Lawyer and Senior Vice-President of IMANI Africa, Kofi Bentil, has recently defended the establishment and operations of the Ghana Gold Board (GoldBod), describing it as the best approach Ghana has adopted to manage its gold resources. However, Mr. Bentil cautioned that GoldBod is still evolving and should not be presented as a flawless institution. He expressed concerns that, under the previous arrangement, the Bank of Ghana was directly involved in gold trading, carrying the financial consequences of those transactions. Specifically, he explained that, under the Bank of Ghana’s control, the central bank was trading gold through GoldBod, with the resulting gains or losses ultimately reflected on the central bank’s balance sheet.
Mr. Bentil highlighted that at the time, it was the Bank of Ghana that was trading gold through GoldBod, creating a situation where the central bank was also responsible for the risks associated with commercial gold trading. He argued that this structure presented problems because the central bank, which includes monetary and financial stability, was also carrying the risks. The losses, he stated, belonged on the books of Bank of Ghana, leading to challenges for the central bank.
He further emphasized that the arrangement created difficulties for the central bank, as the commercial risks inherent in gold trading were not adequately separated from the central bank’s responsibilities. This separation, he asserted, was a significant concern, prompting calls for a revised model in which commercial risks associated with gold trading would be handled by a separate entity.
Mr. Bentil proposed that Ghana would transition towards a system in which GoldBod would assume its own capital and operate more independently from the Bank of Ghana. He outlined a plan for GoldBod to assume the commercial risks and rewards of its gold purchasing and trading activities, thereby eliminating the direct responsibility of the Bank of Ghana.
Despite his strong advocacy for GoldBod, Mr. Bentil acknowledged that the institution still has areas for improvement. He stated that they have not yet reached the point where it is perfect, suggesting that public discussion should focus on identifying and correcting weaknesses rather than concluding that the entire GoldBod concept is fundamentally flawed. He rejected suggestions that the establishment of GoldBod was itself a policy mistake. He maintained that anyone trying to suggest that GoldBod is a mistake is wrong. He underscored that Ghana’s experience with gold trading and the challenges associated with the previous arrangement demonstrate the need for an institution capable of managing the commercial side of the country’s gold resources. He concluded by reiterating that GoldBod represents the best we have done with our gold resources yet.”
This arrangement will allow GoldBod to manage its own risks and rewards, and it will create more stability within the gold trading ecosystem.
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Source: Adom Online
