4th August 2020
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Crude gold purchase plan is “economic nonsense” – economist

Author: Emmanuel Akile | Published: Wednesday, July 22, 2020

A local hunts for gold in Kapoeta. Gold is found in Kapoeta state's Ngauro, Namurunyang, Kauto and Napotpot villages, all dozens of kilometers outside Kapoeta town. | File photo/Gurtong

An economist has criticized the government’s decision to purchase crude gold in an attempt to improve and stabilize the economy of South Sudan.

Dr. Lual Achuek has described the move as an “economic nonsense”.

Two weeks ago, the central bank governor announced plans to increase its mineral stockpile by purchasing crude gold within the country.

Jamal Abdallah Wani said $4 million has been approved to kick-start the activity in collaboration with local miners.

He revealed that the board of the bank also approved an additional $1.5 million to acquire crude gold.

“This is economic nonsense. There is nothing like that. First of all, why do you have to get $4 million dollars? You don’t need that,” Dr Acuek said on Dawn show.

“You need pounds to buy the gold in order to sell it, bring it and use the dollar. So, that one is a non-starter.

The gold will be refined and stored within the bank.

Eastern Equatoria, is one of the regions in the country that contains some of the most important and best-known sites for artisanal and small-scale gold mining.

However, the 2012 Mining Act criminalizes black market gold sales. Despite this legal framework, South Sudan’s gold remains ungoverned and poorly regulated.

According to Dr. Acuek, who is also the Managing Director of Ebony Center, a move similar to contracting of oil firms should apply for gold mining.

“Gold is like oil, in the sense that it is mined. So, you need concession to a company like what the government has done to the oil; it has Petronas, CNPC, Indian companies and then our Nilepet,” Dr Acuek advised.

Dr. Acuek went on to advice the central bank to instead establish national companies to explore the gold than directly engaging with miners.

“The role of the central is to buy gold, not to sell it but buy gold and turn into a reserve and so when you have a reserve in terms of gold then now your economy becomes strong because you back up your currency, the pound will be backed up not by oil alone but also by gold,” he said.

This is what the central bank does. Central bank doesn’t just go out and buy few quantities of gold here and then run around that they are diversifying the economy. This is a laughing stock.

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