Introduction

In the realm of sovereign economics, a paradigm shift is often required to unlock hidden value. A compelling argument has emerged from the Centre for Policy Scrutiny (CPS) regarding the economic potential of Ghana’s mineral assets. The central thesis is provocative yet grounded in economic theory: “Gold in the ground is not dead wealth.”

Despite being the sixth-largest gold producer globally, Ghana’s official balance sheet reflects only a fraction of its true mineral wealth. Professor Paul Alagidede, a fellow at the CPS, has highlighted a critical disconnect between Ghana’s confirmed gold reserves and their utilization in national financial policy. With estimated in-situ reserves valued at approximately US$146 billion, the potential for fiscal transformation is immense. This article explores the economic implications of treating subterranean gold as a dormant asset versus a strategic reserve, offering a pedagogical breakdown of how emerging markets can leverage natural resources for liquidity and stability.

Key Points

Background

Ghana’s economic history is deeply intertwined with gold mining, yet the nation’s financial architecture has not fully capitalized on this legacy. As a leading gold producer, Ghana generates approximately 440 tonnes of gold annually. However, a significant disparity exists between production volume and national asset accumulation.

The Orthodoxy of “Dead Wealth”

Traditional economic modeling, often referred to as “orthodox economics,” typically views unextracted mineral resources as non-liquid assets—essentially “dead” wealth. In this view, value is only realized upon extraction and sale for foreign currency, usually the US dollar. This paradigm prioritizes immediate liquidity over long-term asset retention, leading to a cycle where resource-rich nations remain dependent on external borrowing.

The Centre for Policy Scrutiny (CPS)

The Centre for Policy Scrutiny, in partnership with Joy Business, has been instrumental in challenging these conventional views. Their recent public lecture served as a platform to re-evaluate Ghana’s sovereign wealth potential. The CPS emphasizes that while Ghana is often categorized as a developing economy facing liquidity constraints, its geological endowment suggests a vastly different financial reality.

Analysis

The core of Professor Paul Alagidede’s argument rests on the distinction between liquidity and solvency. While orthodox thinking views Ghana as a country perpetually in need of external liquidity, the regenerative view posits that the country is already solvent—it merely suffers from a “temporary state of amnesia” regarding its assets.

Re-evaluating the Balance Sheet

Currently, Ghana’s official balance sheet lists about 38 tonnes of gold in reserves. However, confirmed in-situ (underground) reserves are estimated at 1,000 metric tonnes. When valued at current market rates, these confirmed reserves alone amount to roughly US$146 billion. This figure does not include the broader natural asset base, which is valued at approximately US$1.5 trillion.

Professor Alagidede argues that treating this wealth as “dead” is a strategic error. Instead of selling gold immediately for dollars—a currency subject to inflation and devaluation—Ghana could utilize its gold equity to back fiscal policy. This approach aligns with the concept of gold as a strategic reserve asset, particularly vital for emerging market economies vulnerable to currency volatility.

The “Regenerative” Economic Model

The professor contrasts the “age of reductionism” with the “age of regeneration.” In the former, gold is merely a commodity to be sold; in the latter, it is a tool for balance-sheet renewal.

By activating just 40% to 60% of its in-situ gold equity, Ghana could theoretically unlock between US$634 billion and US$952 billion in fiscal space. This capital could be used to:

• Reduce reliance on external debt.
• Stabilize the local currency (the Cedi).
• Finance infrastructure projects without depleting physical reserves.

This analysis challenges the “illusion of poverty” often associated with developing nations, suggesting that the wealth exists, but the financial instruments to access it are underdeveloped.

Practical Advice

For policymakers and stakeholders in the mining and finance sectors, the transition from theory to practice requires concrete steps. Here is a pedagogical guide on how Ghana can operationalize its gold reserves:

1. Adopt a Balance-Sheet Management Approach

Move beyond managing daily cash flows. The government should treat natural resources as capital assets on the national ledger. This involves:

• Asset Tagging: Formally recognizing in-situ reserves as sovereign assets on the balance sheet.
• Long-term Planning: Using these assets as collateral or backing for long-term bonds, rather than liquidating them for short-term budget support.

2. Leverage Artisanal and Small-Scale Mining (ASM)

The GoldBod initiative has demonstrated the potential of the ASM sector, mobilizing US$10.8 billion in a single year. To scale this:

• Formalization: Continue formalizing small-scale mining operations to ensure gold flows through official channels.
• Value Retention: Instead of exporting raw gold, invest in local refining capacity to retain value-added profits within the economy.

3. Diversify Reserve Assets

To hedge against inflation and currency risk, the central bank should consider increasing physical gold holdings relative to foreign currency reserves. This provides a buffer against global economic shocks and reduces dependency on the US dollar.

4. Educate on Gold’s Inflationary Hedge

Economic education is vital. Policymakers and the public must understand that gold is not just a commodity but a store of value. In times of high inflation, gold preserves purchasing power better than fiat currencies.

Frequently Asked Questions (FAQ)

What does “gold in the ground is not dead wealth” mean?

This phrase means that unextracted gold should not be viewed as economically useless simply because it is not currently liquid. Instead, it represents a tangible asset that can be leveraged for national economic stability and growth, provided it is recognized as a sovereign asset.

How much gold does Ghana have in confirmed reserves?

According to the Centre for Policy Scrutiny, Ghana has confirmed in-situ gold reserves estimated at approximately 1,000 metric tonnes. In comparison, the country holds about 38 tonnes in its official financial reserves.

What is the estimated value of Ghana’s gold reserves?

Based on current market prices, the confirmed in-situ gold reserves are estimated to be worth roughly US$146 billion. The broader natural asset base of the country is valued at around US$1.5 trillion.

Why is Ghana’s gold wealth underutilized?

Professor Alagidede attributes this to “orthodox economics” and a “temporary state of amnesia.” The prevailing economic philosophy prioritizes selling gold for immediate foreign currency (liquidity) rather than treating it as a strategic asset for long-term balance sheet strength.

What is the role of GoldBod?

GoldBod is an initiative aimed at mobilizing gold from the small-scale and artisanal mining sectors. It has successfully channeled significant funds (US$10.8 billion) into the economy, serving as a foundational step toward better utilization of the country’s mineral wealth.

Conclusion

The narrative that Ghana is a “poor country” in need of constant external liquidity is being challenged by a wealth of geological evidence. With confirmed gold reserves valued at US$146 billion and a broader asset base of US$1.5 trillion, the country possesses the raw materials for economic independence.

However, realizing this potential requires a fundamental shift in economic philosophy—moving from a reductionist view of gold as a commodity to be sold, to a regenerative view of gold as a strategic asset to be managed. By anchoring the national balance sheet on these sovereign assets and leveraging initiatives like GoldBod, Ghana can bridge the gap between its geological wealth and its financial reality. As Professor Alagidede aptly stated, the country is not poor; it is merely in a state of amnesia, and the time to wake up is now.

Sources

• Source: MyJoyOnline (www.myjoyonline.com)
• Organization: Centre for Policy Scrutiny (CPS) & Joy Business
• Event: Public Lecture on Economic Policy and Sovereign Assets
• Key Figure: Professor Paul Alagidede (Fellow, CPS)
• Date of Original Publication: January 19, 2026

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