There is something important happening in Zambia’s gold sector, and it goes beyond the announcement of another licensing regime. The Ministry of Mines and Minerals Development is preparing a new legal framework that will require companies involved in downstream gold activities to obtain specific licences. Permanent Secretary Dr Hapenga Kabeta has also warned that dealing in gold without the appropriate licence will constitute a serious offence, while the Bank of Zambia remains the country’s authorised buyer. For an industry that has for years existed somewhere between formal mining, artisanal production, informal trading and cross-border markets, this represents a significant attempt to bring the gold value chain under greater control.
The announcement is particularly interesting because Zambia's gold debate has never really been just about mining. It is fundamentally a question about what Zambia does with the wealth contained in its natural resources once they are extracted. That is a question I have been interested in for some time. In 2019, I wrote Sovereign Wealth Fund in Zambia, exploring how the country could convert natural-resource wealth, particularly from strategic minerals such as copper and gold, into longer-term national financial wealth. The argument was relatively straightforward: Zambia should not only ask how much mineral revenue can be collected today, but how finite natural resources can be transformed into assets that continue to benefit the country long after the minerals have been extracted.
Gold makes this question particularly interesting because it occupies an unusual position in the economy. Unlike many commodities, gold is not simply an input into production or a raw material destined for consumption. It is also a financial asset and a reserve asset. A country can mine gold, refine it, sell it, hold it as part of its reserves or use it within a broader financial architecture. That gives gold a strategic character that is different from simply exporting another commodity.
This is why the current discussion around licensing, traceability and the Bank of Zambia's role deserves much more attention than it is currently receiving. If Zambia can establish a credible system through which gold is formally produced, purchased, assayed, processed and accounted for, the country gains something more valuable than regulatory compliance. It gains visibility over a potentially significant source of national wealth.
For years, one of the problems with Zambia's gold sector has been the difficulty of knowing exactly what is being produced and where it ultimately goes. Gold is highly valuable relative to its physical size, which makes it particularly susceptible to informal trading and smuggling. When gold moves outside the formal system, Zambia potentially loses more than tax revenue. It can also lose foreign exchange, export earnings, production data and the opportunity to convert part of that resource into official financial assets.
The proposed framework therefore has an important objective. But regulation by itself will not be enough. Zambia also needs to make the formal market work better than the informal one. An artisanal or small-scale miner should know where they can sell their gold, what price they should expect, how the gold will be assayed, how purity will be determined and when they will receive payment. If the formal market is slow, opaque or offers significantly less than informal buyers, no amount of enforcement will completely eliminate informal trading.
This is where the idea of a more developed national gold market becomes important. In subsequent work on Zambia's gold reserves, I argued for the development of a formal gold market and institutions capable of supporting price discovery, reserve accumulation and financial management of the country's gold resources. The objective should not simply be to control gold, but to build an ecosystem around it that allows miners, traders, processors, government and the central bank to participate in a transparent and economically efficient market.
The Bank of Zambia's role is therefore particularly important. If the central bank is the authorised buyer, then the institution effectively sits at a critical point between Zambia's gold producers and the country's reserve architecture. That creates an opportunity, but it also creates a significant responsibility. The buying process, assay systems, pricing mechanisms and payment arrangements must be transparent enough to maintain confidence among producers, particularly small-scale miners.
There is also a legitimate question about concentration of market power. A single-buyer model can improve traceability and make it easier for the authorities to account for gold production, but it can also create problems if sellers have no confidence that they are receiving a fair market price. Formalisation should therefore not simply mean moving gold transactions from informal buyers to a government-controlled buyer. It should mean creating a market that is transparent, competitive where appropriate, efficient and trusted.
Ultimately, however, the bigger opportunity lies beyond the licensing regime itself. Zambia needs to start thinking about gold as part of a broader national wealth strategy. A mineral resource does not automatically make a country wealthy. Wealth is created when a country is able to convert natural resources into productive capital, financial assets, infrastructure, human capital and long-term savings.
This was at the heart of the sovereign wealth argument I was making several years ago. Zambia has finite mineral resources. Copper will eventually become more difficult or expensive to extract, while individual mines will decline. The same is true for gold. The challenge is therefore to convert part of today's mineral wealth into assets that can support tomorrow's economy.
Gold can potentially play a role in that process because it sits at the intersection of mining, foreign exchange, monetary policy and financial reserves. A properly designed gold architecture could eventually encompass formal purchasing, refining, transparent price discovery, responsible sourcing, reserve accumulation and financial instruments that allow Zambia to manage commodity-price risks.
That does not happen overnight. It requires institutions, legislation, credible regulation and strong governance. But the institutional journey has to begin somewhere.
Seven years later, the conversation has moved considerably closer to the institutional questions that matter.
The question is no longer simply whether Zambia has gold. We know that it does. It is no longer simply whether gold should be regulated. Clearly, it should.
The more important question is what Zambia intends to build around the gold that it produces.
Because gold buried underground is a mineral. Gold traded through a transparent market is a commodity. But gold that is properly accounted for, accumulated as reserves and ultimately converted into long-term investment capital can become something much more important.
It can become national wealth.
And perhaps that is the real gold question Zambia should be asking now.
