Factors Affecting Gold Supply: The Case of Ethiopia

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Addis Ababa University


Artisanal and Small-Scale gold mining is largely linked to poverty-driven activity and a source of foreign exchange and government revenue. In Ethiopia, the sector employed a large number of people supporting approximately 1.2 million while the average share of the sector to GDP and total export during the last 15 years was limited to 0.4% and 8% respectively. Ethiopia has had no its fair share of benefits the artisanal and Small-Scale gold mining brings by way of direct revenue generation and foreign exchange creation. The country has been losing, potentially, millions of dollars through smuggling of gold every year. Supply of gold to the formal market was significantly declined. Therefore, the objective of the study was to analyze the effects of factors affecting artisanal and small scale gold supply and forward possible solutions that can improve the contribution of the sector. Notable factors (problems) are linked with global gold price fluctuation, expansion of local and cross boarder smuggling, administrative problems reflected in the gold supply chain as well as impediments related to policies and taxes including environmental dilapidation in gold mining sits in Ethiopia. In general, the performance of the sector was significantly deteriorated due to the combined effects of these deterring factors. A combination of quantitative and qualitative methods was used to analyze the study variables. The target population consisted of 934 artisanal gold miners, dealer, and cooperatives registered and operating in four regions in Ethiopia specifically, Oromiya, Tigray, Benishangul, SNNPR and Gmbella. Random sampling technique was applied to select 100 gold suppliers, senior managers and experts in the field. Out of 100 questionnaires 88 were completed and returned by respondents. Homogenous sampling technique was applied as the target groups are equally well aware of the ASG mining sector. Secondary data was collected from study report, publications, research outputs, proclamations and policy documents related to artisanal and small scale mining. The effects of the factors were examined by using 15 years panel data collected on foreign exchange earned from artisanal and small-scale gold mining sector. Secondary data were analyzed by using multiple linear regression model for one dependent variable (gold supply) and five independent variables. The empirical result shows international gold price fluctuation, local gold price, incentive to gold suppliers have positive and significant relationship with the performance of the sector while contraband trade and lower gold purchase threshold policy have negative relationship. Based on the result of the study, it is recommended that contraband trade should be controlled, appropriate gold product recording, tracking and monitoring be in placed, formalization of artisanal gold miners, technical and financial support for artisanal gold miners and attention should be given for environmental protection.


A Thesis submitted to Addis Ababa University in Partial Fulfillment of the Requirements for the Degree of Executive Master of Business Administration (EMBA)


Artisanal and small Scale Mining, Environmental sustainability, Gold purchase centers