Several Sub-Saharan economies currently strengthening their Gold reserves face the risk of an economic crisis if Gold prices slip, according to a Fitch report.
The countries expected to be most affected by this economic upheaval include Ghana, Tanzania, and Nigeria, who are significantly increasing their gold reserves through domestic purchases. This Gold craze is driven by heightened market volatility in 2025 stemming from U.S. trade tariffs and global geopolitical risks, according to BMI, a Fitch Group unit.
Countries like Kenya and Uganda are also said to be exploring similar strategies, while Rwanda, Namibia, and Burkina Faso are actively adding to their holdings, and Zimbabwe is backing its new ZIG currency with gold reserves.
Potential Risks
The hedging of Gold by African countries according to Fitch carries considerable risks. In Ghana, for example, gold now constitutes about one-third of total reserves, and a significant export from the country.
This has supported the cedi but could undermine export competitiveness if local currency strength persists amidst reduced Forex earnings whilst creating a significant revenue problem if its global prices fall. Any significant decline in global gold prices, which peaked earlier this year, could expose these economies to price and liquidity crises, particularly if U.S. interest rates fall and investors shift back to other assets.
Converting gold into hard currencies may also be difficult during economic crises, as seen in India (1990s) and Argentina (2000s) and this could hinder central banks’ ability to address balance-of-payments issues or stabilize economies.
Rapid gold accumulation may signal weak reserve management, eroding investor and public trust in African Central Banks as funds used for gold purchases could be allocated to other assets or investments with higher liquidity or returns.
Economists therefore warn that nations purchasing gold near the market’s peak risk economic instability if gold prices reverse sharply in the face of global economic tensions.
