What happened
President William Ruto announced that the Kenyan government is preparing a framework to allow a formal gold trade, and that the Central Bank of Kenya (CBK) will be given a key supervisory role. The statement was reported by peopledaily.digital in early September 2024. According to the report, the plan seeks to bring informal mining activities under regulation, improve revenue collection and provide a transparent channel for gold exports. The move is presented as part of a broader effort to diversify Kenya’s export base beyond agriculture and tourism.
Context and background
Kenya’s gold sector has historically operated on a small scale, with most production taking place in the Rift Valley and western regions. Artisanal miners have extracted gold for decades, but the lack of a formal licensing regime has meant that much of the output is sold informally, often crossing borders without customs documentation. The government has previously expressed concern that unregulated gold flows could fuel illicit finance and deprive the treasury of potential tax revenue.
In recent years, the Ministry of Mining, led by Minister Susan Makau, has drafted a mining policy that includes provisions for a licensed gold market. The policy aims to introduce licensing for miners, set quality standards for gold, and create a centralised platform where gold can be weighed, certified and traded. The CBK’s involvement is intended to link the gold market to the foreign‑exchange system, ensuring that proceeds are recorded and can be channeled into the national economy.
The decision to involve the CBK follows a series of consultations with the Kenya Bankers Association, the Kenya Revenue Authority and local mining cooperatives. Stakeholders have highlighted the need for a transparent price‑setting mechanism that reflects international market rates while protecting local miners from exploitation. The CBK’s mandate to maintain monetary stability and oversee foreign‑exchange transactions makes it a logical choice to monitor gold sales that generate foreign currency.
Internationally, several African countries have adopted similar models, allowing their central banks or treasury agencies to oversee precious‑metal trading. South Africa’s South African Reserve Bank, for example, works closely with the Department of Mineral Resources to monitor gold exports. Kenya’s approach mirrors these regional practices, but it will be the first time the CBK is given a direct role in a commodity market beyond its traditional banking oversight.
Compared with what is normal
Historically, Kenya has not maintained a formal gold exchange, and most gold transactions have been conducted through informal channels. In contrast, the new plan proposes a regulated system that would require miners to obtain licences, submit their product for certification, and sell through a CBK‑approved platform. The following points illustrate the shift:
- Informal gold sales have typically bypassed customs, whereas the proposed system will record every transaction in the foreign‑exchange ledger.
- Current gold prices paid to miners are set by middlemen, often at rates below international benchmarks; the new framework aims to reference global spot prices published by the London Bullion Market Association.
- Revenue from gold has been negligible in national accounts; with a regulated market, the government expects to capture levy and tax revenues that were previously untapped.
Why it matters
For Kenyan SMEs operating in the mining value chain, a regulated gold market could open new financing opportunities. Banks may be more willing to extend credit to licensed miners if their output can be documented and valued reliably. Moreover, the CBK’s oversight could stabilise the flow of foreign currency, helping to mitigate pressure on the shilling during periods of external shocks. Communities that depend on artisanal mining could see improved safety standards and better access to official support services if they operate within a legal framework.
From a fiscal perspective, the government anticipates that licensing fees, export duties and a modest levy on gold sales could add to the national treasury. This additional revenue could be earmarked for infrastructure projects in mining regions, such as road improvements and electricity supply, which are critical for scaling up production. On the macro‑economic front, a transparent gold market could reduce the risk of capital flight and strengthen Kenya’s compliance with international anti‑money‑laundering standards.
Practical steps
- If you are a miner or part of a mining cooperative, begin the process of registering with the Ministry of Mining and inquire about the upcoming licensing requirements.
- SMEs that provide equipment, transport or processing services should review their contracts to ensure they align with the anticipated certification standards for gold.
- Financial officers should monitor CBK communications for guidance on how gold proceeds will be reported in foreign‑exchange statements and adjust accounting policies accordingly.
- Consider engaging a tax advisor to understand the potential levy and duty structures that may apply once the market is operational.
- Stay informed about the timeline for the launch of the CBK‑approved trading platform by following updates from the Ministry of Mining and the Central Bank’s official channels.
Financial Management & Analysis services at Beavoren Ventures can help businesses navigate the new licensing regime, set up compliant accounting systems for gold transactions and model the financial impact of the emerging market.
Book a consultation with Beavoren Ventures today and let us handle your compliance, books, and advisory in one place.
Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.