Africa’s position as a significant gold-producing region provides a solid foundation for its central banks to increase their gold ownership.
However, addressing infrastructure, security, and refining capacity challenges will be crucial to unlocking the continent’s full potential in the global gold market.
While managing gold reserves poses challenges, the benefits of gold reserves, including their ability to hedge against inflation and currency fluctuations, make them an essential component of central banks’ reserve management strategies.
One major challenge is the cost of storing and securing gold reserves, which can be substantial.
Gold, an attractive asset for Central banks
The growing importance of gold reserves in Africa is closely tied to the continent’s expanding economies and increasing integration into the global economy.
As a key component of central bank reserves, gold’s unique characteristics – including its safety, liquidity, and return potential – make it an attractive asset for central banks seeking to manage their reserves effectively.
Central banks around the world hold a significant portion of the world’s gold, accounting for approximately 20% of all gold mined throughout history.
The recent surge in gold prices can be attributed to a combination of factors, including heightened geopolitical tensions, increased central bank purchases, and the onset of monetary easing in the United States.
Gold’s reputation as a safe-haven asset has been reinforced by its performance in recent years, with investors seeking refuge in gold amid geopolitical uncertainties.
According to the World Bank, strong central bank gold buying, led by countries such as India, Türkiye, and Poland, has been a key driver of gold demand in 2024.
This trend is part of a broader shift in reserve management strategies, particularly among central banks in emerging markets and developing economies.
As these institutions seek to diversify their reserves and mitigate potential risks, gold has emerged as an increasingly attractive option.
The World Gold Council has revealed that several African countries have significant gold holdings, with the following central banks holding the largest gold reserves;
| Rank | Country | Tonnes |
|---|---|---|
|
1 |
Algeria |
173.56 |
|
2 |
Libya |
146.65 |
|
3 |
Egypt |
126.82 |
|
4 |
South Africa |
125.44 |
|
5 |
Morocco |
22.12 |
|
6 |
Nigeria |
21.37 |
|
7 |
Mauritius |
12.42 |
|
8 |
Ghana |
8.74 |
|
9 |
Tunisia |
6.84 |
|
10 |
Mozambique |
3.94 |
According to the table sourced from the World Gold Council and last updated in November, 2024, Algeria led Africa’s gold reserves with 173.56 tonnes, underscoring its commitment to economic stability and diversification.
As a major oil producer, Algeria’s gold reserves hedge against global oil price fluctuations.
Libya ranks second with 146.65 tonnes, providing a safety net against economic shocks and maintaining investor confidence.
Egypt boasts 126.82 tonnes, supporting economic growth and development as one of Africa’s most populous nations.
South Africa, a major gold producer, ranks fourth with 125.44 tonnes, hedging against economic downturns.
Morocco rounds out the top five with 22.12 tonnes, demonstrating its commitment to diversifying foreign exchange reserves and promoting economic stability.
