NEWS

Gold at Record Highs: Africa’s Place in the Surge

2025-10-09
PACT

Gold’s price has broken the $4,000 per ounce barrier, an unprecedented milestone in modern markets. This surge reflects mounting global uncertainty: persistent inflation, geopolitical tension, and eroding trust in fiat currencies.

Central banks in China, Russia, India, and other non-Western economies are expanding reserves not only as a hedge against volatility, but also to reinforce monetary autonomy and reduce reliance on the dollar. At the same time, investors worldwide are pouring into gold as a safe haven, reasserting the metal’s role as a store of value and a strategic hedge in the global financial system.

The surge has reinforced a familiar pattern: the power lies less with producers and more with the hubs and institutions that set the rules of the trade. Switzerland, the United Arab Emirates, and China dominate refining and bullion markets, capturing margins from transforming raw gold into certified value. Global mining corporations listed in Toronto, London, and New York report soaring share prices, expanding dividends, and steady capital inflows.

Financial markets have also seized the moment. Hedge funds, institutional investors, and retail participants are driving inflows into ETFs, futures, and derivatives, profiting from volatility without ever touching a physical bar. Demand-side actors benefit as well: India’s jewelry sector, Asian consumer markets, and the logistics and insurance firms that keep bullion moving across borders all gain from elevated prices, underscoring gold’s dual role as financial instrument and cultural commodity.

Which raises the obvious question: when gold soars, does Africa’s share rise with it, or does the real profit continue to slip away elsewhere ?

What do African Producers Gain from the Surge ?

Africa contributes significantly to global gold output, with Ghana, South Africa, Mali, and Sudan among its most prolific producers. In theory, record prices should translate into stronger export earnings, fiscal revenues, and foreign reserves.

Some states are seeing short-term benefits, as Ghana continues to draw foreign investment and South Africa relies on gold exports for vital foreign currency.

In practice, however, the gains are slim. Most African gold leaves the continent unrefined, with the real profits captured abroad through processing, certification, and trading. Artisanal and small-scale mining (ASM), which supports millions of livelihoods, remains largely informal and weakly regulated. The result is a vast shadow economy: an estimated $30 billion in gold leaves the continent illegally each year, with higher prices fueling smuggling networks more than public revenues or local development.

Governance gaps compound the problem. Mining codes and fiscal regimes often lag behind market dynamics, creating uncertainty for investors and limited protections for communities. Too often, policies fail to turn extraction into inclusive growth. On the ground, mining regions see little beyond environmental costs, while promised infrastructure and revenue-sharing remain elusive.

Whether at the national, regional, or continental level, aligning mineral policy with long-term development goals remains incomplete. Reliance on raw exports, coupled with minimal investment in refining and value addition, continues to leave African economies exposed to volatility and external dependence.

Looking Forward: Strategy and Sovereignty

Botswana’s sovereign wealth fund, built on diamond revenues, signals a growing recognition that Africa’s resources must be managed as strategic assets, not just export commodities. Across the continent, governments are beginning to frame gold and critical minerals as instruments of sovereignty and industrial policy.

This reorientation unfolds against a global backdrop of inflation, currency fragility, and eroding trust in fiat systems. For Africa, the challenge is even sharper: weak domestic currencies, heavy dollar-denominated debt, and costly forex transactions strip away much of the value from exports. While central banks elsewhere diversify away from the dollar, Africa’s dependence on it remains a structural vulnerability, making commodity-backed strategies a shield against financial fragility.

Producers therefore face a strategic choice: remain exporters of raw ore or reposition as architects of long-term development. That requires more than incremental reforms. Contracts must be renegotiated, local content enforced, and mining embedded into broader industrial strategies.

Human capital will be decisive. Africa’s population is set to double by 2050, with hundreds of millions entering the labour force. This demographic wave can become a driver of prosperity if matched with investment in education, technical training, and innovation. A skilled workforce would allow the continent not only to extract minerals, but also to refine, manufacture, and design the technologies powering the global green economy. Without this link, the youth bulge risks becoming a liability rather than a dividend.

The long-term vision must be more ambitious than capturing margins. By 2040 or 2050, mineral wealth should underpin diversified economies with competitive industries in energy, technology, and advanced manufacturing. Gold and critical minerals can become the backbone of sovereign wealth funds, regional financial markets, and even resource-backed currencies that reduce dollar dependence. If guided strategically, today’s market upswing could lay the foundation for an African century of industrial power and economic sovereignty.

The impact will extend across the continent, not just in producer states. Non-mineral economies are tied into the same regional market: through trade, infrastructure, and shared currencies, they too feel the shocks of price volatility and forex pressures. A continental approach, supported by regional value chains and collective bargaining, can ensure that mineral wealth benefits Africa as a whole rather than deepening divides between producers and non-producers.

Mineral wealth will not automatically deliver sovereignty or development. But it provides the raw material for both, if guided by ambition, coordination, and political will. The opportunity is real. The choice is Africa’s.

References

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