The government’s decision to establish GoldBod as the sole entity for gold exports is raising eyebrows, sparking concerns of another state-controlled monopoly reminiscent of COCOBOD. While officials tout it as a strategy to streamline revenue and curb smuggling, skeptics fear inefficiencies, bureaucracy, and market distortions could cripple the industry. Will GoldBod be a game-changer or just another government-controlled cash cow?
Cocoa bean is recognized in the global chocolate industry as nutritious and offers numerous health benefits including for the improvement of the heart, mood enhancement, antioxidants, neuron production, prevention of anemia among others. In the cosmetics industry, it is used to produce hair and skin care products, and cocoa powder is used in the food industries.
Cocoa has been a political commodity in Ghana after the first export in the late 19th century. The early 20th century saw Ghana leading in cocoa export of about 40,000 tonnes annually.
The prestige Ghana was enjoying on cocoa export led to the establishment of the Ghana Cocoa Board in 1947 to regulate the market.
A decade later, Ghana won its independence from the British. The cocoa market in Ghana was improving the income of farmers and the government was raking in foreign investments. It became a major source of wealth for the economy. The government without hesitation monopolized the industry for foreign exchange.
When Did the Government Monopoly Start?
Government monopoly exists when the government grants itself privileges and entitlements.
State monopoly started when the government created the Ghana Cocoa Board (COCOBOD) and further passed the Ghana Cocoa Board Act 1984, PNDC Law 81.
The COCOBOD was tasked to purchase, market and export cocoa produced in Ghana. Other functions include, Promoting the general welfare of farmers producing cocoa, coffee and shea, and regulating the entire primary cocoa industry.
The law however, prohibits the sale of cocoa except the COCOBOD or authorized and licensed entities. Again, the law also prohibits the extraction of cocoa from sealed bags without lawful authority. In furtherance to these, the law allows only the government to export the cocoa beans out of the country.
Although Cocoa is a cash crop, its farmers are mostly peasants who depend on the cocoa prices from the government. Here, the government decides how much to purchase a bag or tonnes of cocoa bags. There is only one buyer and exporter which is the government.
Recently, cocoa prices are determined as vote buying tools to win elections. Prior to the 2024 elections, cocoa prices were increased to 129.36% per bag and tonne (from GH1,300 for 64Kg to GH3,000 and GH20,928 to GH48,000 for a tonne). This was 3 months to the general elections. In September 2020, the government increased the farm gate price from GH515 per 64Kg to GH660, translating into GH10,560 per tonnes (28% increment). Equally, a-3 month period to the general elections. Farmers’ welfare have become crucial in every election year.
Notwithstanding the volatility of Cocoa prices on the global market, it peaked at $12,072 per tonne in February 2024. With an exchange rate of GH12.4 to a dollar in the same period, the government made GH149,692.8 on each tonne. Nonetheless, the government paid GH48,000 per tonne to farmers (32%) per tonne. The government pocketed 67% on each tonne sold on the global market.
As a result, there are no millionaires not alone billionaires in the cocoa industry of Ghana. Businessmen and women, cocoa farmers, and entrepreneurs in the industry work for the state to enjoy. Government monopoly also occurs when the government deliberately regulates an industry that could create wealth for individuals and become deeply involved in the licensing, production and occupations of the people in the sector. This is evident in the monopolistic cocoa sector.
The Incoming GoldBod Monopoly
The functions of the GoldBod are similar to the COCOBOD. In an interview with Joynew on PM Express, the Precious Mineral Marketing Company (PMMC), a state institution, is putting together a legislation to establish the GoldBod that will have the sole authority to export gold from Ghana. The acting Manager of the PMMC, Sammy Gyamfi, expressed how it has been difficult for the PMMC and Bank of Ghana (the Central Bank) to compete with private gold exporters for forex. It is a clear intention that no individuals or groups can export gold outside the country except the government. He supported this economic position that it will help the government to make more forex for development.
The gold market is dynamic and the government over the years has not been flexible to adapt to changes in the gold market activities. This also denotes why the government is not good at doing business and cannot compete with the private sector for the same business for profits.
Sammy Gyamfi on Accra Weekly News also claims the gold industry is unstructured and unregulated in Ghana. This is absolutely false!
In Ghana, private gold exporters are licensed by the Ministry of Lands and Natural Resources. They export the gold through Customs and immigration laid down procedures, and must be in compliance with the Minerals and Mining Act 2006 (Act 703), and Minerals Commission Act 1993 (Act 450). Generally, there are five (5) export procedures which includes, a notification to PMMC, backed documentation, sealing and inspection, payment of withholding tax and declaration of monthly returns. The sector is well-regulated for gold exports.
Another Centralized Institution to Create Debts?
It is overtly vivid that because the state institutions cannot compete with the private sector in
gold export, centralization seems to be the only way out. When a government uses its legislative powers to advantage private sector businesses, it reduces competition, innovation, and efficiency.
Government monopoly in the cocoa sector has led to cocoa corruption, debt, legal battles, and smuggling, and the state would have to raise additional taxes to fight problems created through centralization. Currently, CocoBod is in debt of GH9.7 billion and payment is due in September 2025. We should never be surprised to see the GoldBod in billions in debt in the years ahead.
The GoldBod will end the licensing regime of gold export, competition and collapse the private sector gold export networks. It will disrupt the entire private value chain.
Obviously, another monopoly is not necessary. It will expand Ghana’s debts, grow the corruption economy, reinforce smuggling, and reduce competition. The government will have the monopoly to determine prices for gold purchase and once again be the only exporter of gold from Ghana.
The best remedy is to stop the government’s GoldBod, and ensure private gold exporters can make enough profits to grow the private sector which is championed as the engine of growth.
All that businesses and entrepreneurs need is to set the rules and allow private players to do business to create wealth and prosperity. The GoldBod is not a solution but another problem to be created by centralization.
Source: Accra Street Journal
Last Updated on March 30, 2025 by samboad
