Addis Abeba – The National Bank of Ethiopia (NBE) has announced a major overhaul of its gold pricing policy, effective 27 August, 2024.
The new directive eliminates the previous practice of offering a fixed and substantial premium above the international gold price to local suppliers selling gold to the central bank.
Under the revised policy, the NBE will set offer prices based on “its internal procedures and a cost-covering incentive.” The updated pricing structure applies to gold deliveries ranging from 25 grams to 25 kilograms.
Going forward, these suppliers will no longer receive a guaranteed premium regardless of the quantity they provide.
Suppliers who source gold from artisanal miners and deliver a minimum of 25 kilograms in a single transaction—referred to as aggregators—will also receive a pricing structure that “ensures cost coverage and provides substantial incentives for profitability,” according to the new directive.
Before the recent revision of the gold pricing policy, the purchasing rate at the NBE for 24-karat gold was set at 9,218 birr per gram ($80.6), whereas the bank offers 5,377 birr per gram ($47) for 14-karat gold, which is the lowest purity level.
The amendment of the directive represents a significant shift from the NBE’s previous approach, which offered considerable fixed price premiums based on the quantity of gold sold.
For instance, under the old system, suppliers selling between 50 grams and three kilograms received a 60% premium, while those selling between three and 30 kilograms obtained a 67% premium.
Aggregators supplying more than 30 kilograms also enjoyed a 72% premium.
In addition to these pricing reforms, the NBE has introduced new incentives for large-scale gold producers.
These producers are now permitted to retain up to half of the foreign currency generated from gold exports and can hold this hard currency for up to three months, a two-month extension from the previous limit.
The NBE justifies these changes as necessary for implementing sustainable reforms in the gold exchange market and providing long-term incentives to suppliers.
By offering more favorable terms for both small-scale and large-scale producers, the NBE aims to encourage increased gold production and boost the country’s export earnings from the sector.
Recent reports indicate that Ethiopia generated $274 million in gold export revenue during the first nine months of the previous fiscal year, with a total of 2.8 tons exported.
Of the total amount, 2.4 tons were exported by large-scale producers, while artisanal miners contributed 0.4 tons.
Despite these figures, export revenue fell short of targets.
Habtamu Tegegn, Minister of Mines, noted during a presentation to the House of Peoples’ Representatives in June 2024 that gold export revenue had declined compared to the target, despite Ethiopia’s estimated potential of mining up to 500 tons of gold annually. AS
