We are sacrificing long-term survival for short-term praise – Prof BokpinEconomist Professor Godfred Bokpin has criticised Ghana’s growing reliance on gold as a key driver of economic stability, warning that the country risks sacrificing its long-term survival for short-term economic gains.
Professor Bokpin said the focus on macroeconomic stability and the benefits of gold had overshadowed the severe environmental damage caused by irresponsible mining.
He warned that Ghana’s current economic gains could quickly be reversed if international gold prices fall sharply, leaving the country vulnerable to another major economic shock.
“Today, we have magnified the effect of the Gold Board to the extent that the discussion about irresponsible mining, the dangers, the existential threat seems infinitesimal in the face of so-called macroeconomic stability, which was just a price shock,” he said.
Professor Bokpin questioned the sustainability of the gains being celebrated, pointing to Ghana’s exposure to fluctuations in global gold prices.
“Look, if gold price today should dip by more than 40%, this macroeconomic stability we talk about will only exist in the textbook. What kind of gain is that?” he asked.
He said a significant decline in gold prices could wipe out the economic gains within months.
“When it’s so exposed to price shock, global gold price shock, what kind of gain is that? Everything could just go within six to eight months of that price shock,” Professor Bokpin warned.
He urged policymakers to learn from historical commodity cycles, noting that commodity prices have repeatedly experienced sharp corrections after periods of strong growth.
“Literally every 10 years, prices of commodities correct from a bust, from a boom; they correct almost every 10 years,” he said.
According to Professor Bokpin, Ghana must therefore subject its gold-driven economic strategy to rigorous sensitivity analysis and stress testing rather than assume that current gains will be sustained.
“Look, if you do sensitivity analysis, if you do stress testing, and you say that if the gold price should dip by 40% today, where would we be? You will see that we’ll be so exposed,” he said.
‘We are not better off’
Professor Bokpin said the assessment of Ghana’s gold economy must go beyond foreign exchange earnings, reserves and other macroeconomic indicators to account for the environmental and social costs of mining.
He called for a value-chain approach that properly captures the environmental cost of gold production, particularly the destruction of water bodies and ecosystems.
“As a country, we should adopt a value chain approach. Let’s account for the environmental subsidy. Ecological integrity we have destroyed,” he said.
He said Ghana could only claim to be better off if the full economic, social and environmental costs of gold production were incorporated into the analysis.
“If you put all of these things together, through the analysis, and you’re able to say that we are far better off, then that’s good news. But if you do that, what is the gain? What are we celebrating?” he asked.
When asked whether Ghana was better off after taking these factors into consideration, Professor Bokpin was unequivocal.
“We are not better off.”
He described the decision to tolerate severe environmental damage in pursuit of economic stability as selfish and a failure of leadership.
“It’s a selfish position to think that you can cause such harm to the environment and water bodies in the name of macroeconomic stability, and say you have gained,” he said.
“It’s a selfish position. This is not leadership. We are sacrificing long-term survivability for short-term praise.”
‘Growth model reliant on environmental destruction is never sustainable’
Professor Bokpin urged Ghana to reconsider an economic model heavily dependent on the extraction and export of primary commodities, particularly where such activities come with high environmental costs.
“This is not leadership. Countries that made it didn’t do so by exploiting the environment like this,” he said.
“And any growth model that is heavily reliant on environmental destruction, primary commodities, is never sustainable.”
He cited Malaysia as an example of a country that successfully moved away from an economy heavily dependent on primary commodities.
According to Professor Bokpin, Malaysia once faced a situation similar to Ghana’s current dependence on natural resources but gradually transformed its economy by reducing its reliance on primary commodities.
“What we are discussing today was what was prevailing in the 50s and 70s in Malaysia, when the economy was heavily driven by copper and tin,” he said.
“From the 70s, 80s, 90s, they shifted away from primary commodities, and that is how Malaysia is where they are today.”
He said Ghana must similarly look beyond immediate economic gains and pursue a development strategy capable of creating sustainable prosperity without destroying the country’s natural resources.
‘Is this macroeconomic stability compared to a life?’
Professor Bokpin also questioned whether Ghana’s Gross Domestic Product (GDP) adequately captures the damage caused by economic activities such as irresponsible mining.
He noted that while mining contributes to GDP, the environmental destruction and social costs associated with the activity are not adequately reflected in the measure.
“How do we celebrate such a growth model with a huge environmental footprint?” he asked.
He referred to the criticism that GDP can sometimes conceal the social and environmental costs of economic activity.
“That is the reason why so many people think that GDP is not just gross domestic product, but gross domestic problem,” he said.
Professor Bokpin warned that the human cost of irresponsible mining should not be dismissed in the pursuit of economic indicators.
“If one person dies today because of irresponsible mining, we have destroyed the water bodies. Is this macroeconomic stability or gain compared to a life?” he asked.
