Ghana’s current economic stability is attributed to the Domestic Gold Purchase Programme (DGPP), a unique idea by former Vice President Dr. Mahamudu Bawumia to leverage locally produced gold to build the country’s foreign exchange reserves and stabilise the cedi.
Former Bank of Ghana (BoG) Governor Dr. Ernest Addison publicly credited Dr. Bawumia, New Patriotic Party (NPP) flagbearer for the 2028 general election with getting the DGPP started, in remarks delivered at the programme’s launch on 17 June 2021.
Again, at an international trade and banking conference in London in 2025, the BoG First Deputy Governor Dr Zakari Mumuni described the Domestic Gold Purchase Programme (DGPP) as an economic lifeline for Ghana.
He stated that the DGPP provided critical foreign exchange liquidity during severe external shocks and limited capital market access when the whole world was facing economic crisis as a result of the COVID-19 pandemic and the Russia-Ukraine war.
Dr. Mumuni said the DGPP helped build foreign reserves, stabilise the local currency, and restore international investor confidence, significantly contributing to Ghana’s sovereign credit rating upgrade from “restrictive default” to B- with a stable outlook.
The Domestic Gold Purchase Programme allows the Bank of Ghana to build foreign exchange reserves by buying locally produced gold and paying in cedis, converting domestic mineral output into reserve assets without spending scarce foreign currency.
Bawumia explains origin of DGPP
To put beyond doubt the originator of the Domestic Gold Purchase Programme, Dr. Bawumia recently gave a detailed account of the thinking behind two most innovative economic interventions he spearheaded under the NPP government, the Gold-for-Oil programme and the DGPP.
Addressing members of the Ghana National Association of Small-Scale Miners in Accra, the former Vice President said the initiatives were born out of necessity during a period of severe external pressure on Ghana’s economy.
He identified two closely linked challenges that forced policymakers to seek unconventional solutions.
The first was the abrupt drying up of external financing in the wake of the COVID-19 pandemic and the Russia-Ukraine war.
“That tap (external financing) was shut for Ghana and quite a few countries. And for us, it resulted in a balance of payments crisis,” he said.
The second constraint, he explained, came from the terms of Ghana’s International Monetary Fund programme.
Under the programme, the Bank of Ghana was permitted to use only $80 million a month to support the foreign exchange market.
“You can imagine what the demand for foreign exchange for Ghana would be on a monthly basis. Significantly more than $80 million a month. And so, in that framework, there was only one result. Because when demand exceeds supply, prices would go up, isn’t it? The cedi started depreciating daily,” Dr Bawumia noted.
Faced with these restrictions, he said he conceived the Gold-for-Oil programme as a practical way around the dollar shortage.
By using gold to pay for petroleum products, the country could secure fuel supplies without further depleting scarce foreign currency reserves and risking shortages at the pumps.
The second major idea, the Domestic Gold Purchase Programme, came to him during a routine exercise session as he reflected on Ghana’s position as a significant gold producer, and questioned the logic of the existing system.
“Why does Ghana, which mines gold every day, have to export cocoa to get dollars for its forex reserves? Why not buy the gold we already produce with cedis?” he recalled asking himself.
Dr Bawumia described the approach as deliberate “out-of-the-box thinking.”
“It was not a textbook idea. There’s no textbook in economics that will tell you about the Gold-for-Reserves programme,” he said.
Dr. Bawumia said he later presented the concept to the Bank of Ghana.
However, because the proposal was highly unconventional, the central bank spent nearly a year conducting thorough due diligence.
“Officials were initially hesitant, worried they could face consequences for implementing a policy that had no clear international precedent. Finally, they agreed, and Ghana became the first country in Africa, and probably the world, to implement such a programme. Now, other countries are coming to learn from Ghana,” Dr Bawumia added.
The former Vice President’s remarks offer insight into the practical pressures and creative responses that shaped key economic policies during a particularly difficult period for the Ghanaian economy.
