In its second Growth and Transformation Plan (GTP II), the Government of Ethiopia planned to expand the export base by strengthening the export performance of selected sectors, including mining. The government set an ambitious target of increasing foreign exchange earnings of the mining sector from 344 million USD to 2.0 billion USD between 2014/15 and 2019/20. Enhancing the performance of the gold export sector is crucial in achieving this target, as gold contributes well above 90 percent of the foreign exchange earnings of the mining sector.
The gold mining industry is segmented into two components: modern and artisanal gold production. Artisanal gold miners who supply non-monetary gold to the National Bank of Ethiopia (NBE) for export make up around 50% of total production. Apart from generating valuable foreign currency, artisanal gold mining is a major employer. According to information from the Ministry of Mining, the number of artisan miners is estimated at around one million.
Gold export earnings as a proportion of total commodity earnings have been on the decline in recent years, shrinking from 18.6% in 2012/13 to 7.2% in 2016/17. During the same period, the share of artisanal gold mining in total gold exports declined from a peak of 68% in 2012 to 48% in 2016.
These issues are of high concern to senior policymakers, who have requested the project team produce an assessment of the workings of the sector. This study has two main objectives:
- To evaluate the performance of the Ethiopian gold export sector with the aim of identifying the main challenges the sector is facing; and
- To investigate impacts of the incentive schemes the NBE avails to suppliers of gold.