The missing half of risk management: Why Ghana’s commodity businesses must embrace hedging

Ghanaian businesses have become experts in managing currency risk, regularly hedging against fluctuations in the value of the cedi. However, when it comes to commodity price hedging, the conversation in boardrooms often falters. Gold producers, oil marketers, and manufacturers who would never leave a dollar payment unguarded remain vulnerable to the unpredictable swings in gold, crude, and gasoil prices.

While the tools to hedge commodity risk are readily available through existing banking relationships used for foreign exchange, the crucial missing piece is a change in mindset.

Traditionally, price movements have been viewed as an unavoidable cost of doing business. Yet, with gold prices soaring from around $2,600 an ounce to an intraday high above $5,500 in January 2026, and then retreating and rallying again above $4,500 by August, it is clear that these fluctuations can significantly impact profitability, cash flow, and investment decisions. The same principle applies to hedge against commodity risk, for the same reason.

The two risk management strategies are closely linked in Ghana. Almost all significant commodity transactions ultimately settle in dollars, converting through the cedi. Businesses that hedge currency risk but neglect commodity price risk have only addressed half the problem, protecting the conversion rate but leaving the underlying price vulnerable. This is the case for fuel importers, gold exporters, and anyone else with dollar-denominated contracts and working capital cycles.

Hedging is not about predicting price movements, but about removing the need for forecasting entirely. A well-structured hedge fixes or bounds an outcome, allowing a business's profitability to depend solely on its operational efficiency rather than market fluctuations. Forward contracts lock in a price with no upfront cost, while options provide protection against adverse moves for a premium while preserving upside potential.

For businesses with stretched cash cycles, a zero-cost collar—a combination of a forward and an option—offers a cost-effective solution.