Ghana’s Gold-for-Oil (G4O) policy, once hailed as a transformative solution to the country’s foreign exchange (FX) crisis, is facing increasing scrutiny as industry experts question its effectiveness in stabilizing fuel prices and strengthening the cedi.

The policy, introduced in December 2022 and first implemented in January 2023, was designed to use Ghana’s gold reserves to purchase refined petroleum products, reducing the reliance on scarce U.S. dollars. However, two years on, a recent report by the Chamber of Oil Marketing Companies (COMAC) suggests that G4O has fallen short of expectations, covering only 30% of the country’s petroleum needs while failing to prevent the cedi’s depreciation or provide long-term price relief at the pumps.

COMAC’s findings challenge the erstwhile NPP government’s claim that G4O has successfully stabilized fuel prices and curbed inflation. “Since its implementation in January 2023, G4O has covered only 30% of Ghana’s oil needs; a limited scope that raises doubts about its effectiveness in addressing key economic concerns such as fuel price stability, currency depreciation, and inflation in petroleum-dependent sectors,” the report states.

According to COMAC, global market trends played a far greater role in lowering fuel prices than the G4O initiative itself. “The oil market naturally self-adjusts after experiencing significant shocks. Following the Russia-Ukraine crisis, crude prices surged before eventually stabilizing as global markets gradually adjusted,” the report further explains.

Despite initial optimism, the policy’s impact on the Ghanaian cedi has been minimal, with FX volatility persisting. COMAC argues that “the persistent correlation between rising crude oil prices, a weakening cedi, and pump prices indicates that exchange rate fluctuations driven by international market forces remain the dominant factor; a challenge that the G4O program failed to address.”

The report further reveals that some Bulk Import, Distribution, and Export Companies (BIDECs) were able to import fuel at lower costs than what was secured under G4O, raising concerns about inefficiencies in the government-led procurement process.

One of the most significant criticisms outlined in the report is the lack of transparency in G4O transactions. “Transparency is not merely about government involvement; it requires public disclosure of financial records, procurement contracts, and independent audits—none of which have been made readily available,” COMAC asserts.

The report further bemoans that “there is no publicly accessible data on G4O transactions, profit margins, financial risks, or losses.” Additionally, it highlights concerns that some G4O-imported fuel remained unsold due to pricing mismatches, leading to financial losses for the Bulk Energy Storage and Transportation (BEST) Company, which was tasked with managing the imports. “Some BIDECs were importing oil at much lower premiums and prices than those offered by BEST through the G4O program,” the report states, raising questions about the efficiency and viability of the initiative.

As dissatisfaction with G4O grows, COMAC is calling for a full reassessment of the policy and is urging the government to consider transitioning to a Gold-for-Forex (G4F) model instead. “Instead of direct commodity swaps, Ghana should leverage its gold reserves to stabilize foreign exchange markets, ensuring that oil importers have access to adequate FX liquidity,” the report recommends. The report also suggests that Ghana must prioritize structural reforms to address the root causes of its economic vulnerabilities, including strengthening refining capacity at the Tema Oil Refinery (TOR), enhancing storage and distribution efficiency, and ensuring independent audits of petroleum-related government initiatives.

The Gold-for-Oil policy was initially championed by Vice President Dr. Mahamudu Bawumia, who described it as “the most important economic policy change in Ghana since independence.” He argued that the initiative would save Ghana approximately $4.8 billion annually and prevent an economic collapse. However, COMAC’s report questions whether the initiative was sufficiently planned or rushed into implementation without proper safeguards.

Attached is a full copy of the report.