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African economies, facing major economic challenges, are turning to gold to reduce their dependence on international currencies, especially the dollar. This move, seen in many countries on the continent, is aimed at diversifying foreign exchange reserves and mitigating the risks associated with global economic fluctuations.
A strategy for stock diversification
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, designs to buy bullion directly from artisanal miners. This initiative aims to strengthen the country’s foreign exchange reserves, which have been severely affected by the suspension of World Bank financing and capital flight. Nigeria, on the other hand, sees gold as a potentially effective tool to stabilize its currency, the naira, and fight the rampant inflation that is weighing on its economy.
A response to global economic challenges
Other African countries are also adopting similar measures. Madagascar, for example, began buying gold domestically to compensate for declining vanilla export earnings. Tanzania recently committed $400 million to purchase six tonnes of gold, marking a major step towards diversifying its reserves.
In Zimbabwe, the government launched a gold-backed currency, the ZiG, to combat inflation and exchange rate volatility. This country had already introduced gold coins in 2022 for the same purpose. According to experts, these measures are aimed at protecting African economies from external economic shocks, exacerbated by the COVID-19 pandemic, the conflict in Ukraine and rising global interest rates.
In summary, the decision by African countries to increase their gold reserves reflects a desire to protect themselves from 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 for the global economy could be significant as more and more countries choose gold as a strategic reserve asset.
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A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I committed to raising awareness and informing the general public about the ever-evolving ecosystem . My goal is to empower everyone to better understand blockchain and seize the opportunities it offers. Every day, I strive to provide an objective analysis of the news, decipher market trends, relay the latest technological innovations, and put into perspective the economic and social issues of this ongoing revolution.
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