Ethiopia resumes local gold trade

Under new rules, the National Bank of Ethiopia (NBE) will purchase gold from licensed local traders and producers at the world market rate and sell it to retailers in the impoverished Horn of Africa nation, officials said on Friday.

Ethiopia produces about four tonnes of gold a year, about one tonne of which the government estimates has been lost annually to black marketeers in neighbouring countries, India and the Middle East, since trade was banned in 1977 by the Soviet-backed government of Mengistu Haile Mariam.

Mengistu took power in 1974, overthrowing emperor Haile Selassie, and imposing strict communist economic controls, including a centrally planned economy. He was toppled in 1991, but the trade ban remained.

Black market

Gold dealers in Addis Ababa, who said the ban and resulting black market trade had destroyed their businesses, breathed a sigh of relief as the sales resumed.

“The black market took over and local miners, searching for better prices, started moving across the border” Mekonnen Assefa, jewelery shop owner

“We used to buy gold from the NBE,” said Mekonnen Assefa, a jewellery shop owner. “Once the communists came to power, we were denied that right.

“The black market took over and local miners, searching for better prices, started moving across the border,” he said.

Another dealer, Muhammad Aman, echoed that complaint. “Traditional miners preferred to go across the border or engage in illicit trade inside Ethiopia that was hurting them, us and the country at-large,” he said.

Tonnes of gold being smuggled out of the country have been intercepted at Addis Ababa’s Bole Airport and border points in recent years, according to customs officials.