Gold is making history! Gold prices have hit 50 all-time highs over the last 12 months, its best streak in 12 years. This is also the 3rd-longest streak on record after a historic run during the late 1970s.
The price of gold has rocketed past $3,100 an ounce, a record-shattering surge that reflects a world gripped by fear, conflict, and a desperate scramble for stability. Goldan Sachs is expected to raise gold price to $3600-$4000 by next year. Looking at the upward trend, I am not sure anyone is prepared to hear where gold prices might be later this decade.
With its market value ballooning to $21 trillion--up by $7 trillion in just 12 months--gold is not merely a metal; it is a mirror reflecting global chaos. Yet for Africa, a continent that holds 30% of the planet's mineral wealth, this moment is not about panic. It is about power.
For Rwanda, it is a clarion call to harness this supercycle and finally turn buried treasure into lasting prosperity.
History, however, is littered with Africa's missed opportunities. Colonial powers pillaged $2.5 trillion in resources between 1945 and 1975, while post-independence leaders squandered the China-driven boom of the 2000s.
Today, as lithium, cobalt, and copper fuel the green energy transition, Africa faces a third supercycle--and Rwanda is proving that this time, the story can be different. But there is a catch: financial institutions including banks, historically risk-averse and slow to act, must break from the past.
Gold's rally is not an anomaly--it is a signal. Lithium prices have tripled since 2020.
Copper has doubled. Cobalt, essential for electric vehicles, trades at 150% of its pre-pandemic peak.
For mining ventures, these prices are not just profitable; they are unprecedented. Yet Rwandan banks, like many across Africa, still shy away from financing mining projects, dismissing them as "too risky." This logic is outdated.
High commodity prices inherently de-risk mining assets: margins widen, break-even costs shrink, and returns surge. When gold trades at $3,100, even modest deposits become viable. When lithium demand soars to 4,200% by 2040, early investors win big.
But the equation tilts further with offtake agreements - binding contracts where buyers commit to purchasing future production. Global automakers like Tesla and BMW, desperate for ethical cobalt and lithium, are signing these deals to secure supply chains.
The EU's Critical Raw Materials Act mandates that 30% of battery metals be recycled or sourced domestically by 2030, creating a $150 billion market for traceable minerals. For Rwandan miners, these commitments turn hypothetical reserves into guaranteed revenue.
Banks no longer bet on vague deposits; they finance contracts with Tesla and the likes.
Rwanda has already laid the groundwork. Its blockchain-certified gold, conflict-free tantalum, and ethically sourced lithium are in demand. The Kigali Gold Refinery, which processes several tons annually, sells to foreign buyers at a premium.
Yet without local banks financing miners to scale operations, Rwanda risks outsourcing its boom to foreign lenders--repeating the cycle of dependency.
This caution now borders on self-sabotage. Global mining giants like Barrick Gold and Rio Tinto report profit margins above 35% in 2024, their highest in decades. Gold's volatility has plummeted--price swings are now narrower than tech stocks, making it a banker's hedge.
Offtake contracts from automakers and tech firms de-risk cash flows, turning mines into annuity-like assets. Meanwhile, Rwanda's mining sector is primed for explosive growth. Revenues hit $1.2 billion in 2023, up 200% since 2018, yet this is a fraction of its potential.
The country's tantalum reserves could supply 20% of the global electronics market. Its lithium deposits, though modest, could anchor a regional battery hub. But without financing, small-scale miners cannot modernize equipment, expand output, or meet Tesla's volume demands.
The irony? Foreign banks are circling. The AfDB and European Investment Bank have pledged $500 million for African critical minerals. Private equity firms are raising $2 billion funds targeting ESG-compliant mines. If Rwandan banks do not act, foreign capital will dominate--and reap the rewards.
Rwanda's government has been bold--banning raw mineral exports, launching refineries, and courting global buyers. But financial institutions need policy tailwinds to move faster.
Risk guarantees, such as a state-backed mining fund to absorb 30% of loan defaults, could incentivize banks to lend.
Lower interest rates via concessional loans for projects with offtake agreements would accelerate investment. Streamlining licenses would unlock dormant sites. Mandating foreign miners to partner with Rwandan firms ensures skills and profits stay local.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Chile's lithium boom offers a blueprint: by requiring local refining and shared royalties, it now controls 55% of the global market. Rwanda's policies are bolder--but without aligned banks, progress stalls.
Commodity booms are fleeting. When China's demand cooled in 2014, copper prices crashed 40%, devastating Zambia. Rwanda cannot afford to wait. Gold at $3,100 is a generational signal--a chance to convert minerals into highways, hospitals, and high-tech hubs.
Rwandan banks have a choice: finance the mines that could lift millions from poverty, or watch as foreign lenders and firms extract another $10 trillion in wealth. The world's hunger for clean energy metals is a once-in-a-century alignment. Prices are high. Buyers are desperate. Trust in Rwanda's "ethical minerals" is unmatched.
The tools are there. The policies are proven. The time is now. Rwanda's financial institutions must shed their caution and become architects of a revolution. Because if not now--when? If not here--where? The world's desperation is Africa's opportunity.
Rwanda's banks must not let it slip away.
