Chief Executive Officer of Goldbod, Sammy Gyamfi, has explained that the billions of dollars quoted in Ghana’s gold export figures do not mean the company has such amounts stored as cash.
Speaking in an interview with Joy FM, Mr Gyamfi said many people, including some Members of Parliament, wrongly assume that Goldbod is “so rich” whenever export figures are announced.
“There are a lot of people who come to worry me because they think Goldbod is so rich. Anytime they hear that we’ve exported $6 billion, they think the $6 billion is sitting somewhere,” he said.
According to him, gold trade is a revolving business and must be understood as such. He gave an example to explain the process:
“Gold trade is a revolving business, so you can give me GH₵10,000 to buy gold but in a matter of a year, I can buy gold worth $1 billion with that GH₵10,000. Why? Because every three days I will buy gold worth GH₵10,000, go and sell it, bring the money again, convert it into cedis, buy gold again, go and sell it and get dollars, convert it into cedis. So cumulatively, you can buy $1 billion of gold over a certain period with just GH₵10,000 as the seed capital.”
He stressed that the $6 billion in exports does not mean the company had been given that exact amount to trade with. “It doesn’t mean that we’ve been given $6 billion and we bought $6 billion. It is a revolving trade,” he clarified.
Mr Gyamfi also explained how Goldbod raises its trading capital. He noted that the company is not currently drawing on its budgeted seed funds but largely receives support from the Bank of Ghana (BoG).
He said the central bank provides funds through what is called an FX forward option. Under this arrangement, banks and businesses that need foreign exchange but cannot meet their demands through the commercial system submit requests to the BoG, which then processes them.
“So BoG says if you need FX, come to me, make your request, and support it with the needed documentation. Once I clear that, I will fix a rate for you, I will give you seven days, I will take your cedis, and in seven days I will give you the dollar at a certain agreed rate,” Mr Gyamfi explained.
He added that once the BoG collects these cedis, part of the funds are given to Goldbod to buy gold. “That cedis plus the other cedis the BoG will have is given to Goldbod, then Goldbod, within a T+3 cycle, uses the cedis to buy gold, export the gold, and we get paid in dollars, and then the BoG gives us cedis again to go and buy gold.”
According to him, most of the dollars raised are used to meet market demands, which at one point reached as high as $50 million a day.
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