Ghana plans to introduce a new blockchain-based system to track gold in the country, curbing a multi-billion dollar smuggling crisis that has plagued the sector for decades.
Sammy Gyamfi, who leads the Precious Minerals Marketing Company (PMMC), revealed that blockchain will introduce transparency in a sector where corrupt officials have exploited opaque structures to conduct fraud. PMMC is a government body charged with grading, valuing, buying, and selling gold and other precious minerals in Ghana.
“The current system is failing the country. With this new setup, every licensed miner will be registered in a national database, and every production batch will have a unique digital code,” Gyamfi stated, as reported by local outlet GhanaWeb.
“As the gold moves through the chain from miner to buyer to exporter, each transaction will be recorded instantly on a blockchain platform,” he added.
While the new bill has yet to receive parliamentary approval, Gyamfi revealed that the government has already kickstarted pilot projects in select communities, and they have been a success.
Ghana is among the largest gold producers on the continent. Last year, it produced 153 metric tons of the precious metal, valued at $15 billion by today’s prices. However, a substantial portion of the mining is conducted by small-scale operators, whom the government has been unable to regulate properly. This leads to poor working conditions and, ultimately, other crimes such as tax evasion and smuggling.
According to Gyamfi, Ghana loses $2 billion annually to smugglers and corrupt government officials. It’s not alone; according to one report, over $30 billion worth of gold was smuggled out of African countries in 2022.
Blockchain is among the technologies governments and the private sector are exploring to curb this vice. With its on-chain, tamperproof records, blockchain creates an immutable record of the movement of the precious metal from the mine to the consumers. Additionally, users can authenticate that their gold is genuine and sourced responsibly.
Blockchain’s ties with gold go beyond authentication. Tokenized gold has become one of the fastest-growing applications of the technology. Amid recent spikes in gold prices to hit record highs, the market cap of tokenized gold soared to $1.6 billion this week. The sector has also attracted some of the world’s biggest institutions, including Europe’s largest bank, HSBC (NASDAQ: HSBC), which issued tokenized gold for retail customers in Hong Kong last year.
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