African countries are betting on gold to preserve their economy!
African economies, facing major economic challenges, are turning to gold to reduce their dependence on international currencies, especially the dollar. This movement, observed in several countries on the continent, aims to diversify currency reserves and mitigate risks linked to global economic fluctuations.
A strategy to diversify reserves
Several African states, including South Sudan, Uganda, and Nigeria, are taking steps to increase their gold reserves. South Sudan is considering adding gold to its national reserves. To do this, its central bank is studying the experiences of other countries that have already adopted this strategy.
Uganda, for its part, plans to buy bullion directly from artisanal miners. This initiative aims to strengthen the country’s foreign currency reserves, which have been severely affected by the suspension of World Bank funding and capital flight. Nigeria, on the other hand, views gold as a potentially effective tool for stabilizing its currency, the naira, and combating rampant inflation weighing on its economy.
A response to global economic challenges
Other African countries are also adopting similar measures. Madagascar, for example, has started buying gold on the domestic market to offset the decline in revenues from vanilla exports. Tanzania has recently allocated 400 million dollars for the purchase of six tons of gold, marking a significant step towards diversifying its reserves.
In Zimbabwe, the government has launched a gold-backed currency, the ZiG, to fight inflation and exchange rate volatility. This country had already introduced gold coins in 2022 for the same purpose. According to experts, these measures aim to protect African economies from external economic shocks, exacerbated by the COVID-19 pandemic, the conflict in Ukraine, and the rise in global interest rates.
In summary, the decision of African countries to increase their gold reserves reflects a desire to protect against global economic uncertainties. By diversifying their reserves, these nations hope to strengthen the stability of their economies in the face of international currency fluctuations. The implications of this trend on the global economy could be significant as more and more countries opt for gold as a strategic reserve asset.
