Prof. Godfred Bokpin, a Professor of Finance and Economics at the University of Ghana Business School, has revealed that the total financial losses resulting from Ghana’s gold procurement policy exceed the publicly cited $1.7 billion figure when accounting for the entire value chain.
According to the scholar, understanding the magnitude of these losses requires evaluating the full spectrum of structural mechanisms, incentives, and revenue sacrifices that were introduced to operationalize the initiative, rather than looking at basic headline purchase costs alone.
“The losses actually exceed the $1.7 billion. How do you arrive at that? Help me understand. Okay, so you want to look at the incentives mechanism that we put in place to make the intervention work.”
Prof. Godfred Bokpin
Prof. Bokpin explained that authorities implemented artificial incentive frameworks specifically manipulating the spread between the official Bank of Ghana foreign exchange rate and prevailing market rates to make the scheme competitive.
To sustain domestic gold procurement, the state paid premium prices for gold, rendering Ghana’s purchase rates among the highest in the sub-region.
As highlighted by the International Monetary Fund (IMF), this price disparity inadvertently incentivized cross-border gold smuggling, as operators from neighboring countries funneled gold into Ghana’s state purchase system to capture higher returns.
Fiscal Compromises and Unintended Structural Leakages
A primary component of the uncounted financial drain stems from direct revenue sacrifices made by government policy. In order to facilitate the procurement program, the government completely abolished the 1.5% final withholding tax on gold.
Prof. Bokpin noted that while this tax removal was intended as an incentive, it represented a direct fiscal loss to the state.
Revenue that would have flowed into the national treasury to fund public infrastructure such as roads, schools, and health facilities was voluntarily surrendered by a nation already facing severe resource constraints.
Furthermore, the economic expert questioned the initial planning and foresight behind the initiative, asking “whether we fully anticipated the value chain cost from beginning to the end.”
By failing to account for complete value-chain overheads, administrative friction, tax expenditures, and exchange rate subsidizations, state planners underestimated the aggregate economic burden, causing actual losses to compound far beyond the headline $1.7 billion assessment.
Broader Macroeconomic Consequences for Ghana’s Economy
The economic impact of these uncaptured value-chain losses presents severe risks to Ghana’s broader fiscal health and development trajectory.
First, abandoning the 1.5% withholding tax shrinks the sovereign revenue envelope.
In an economy operating under fiscal consolidation programs, sacrificing direct tax streams forces the government to bridge budget deficits through additional public borrowing, elevating national debt service costs and reducing the capital available for critical infrastructure development.
Second, maintaining artificially high purchase prices relative to regional markets distorts domestic foreign exchange management and monetary stability. Offering above-market prices creates inflationary pressures, misallocates state capital, and invites illegal arbitrage activities.
Ultimately, failing to anticipate end-to-end value chain expenses creates long-term structural deficits that erode public trust, weaken fiscal governance, and redirect vital public resources away from essential socio-economic sectors.
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