Rethink Ghana’s economic framework to end liquidity crisis-Prof. Alagidede

Professor Yegandi Imhotep Paul Alagidede of the University of Ghana (UG), Legon, has called for a fundamental shift in Ghana’s economic framework to recognise national wealth as both flows and stocks, as part of efforts to address the country’s recurring liquidity challenges.

He argued that Ghana’s natural resources should be treated as anchors for domestic liquidity, currency stability and long-term economic planning, without necessarily fuelling inflation.

“Over the past six decades, Ghana has gone to the IMF about 18 times, including 10 programmes in the last 35 years of democratic governance. At the heart of this problem is the System of National Accounting (SNA), which measures growth primarily through Gross Domestic Product (GDP),” he said.

Prof. Alagidede was speaking at a public lecture organised by the Centre for Policy Scrutiny (CPS) in Accra on the topic: “Rich in gold, poor in liquidity: Omnidox and the reconstruction of Ghana’s monetary architecture.”

According to him, Ghana must rethink how it defines and measures development if it is to break free from decades of economic vulnerability and unlock its true potential.

Despite the country’s vast natural wealth, particularly in gold and other mineral resources, he said Ghana continued to behave like a poor country because of outdated economic thinking that undervalued its real assets.

He explained that Ghana’s development path over the past 60 years had been shaped largely by two dominant schools of thought, Orthodox and Heterodox Economics,  which  although  were influential in policy formulation and institutional development, had failed to transform resource-dependent economies into stable, high-income societies.

“These models focus almost entirely on what is visible in markets—what is extracted, sold and priced. As a result, countries like Ghana are considered poor simply because much of their wealth remains underground or outside formal markets,” he noted.

Prof. Alagidede described this contradiction as a “paradox of scarcity in the midst of abundance,” stressing that Ghana was rich in gold, oil, land, labour and social capital, yet consistently struggled with liquidity.

The Head of Finance and Bank of Ghana Chair in Finance and Economics at UG explained that the current system of national accounting focused only on the market value of goods and services produced within a year, while ignoring critical components such as unpaid care work, the informal sector, indigenous knowledge systems and in-situ natural resources.

“In many African societies, wealth was traditionally measured more holistically, by livestock, land, social relationships and communal well-being. These were all considered part of national income, even if they were not traded in markets,” he said.

Using Ghana as an example, he observed that the country’s official GDP, estimated at about $82 billion, significantly understated the true size of the economy, adding that “When natural assets such as gold reserves, informal economic activity and household production are included, Ghana’s economic base could be many times larger,” he added.

He pointed particularly to gold, noting that Ghana is the sixth-largest producer globally.

“Proven in-situ gold reserves alone are valued at over $1.5 trillion, far exceeding the country’s public debt. Yet orthodox frameworks treat this wealth as ‘dead’ until it is extracted and exported, often in exchange for foreign currency. This is why we borrow paper money from abroad while sitting on a bedrock of real wealth at home,” he said.

Prof. Alagidede urged institutions such as the Ghana Statistical Service, the Ministry of Finance and the Bank of Ghana to rethink national accounting, conduct comprehensive sovereign asset audits and manage the economy as a balance sheet rather than merely a cash-flow statement.

BY CLIFF EKUFUL

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