The Kingdom of Ghana was formed in the 5th century A. D. in the Upper Niger Valley. Most of the inhabitants of the region were farmers living in villages under the control of a local chief. They were eventually organized into a more centralized administration that became known as the Kingdom of Ghana. Ghana achieved great fame as 'the gold kingdom'. Although Ghana possessed no indigenous gold deposits, Ghanaian merchants purchased great quantities of gold from neighboring lands and transported the material to North Africa and thence to the rest of the world. Ghana became involved in other forms of trade, making its merchants and kings very wealthy indeed.
Ghana was ruled by a king, who was considered sacred and from whom all authority emanated. He was assisted by a council of ministers to administer day-to-day activities. The King maintained a large army that constituted his ultimate source of power. But by the 12th century, Ghana had collapsed and was divided into a series of independent principalities.