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In the midst of ample gold, we’re a liquidity lure — Prof. Alagidede

Date: January 19, 2026
Source: Life Pulse Daily / MyJoyOn-line

Introduction

Ghana stands at a important juncture in its financial historical past, possessing immense herbal wealth but often dealing with acute liquidity shortages. This paradox paperwork the core of a compelling public lecture delivered by way of Professor Paul Yegandi Imhotep Paul Alagidede. Organized by way of the Centre for Policy Scrutiny (CPS) in partnership with Joy Business, the development highlighted a basic disconnect between Ghana’s exact asset base and its monetary truth. Professor Alagidede, a Professor of Finance and the Bank of Ghana Chair in Finance and Economics on the University of Ghana, argues that the rustic’s power financial demanding situations aren’t because of a loss of sources, however moderately a “disaster of monetary pondering.”

For a long time, Ghana has trusted orthodox financial fashions and repeated bailouts from the International Monetary Fund (IMF). However, Prof. Alagidede means that those approaches fail to seize the actual price of the country’s financial environment. He posits that Ghana isn’t a deficient nation however moderately a “wealthy space with a locked door,” trapped in a liquidity disaster in spite of sitting on a bedrock of gold and different herbal belongings. This article explores his insights on why conventional financial measurements fail creating international locations and provides sensible recommendation for navigating this liquidity lure.

Key Points

Before diving into the detailed research, it is very important to summarize the core arguments offered by way of Professor Alagidede. These key issues shape the root of his critique relating to Ghana’s financial construction and liquidity demanding situations.

The Paradox of Scarcity

Despite having ample herbal sources, Ghana reviews a protracted scarcity of liquidity. This creates a paradox the place financial achievement seems on paper, however the real availability of money and credit score stays constrained.

Crisis of Economic Thought

The root reason behind the issue isn’t a loss of wealth however a limitation in financial fashions. Both orthodox (conventional) and heterodox (choice) financial theories have failed to boost Ghana into sustained, high-level achievement.

IMF Reliance

Ghana’s historical past of coming into into roughly 18 IMF programmes (10 within the final 35 years) highlights a structural dependency on overseas liquidity to accomplishment a home financial environment this is already wealthy in belongings.

Flawed Accounting Systems

The System of National Accounts, which is determined by Gross Domestic Product (GDP), is criticized for measuring simplest visual exports and repair flows. It ignores the huge price of in-situ herbal belongings like gold reserves.

Background

To perceive the intensity of the liquidity lure described by way of Professor Alagidede, one will have to take a look at Ghana’s financial trajectory since independence. Ghana is incessantly cited as a beacon of democracy and balance in West Africa, but its financial efficiency has been unstable. The nation has transitioned via more than a few regimes, adopting other financial insurance policies starting from socialist leanings to free-market capitalism.

Despite those shifts, the rustic has struggled to reach constant, sustainable achievement. The lecture on the Centre for Policy Scrutiny introduced this historical past into sharp focal point. Prof. Alagidede famous that over the last six a long time, Ghana has grew to become to the International Monetary Fund (IMF) for help kind of 18 instances. In the final 35 years on my own, underneath democratic governance, this quantity stands at 10.

This ordinary reliance on exterior financing suggests a systemic factor moderately than a brief surprise. The “liquidity lure” refers to a state of affairs the place financial coverage turns into useless (incessantly because of low rates of interest), however on this explicit context, Prof. Alagidede makes use of it to explain an financial environment the place cash is scarce in spite of the presence of treasured belongings. The lecture emphasised that the issue lies in how the financial environment is measured. The present financial concept working the rustic makes a speciality of flows—what’s produced and ate up once a year—moderately than shares—the gathered wealth of the country.

Analysis

The core of Professor Alagidede’s research rests at the barriers of the System of National Accounts, the usual framework used globally to measure financial job. This machine calculates Gross Domestic Product (GDP), which represents the overall financial price of all completed items and services and products made inside a rustic all over a selected length.

The Limitations of GDP Measurement

According to Prof. Alagidede, Ghana’s GDP is valued at roughly US$82 billion. While this determine supplies a snapshot of annual financial job, it fails to seize the country’s general wealth. The lecture highlighted a important flaw: the present accounting machine simplest counts visual gold and sources that depart the rustic’s shores as exports. It does now not account for the huge reserves of gold, bauxite, oil, and different herbal belongings embedded within the financial environment.

By ignoring those belongings, the machine creates an “phantasm of poverty.” The financial environment seems smaller and no more tough than it in fact is. This misrepresentation has critical penalties for worldwide belief and home coverage.

The Disconnect Between Assets and Liquidity

The Professor described Ghana as a “wealthy space with a locked door.” The nation possesses an estimated US$1.5 trillion value of gold and herbal belongings. However, as a result of those belongings aren’t absolutely known within the nationwide accounting framework utilized by credit standing businesses and worldwide lenders, they don’t translate into home liquidity.

Credit ranking businesses focal point on liquid metrics: reliable reserves (round US$60 billion), fiscal deficits, and debt-to-GDP ratios. They in large part forget about illiquid herbal wealth. Consequently, Ghana is incessantly rated as a high-risk borrower, forcing the rustic to hunt dear exterior financing. Prof. Alagidede argues that this forces the country to “opt for paper from in another country” (loans and bonds) whilst sitting at the bedrock of wealth at house.

Orthodox vs. Heterodox Economics

The lecture additionally critiqued the 2 dominant faculties of monetary concept that experience formed Ghana’s coverage. Orthodox economics emphasizes marketplace balance, low inflation, and monetary self-discipline. Heterodox economics incessantly advocates for energetic executive intervention and unorthodox financial insurance policies. Prof. Alagidede contends that whilst each have contributed to accomplishment, neither has been enough to transition Ghana right into a high-level, steady-state achievement trajectory. The reliance on those fashions has stored the rustic in a cycle of growth and bust, necessitating common IMF interventions.

Practical Advice

For policymakers, traders, and electorate looking for to know or navigate Ghana’s financial panorama, the next sensible insights are derived from Prof. Alagidede’s research. These steps focal point on rethinking price, liquidity, and financial venture building.

1. Rethink Asset Valuation

Stakeholders will have to glance past GDP when assessing Ghana’s financial well being. Investors and policymakers must believe the “nationwide stability sheet” progress, which contains herbal finance shares. Understanding that Ghana is asset-rich supplies a special standpoint on long-term solvency in comparison to momentary liquidity constraints.

2. Domestic Resource Mobilization

To damage the cycle of IMF dependence, there will have to be a shift towards unlocking home liquidity. This comes to growing monetary tools that may monetize herbal belongings with out essentially exporting them. For instance, structuring home bonds sponsored by way of useful resource revenues or growing sovereign wealth budget that immediately give a contribution to liquidity.

3. Policy Diversification

Policymakers must keep away from depending only on orthodox austerity measures or heterodox spending sprees. Instead, a hybrid progress that acknowledges the original structural composition of Ghana’s financial environment is wanted. This contains making an investment within the price chain of herbal sources (e.g., refining gold in the neighborhood) to extend the speed of cash inside the financial environment.

4. Educational Shift

For scholars and economists, the recommendation is to develop the curriculum past usual neoclassical fashions. Studying the constraints of the System of National Accounts in creating economies is a very powerful for long term coverage accomplishment.

FAQ

Conclusion

Professor Paul Alagidede’s lecture gives a profound re-examination of Ghana’s financial standing. By figuring out the rustic as a “liquidity lure” moderately than a deficient country, he shifts the narrative from certainly one of shortage to certainly one of mismanagement and dimension error. The reliance at the System of National Accounts, which overlooks trillions of bucks in herbal belongings, has perpetuated a cycle of dependency at the IMF and overseas liquidity.

The trail ahead calls for a paradigm shift. Ghana will have to transfer past orthodox financial fashions that fail to seize its distinctive asset base. By spotting the immense wealth embedded in its gold and different sources, and by way of creating leading edge monetary frameworks to unencumber this price, Ghana can transition from a “wealthy space with a locked door” to a liquid, thriving financial environment. The insights from this lecture function a decision to motion for policymakers to reconsider the very definition of monetary wealth.