By: Forbes Africa

A November report from Ethiopia's Ministry of Mines highlights a paradox in the country's gold sector: artisanal mining, conducted by small-scale operations, significantly outperforms large-scale industrial producers. Despite favorable funding reforms, several major corporations have failed to meet production targets.

Research economist Lawrence Adu Asamoah explains that artisanal mining thrives due to its flexibility, low entry barriers, and access to informal markets offering quick cash. In contrast, large-scale producers are hampered by technical and capital constraints, exacerbated by a tight foreign exchange regime and institutional bottlenecks like slow licensing. Data illustrates the disparity: in one quarter, a major processing plant produced under 500 grams of gold, while another large operator yielded just over 41 kilograms.

This underperformance comes at a critical time as Ethiopia pursues an economic revival agenda to maximize gold exports amid soaring debt, high inflation, and a significantly weakened currency. However, the sector has a notable silver lining. Gold export revenues surged dramatically, from $409 million in mid-2024 to $3.5 billion by last July. Economist Irmgard Erasmus attributes this exceptional performance to high global prices and the significant contribution of hoarded inventory and artisanal mining. She anticipates that continued favorable prices and structural trade reforms will help sustain elevated gold export earnings.