HOW GOLD TRADE HAS IMPACTED ON AFRICA

0
838
Gold in Africa

Up to the close of the 19Th century, gold-dust, grains of gold and cowry shells played a very big role in the financial dealings of societies and communities across Africa. Gold was first used as a medium of exchange and gold prices, including commodity prices exchanged for gold, were determined using brass scales and weights. The mining of gold around that time was an arduous job that involved panning for gold by children and women near the edges of gold-rich African rivers, diving deep into rivers (by men) and digging shafts deep into the earth where the mineral was located.

When gold was discovered by George Walker (An Australian Miner) in the Witwatersrand Basin in the year 1886, a major gold rush in the history of gold mining and trade on the African continent was sparked off with South Africa being the major player. It gave birth to Johannesburg city and ten years later, Johannesburg became the biggest city in Southern Africa. Such developments on the African continent have often led to massive arrivals of outsiders, creating antipathy among the original settlers. Racism has been a malady on the African continents, following colonization by European countries whose motives were simply mining and benefitting from gold trade.

Today, gold mining and trade have evolved from panning to commercialized gold production processing, minting and trade. High quality gold is now graded in terms of Karats, an internationally recognized standard of determining gold quality. From Southern Africa, through Congo to North Africa, there have been substantial profits that have accrued from gold trade and mining as can be seen in improved infrastructure. Africa’s involvement as a major player in the gold bullion market has made it a centre of attraction for most investors.

Gold mining and trade have attracted the flow of capital to many African countries involved in the activities. It is universally known that capital streams to anywhere it can make the greatest return comparative to identified risks. South Africa has been a beneficiary of this in the recent decades and this is why the economy is exceptionally strong. The gold mining industry in the country has not been declining because of the massive capital investments.

However, the crisis in the Democratic Republic of Congo has in most cases been persistently fuelled by the gold riches in the country. Here gold has been something of a curse than a blessing. As war-lords trade gold with major gold companies across Europe in exchange for ammunition, the level of insecurity has up-scaled to unimaginable proportions. Gold from the Congo has served to enrich countries like Uganda, Rwanda and Tanzania; as a recent UN report indicated. These insurgencies have further encouraged smuggling and illegal trade in gold, something that has drained the country’s resources. With the emergence of poll-tax collectors and major boarder points that are managed by war-lords, the country has failed to manage its revenue collection and this has been economically disastrous.

Finally, it should be noted that African countries have never received the best deal in gold sales. This is because gold buyers worldwide buy from small artisan miners at very low prices. Africa’s inability to process gold has always made the prices of her gold cheaper than should be. Gold prices of high quality 24 Karat gold bars and items are very good that had Africa to mine, refine and sell high quality gold products, earnings from the sales would be thrice higher than what they are earning now.

Comments

comments