By Fred E. KISSI
Decades after independence, Ghana’s economy still bears the deep stamps of external control.
From colonial trade policies that locked the country into raw material exports to modern financial agreements that benefit creditors more than Ghanaians, true economic independence has remained elusive.
Governments have cycled the tendency of borrowing to stay afloat, making painful concessions, and turning to external institutions for solutions that rarely lead to lasting change.
Before I present a comprehensive overview of our debt situation, it is essential to acknowledge that debt is not a bad idea. Having worked in corporate loans and debt management desks for over a decade in a global bank, I have seen firsthand how large corporations strategically leverage debt to drive expansion. In contrast, smaller ones often struggle under its weight.
The same applies to national economies; the larger, more developed ones manage debt as a tool for national expansion and get out of it easily, while smaller economies often find themselves trapped in cycles of dependency and control. Most first-world nations, including the United States of America, carry massive debt burdens but remain in control of their economic policies.
The key difference is that they borrow on their terms, whereas economies like Ghana often cede economic sovereignty to creditors in exchange for financial lifelines.
In the recent February 2025 State of the Nation Address (SONA), President John D. Mahama was blunt about the scale of this crisis when he declared, “I, John Dramani Mahama, will fix the economic crisis confronting our country and reset it on a path of growth and prosperity.” Yet Ghana has heard promises of economic transformation before.
So, the questions remain: Will this time be any different, and can the country finally take control of its financial future? Are we doomed to repeat the past, trapped in an endless cycle, like the biblical bottomless pit? Time will be the best judge.
The foundations of economic dependence
Under British rule, Ghana’s economy was structured around the export of raw materials like gold, cocoa, and timber while relying on imports to satisfy local needs. This model ensured that wealth flowed outward, and after independence, successive governments have attempted reforms to restructure the base with limited success.
Kwame Nkrumah’s vision for Ghana was built on industrialization and economic self-sufficiency, leading to major projects such as the Akosombo Dam, Tema Industrial City, and state-owned factories. He financed these initiatives through bilateral loans, cocoa revenues, and strategic international partnerships, ensuring that Ghana retained significant control over its economic direction.
For instance, the Akosombo Dam, a cornerstone of Ghana’s energy infrastructure, was constructed at a total cost of US$258 million. It was funded through US$64.5 million, which was a 25 percent contribution from the now World Bank, the US, and the UK, while the remaining 75 percent came from the Ghanaian government, private sector investments like Valco, and other international partners.
Unlike modern borrowing trends, where significant portions of loans are frequently used for recurrent expenditure and debt servicing, Nkrumah’s financing model was strategic, focused on large-scale infrastructure to drive industrialization and long-term economic transformation.
Beyond infrastructure, cocoa export revenues played a crucial role in financing development. The government, through the Ghana Cocoa Marketing Board (now COCOBOD), managed cocoa proceeds to fund industrial projects, reducing dependence on external creditors.
Additionally, Soviet and Chinese financial assistance helped develop key industrial assets, including the Tema Oil Refinery and several manufacturing plants.
While Ghana did rely on external loans, they were primarily tied to specific development projects. Nevertheless, loan repayments were largely tied to cocoa exports, reinforcing Ghana’s role as a commodity-dependent economy rather than a fully industrialized nation.
Safe to say that while external financing played a role, it did not dictate Ghana’s economic policies the way IMF conditions and Eurobond market fluctuations do today.
The issue of debt and dependency
Ghana’s debt burden reached unsustainable levels in recent years. Despite undergoing 17 IMF programs since independence, Ghana remains trapped in a cycle of debt crises, currency depreciation, and fiscal imbalances.
If these interventions were truly effective, why does the country keep returning for bailouts? The reality suggests these programs provide temporary relief rather than addressing deeper structural weaknesses in the economy.
Dr. Cassiel Ato Forson, Minister of Finance, highlighted at the 2025 National Economic Dialogue that Ghana’s economy grew at an average of 6.8 percent per year between 2008 and 2019, exceeding the regional average of 4.4 percent and the global average of 2.7 percent.
However, this growth was heavily driven by gold mining and oil production, alongside rising public debt. Oil, which became a key contributor to GDP in 2011, accounted for 5.0 percent of GDP growth, while nearly 20 percent of growth between 2013 and 2019 came from gold mining.
Despite this expansion, Ghana’s economic structure remained fragile. The fiscal deficit averaged 4.0 percent of GDP from 2008 to 2019, more than twice the level recorded between 2000 and 2007, as government borrowing increased.
Public debt, which had fallen to 20 percent of GDP after the HIPC debt relief in 2006, climbed sharply to 93 percent at the central government level by 2022.
Dr. Forson emphasized that while Ghana’s economy expanded, it failed to achieve structural transformation or productivity gains, keeping the country dependent on commodity exports and vulnerable to external shocks.
Between 2021 and 2024, the fiscal deficit remained high, standing at 12.0 percent in 2021 and only slightly improving to 11.8 percent in 2022 as borrowing pressures persisted. However, as Ghana’s debt crisis deepened and the government sought an IMF bailout, the deficit narrowed sharply to 4.6 percent in 2023, with a projection of 5.0 percent for 2024.
This sudden improvement was largely driven by external conditions imposed by lenders rather than internal economic strength. The US$3 billion IMF bailout deal required Ghana to adopt strict fiscal adjustments, including tax increases and deep spending cuts; austerity measures intended to stabilize public finances, but with significant economic and social trade-offs.
At the 2025 State of the Nation Address (SONA), President Mahama announced that Ghana’s public debt stood at GH₵721 billion, slightly lower than the GH₵736 billion reported by the Bank of Ghana in November 2024, representing 72.2 percent of GDP.
As of the November 2024 figures, external debt accounted for 57.6 percent of the total, amounting to US$27.6 billion, while domestic debt stood at GH₵311.7 billion.
Additionally, state-owned enterprises (SOEs) such as the Electricity Company of Ghana (ECG) and the Ghana Cocoa Board (COCOBOD) hold significant liabilities. ECG’s debt stands at GH₵68 billion, while COCOBOD owes GH₵32.5 billion.
Although SOE liabilities are not included in Ghana’s official public debt, they present major fiscal risks due to government guarantees and potential bailout commitments.
The implications of the nation’s debt situation are severe. In 2022, interest payments alone consumed 45 percent of government revenue, while total debt servicing (interest + principal) exceeded 50 percent.
While debt restructuring under the IMF program and the Domestic Debt Exchange (DDEP) in 2023 provided temporary relief, Ghana entered 2025 still facing significant repayment obligations, particularly as deferred payments and Eurobond maturities approach.
Instead of relying on industrialization and economic diversification to generate sustainable revenue, the country has continuously borrowed to sustain basic operations, reinforcing its dependence on external credit markets.
Comparatively, Kenya’s Debt-to-GDP ratio stood at 67 percent as of September 2024, but the country has effectively leveraged external financing to develop infrastructure, including the Nairobi Expressway and large-scale energy projects that enhance industrial productivity. Nigeria, with a lower Debt-to-GDP ratio of 55 percent by mid-2024, faces fiscal pressures due to weak revenue collection, limiting its ability to service obligations despite lower debt levels.
Ghana’s challenge, therefore, is not just the size of its debt but its cost and efficiency. Without strategic investments that generate returns, debt becomes a long-term liability rather than a tool for development
The influence of Eurobonds
Ghana does not seek all its external debt through the IMF; a significant portion comes from global financial markets in Eurobonds. While Eurobonds investors do not impose direct policy conditions like the IMF, their influence is evident in Ghana’s fiscal decisions. Credit rating agencies such as Moody’s, Fitch, and S&P assess debt sustainability, and a downgrade can trigger capital flight and high borrowing costs or even total exclusion from international markets.
This played out after 2021, when Ghana’s downgrade to junk status shut it out of Eurobond markets, forcing a return to the IMF.
Eurobonds have historically played a major role in financing Ghana’s infrastructure and development projects, including major road expansions and energy investments. However, their high interest rates, significantly higher than concessional loans from the IMF, have made debt servicing a growing burden on fiscal space.
By 2022, as global investors lost confidence in Ghana’s ability to meet its repayment obligations, the country faced a financial squeeze and had to implement deep spending cuts and economic adjustments to reassure markets. When investor confidence weakens, Ghana has no choice but to rely on multilateral institutions like the IMF for financial stability.
This reliance comes with policy adjustments that prioritize short-term fiscal stability over long-term economic transformation. Debt servicing will remain one of the largest constraints on fiscal policy in 2025.
Resource Exploitation – Who profits from Ghana’s wealth?
Ghana’s abundant natural resources, particularly gold, have long attracted foreign investment. However, the benefits to the nation have often been limited due to agreements favouring external entities.
For example, the Chirano Gold Mine was 90 percent owned by Kinross Gold Corporation, with the Ghanaian government holding a 10 percent carried interest. Similarly, in 2018, Gold Fields Limited and Asanko Gold Incorporated entered a 50-50 joint venture concerning the Asanko Gold Mine, with the government maintaining a 10 percent free carried interest.
Kizito Cudjoe reported in the Business & Financial Times (BFT) in October 2024 that as of 2023, the mining sector contributed a record GH₵11.55 billion (circa $980 million) in taxes, marking an 81.1 percent increase from GH₵6.38 billion in 2022 and accounting for 22.7 percent of all direct taxes.
Despite this significant contribution, questions remain about whether the financial benefits to Ghana align with the value of its natural resource contributions. These ownership structures are mirrored in the oil industry as well, except that GNPC bites a bit more in some cases, with interests ranging from 10 percent-c.22 percent.
The structure means that while government retains a stake, a significant chunk of the profits accrues to foreign investors, raising concerns about equitable profit distribution.
Illegal mining, known locally as “galamsey,” exacerbates the situation. Initially a small-scale local operation, it has evolved into a multi-billion-dollar shadow economy involving foreign actors, particularly from China.
The environmental damage is catastrophic, with rivers and farmlands destroyed. Economically, the government loses significant revenue due to unregulated gold exports while struggling to enforce regulations. The failure to control galamsey reflects deeper governance weaknesses where political ties and corruption undermine national interests.
A November 2024 report by The Guardian estimated that Ghana loses over US$2 billion annually due to illegal gold exports, nearly double what the government earns from formal gold trade. This revenue drain deprives the country of crucial funds that could support infrastructure, education, and healthcare.
In response to these challenges, John Mahama’s government plans to establish a Gold Board to streamline gold purchases from small-scale miners, aiming to boost earnings and curb smuggling.
This initiative is expected to maximise benefits from gold sales and stabilise the national currency. In 2024, Ghana’s gold exports totalled US$11.64 billion, marking a 53.2 percent increase and nearly doubling the nation’s trade surplus to US$4.98 billion.
Can Ghana break free?
Some economists argue that foreign capital is a necessary catalyst for economic growth, especially in developing nations with limited domestic savings. They point to the role of IMF programs in stabilizing macroeconomic fundamentals and attracting investor confidence.
Proponents of external borrowing also argue that Ghana’s infrastructure development, such as roads, power plants, and ports, would not have been possible without access to international financing.
Between 2017 and 2020, Ghana secured over US$6 billion in Eurobond issuances, funding major projects like the Tema Port expansion and road network improvements.
Without these funds, supporters argue, the country’s development pace would have been significantly slower. Similarly, China’s infrastructure-for-resources agreements have enabled rapid expansion in key sectors, including energy and transportation.
While foreign capital can play a role in development, Ghana’s experience suggests that heavy reliance on external loans comes with long-term risks. High interest payments crowd out essential public spending, and externally dictated policies prioritize debt repayment over social and economic investments.
With debt servicing consuming over 50 percent of Ghana’s annual revenue in 2023, the country is left with narrow fiscal space for growth initiatives.
The challenge, therefore, is not to eliminate foreign financing but to ensure it is used strategically, with clear exit plans to prevent perpetual dependency. Ghana must establish stricter oversight on loan agreements, demand better terms from international creditors, and prioritise investments that generate domestic revenue rather than create future liabilities.
As a banker with extensive debt management experience, I recognise that the best way to utilise loans is to invest them in projects that can sustain themselves financially. This ensures that the loan is appropriately linked to specific projects with projected cash flows and repayment autonomy, providing our loan-burdened fiscal space with much-needed relief. Anything beyond this, and the dependency will continue.
Policy pathways for economic independence
Ghana’s quest for economic sovereignty cannot be achieved without major policy shifts. The first step is a conscious effort at reducing external borrowing by improving domestic revenue generation and closing tax loopholes that favour foreign companies.
I coined the term “Creative Revenue” to describe new and modern innovative ways to extract fair revenue. Industry experts, such as Kwame Kankam of Property Data Hub Limited and Kwesi Asante of The Builders Mall, have solid ideas on maximizing revenue in the real estate sector, and I am sure other industry experts possess similar ideas and are willing to assist government with new ideas to achieve the same.
President Mahama’s State of the Nation Address emphasized a shift toward a more robust tax system, closing loopholes in tax waivers, and reducing wasteful government spending. His administration’s approach to homegrown economic policies aims to ensure that Ghana no longer relies on external bailouts as a financial lifeline.
Trade and resource agreements also need to be renegotiated to secure fairer terms, enhance resource governance, and prevent exploitative contracts that undermine national economic strength. Botswana has excelled in this regard.
The country recently renegotiated its share of diamond sales from its joint venture with De Beers, increasing it from 25 percent to 30 percent for the first five years of their 10-year agreement, and then to 40 percent in the following five years to ensure equitable resource partnerships. Ghana might consider adopting Botswana’s approach to secure a fair share of revenue from our natural resources for national development.
Sovereign wealth funds like the Minerals Income Investment Fund (MIIF) and the Ghana Petroleum Funds must deliver on their strategic mandates. They must ensure that resource revenues are reinvested in long-term development rather than wasted on recurrent spending. When managed well, these funds could also provide a financial cushion during downturns.
Industrializing the extractive and agric sectors and ensuring local value addition are necessary initiatives to shift from resource dependence to wealth creation. South Africa stands out as a leader in this regard, having developed a comprehensive mining industry that not only extracts minerals but also processes them into higher-value products.
This integrated approach has significantly contributed to the country’s economic development. Similarly, Benin has pursued industrialization by concentrating on value addition within its agricultural sector. The country is investing €550 million to develop a ‘farm to fashion’ value chain, intending to process its cotton domestically rather than exporting it in its raw form.
This initiative by Benin aims to emulate successful industrialization efforts in other countries, such as Ethiopia’s apparel sector and Mauritius’ economic growth through textiles. Ghana can emulate these trends and prioritize local value addition in key industries.
Leaders (industry experts, professionals, government leaders, etc) must also take responsibility. Too often, economic decisions are made with short-term political gains in mind rather than a long-term vision for financial independence. This is replicated through several SOEs and government agencies.
A fundamental part of our transformation blueprint lies in efficient governance and fiscal discipline. President Mahama has set an example, cutting government expenditure with 60 ministerial appointees and that of important state events like this year’s 6th March’ celebration. He has also pledged to hold corrupt officials accountable.
These leadership initiatives must cascade to every government institution to help restore public confidence and prevent resource mismanagement.
While recent policy proposals signal a shift towards greater financial autonomy, their success depends on decisive implementation and long-term commitment.
True economic independence will not come from rhetoric or temporary stabilization measures but from structural changes that ensure Ghana is no longer dictated by the conditions of creditors and external institutions.
Ghana is not alone in facing these economic struggles, but the difference between stagnation and progress lies in decisive leadership and strategic policy choices.
The country has the resources and human capital to break free from financial dependence, but only if governance prioritizes national interests over creditor expectations.
The path to economic sovereignty will not be dictated by bailouts but by Ghana’s ability to invest in its future on its terms.
The writer is a seasoned banker, financial strategist, and consultant
