the market’s future.

“Brexit came as a surprise. Everybody in the [gold] market had a smile,” said Ofei, president and CEO of Italtech Ghana Limited, a private gold exporting company in Ghana’s capital Accra. “Nobody believed that this would happen.”

Within 24 hours of the vote, the precious metal saw its biggest spike – up as much as 8% – since 2008. Gold exchange-traded funds also surged as investors flocked to what is often a reassuring commodity when the market takes a slide. Meanwhile, those in Ghana’s gold sector like Ofei relished the uptick. The small West African nation is the second biggest producer of gold in Africa and tenth globally. In 2015, the government brought in more than $3.2 billion in gold export revenue, according to the Minerals Commission of Ghana.

“Gold holds its purchasing power over time,” says Steve Hanke, professor of Applied Economics at Johns Hopkins University. “Anything that creates uncertainty, like Brexit, usually gives gold a lift. So the Ghanaian gold sector should view Brexit as a positive.”

But in other parts of Africa, like much of the rest of the world, the UK’s decision to leave the EU left markets roiling.

After the vote, the South African rand plunged nearly 8% against the U.S. dollar, the most since 2008. The International Monetary Fund projected economic activity to contract 1.8% in Nigeria and cut sub-Sahara African GDP growth down 1.4% from April. In Kenya, Brexit put a squeeze on the country’s real estate market – one of Africa’s most promising – and threatened potential monthly trade losses of billions of shillings.

Bright prospects

Ghana has remained mostly unscathed through all the hysteria, although Brexit will likely hamper remittances from Ghanaians living in the UK and weaken export demand as the cedi appreciates against the pound, according to Sulemana Mohammed, CEO of, a financial portal for Ghanaian investors and businesses. Brexit, however, should reinforce Ghana’s investor-friendly image as some of Africa’s larger economies bear the brunt of the market’s volatility.

“Ghana has a better democracy compared to other countries in Africa,” said Mohammed. “We have a history of peaceful elections and no terrorist attacks have been recorded. The only thing is we need to shape up our macro-economic environment and then we will be in a much better position to attract investment.”

The country’s debt-to-GDP ratio of 63 percent is concerning for many global investors, Mohammed added.

But with a relatively stable currency and a booming gold sector, Ghanaians like Ofei aren’t too worried. Since Brexit, Ofei has received a record number of inquiries from refineries around the world looking to buy gold. He’s had requests from clients in Russia, India, Dubai, and even Austria.

Before the vote, Ofei says he was receiving a couple inquiries every other week. Now it’s almost a daily occurrence. “We will buy anything you bring,” an executive of a gold refinery recently told Ofei during a gold convention in India.

As the climate of uncertainty lingers, the gold market should continue to benefit top precious metal exporting countries like Ghana.

“We will be in uncharted territory for a few years as Brexit unfolds,” said John Mulligan, head of member and market relations at the World Gold Council in London. “There are a lot of risks leading to reduced faith in a shrinking pool of investor assets and that means continued heightened uncertainty.”

But Mulligan notes that Brexit has not been the only factor triggering increased investor interest in gold. “I think it started pre-Brexit. It started at the beginning of the year when investors of all stripes became increasingly wary that the economic recovery [from 2008] had become far more vulnerable than expected,” Mulligan said.

Brexit magnified that vulnerability so much so that the U.S. Federal Reserve even suggested that it might postpone a hike in the interest rates considering the debilitating effect Brexit has already had on the global economy. However, officials are still considering raising them before the end of the year. If the rates stay flat, Ghanaian gold should continue to do well, according to Kwaku Asuahene, CEO of A.A. Minerals Limited, a small-scale gold exporting company based in Accra.

“The dollar is the major determining currency around the world,” said Asuahene. “Anything that affects the dollar has a wider implication than the pound because gold is directly connected to the dollar.”

While interest rates may hold greater weight in determining the longevity of gold’s rise, Asuahene credits Brexit, in part, for his short-term success. From 23rd June to mid-August, he received 15 inquiries from international gold importers, including many from Europe. In a typical two-month time span, he says he would normally receive only two or three requests.

But not all Ghanaians, however, are feeling the gold rush. Only those who trade and sell gold on an international level are seeing the immediate effects of a disunited Europe, according to Lord Mensah, a lecturer at the University of Ghana Business School. The small-scale mining producers and galamseys (artisanal gold miners) in the countryside often get left behind.

“If you go to the hinterlands where we have the gold, the people there don’t know anything about the response of Brexit,” said Mensah. “The real value of gold is not noticed at their levels.”

“[But if] gold prices are going up and that is the main commodity to export, it will force production to increase,” Mensah said.

This will take time. There also isn’t a guarantee that heightened investor interest and record inquiry levels will translate into actual orders, but the potential should keep Asuahene and Ofei smiling.