The true economic cost of Ghana’s Gold Board (GoldBod) programme may be higher than figures currently dominating public debate, with an estimated GH¢2 billion in forgone withholding tax revenue yet to be fully factored into assessments of the initiative, economist Dr Adu Owusu Sarkodie has said.
Dr Sarkodie, a Senior Lecturer at the University of Ghana and Executive Director of the Centre for Policy Scrutiny, said evaluating GoldBod solely on its reported financial gains or losses would provide an incomplete picture of its impact on the economy.
According to him, the government must account for the full range of direct and indirect costs associated with the programme, including tax concessions, fees, premiums, charges and exchange-rate differentials.
He estimated that the removal of the 1.5% withholding tax on gold purchases alone may have cost the state about GH¢2 billion in potential revenue.
“One of the costs for the programme, the fees, the charges, the exchange rate differential, the foregone tax, 1.5% withholding tax foregone, that’s about GH¢2 billion foregone,” he said.
Dr Sarkodie argued that this amount has received little attention in the ongoing controversy over GoldBod, which has largely centred on claims involving US$1.7 billion, equivalent to about GH¢22 billion.
“And that’s even; it’s not been accounted for in all our conversations. Our conversation has been set on a 1.7 billion, GH¢22 billion. It should be higher,” he said.
Tax Waiver Part of GoldBod’s Cost
The 1.5% withholding tax on gold purchases was removed as part of the government’s 2025 tax reforms accompanying the implementation of the GoldBod initiative.
The measure was intended to make the formal gold-buying system more attractive to small-scale miners and other sellers and encourage them to sell through authorised channels.
Government has maintained that the policy is part of efforts to curb gold smuggling, formalise the trade and improve Ghana’s ability to capture foreign exchange generated by the sector.
Dr Sarkodie acknowledged the policy rationale but argued that the revenue sacrificed to achieve those objectives should still be treated as an economic cost.
He described the tax exemption and some other incentives under the programme as “giveaways” that must be incorporated into any credible assessment of GoldBod’s performance.
“The design of the programme is very generous. It has too many giveaways,” he said.
Beyond the tax concession, he identified premiums, discounts, fees, charges and exchange-rate differentials as other components that could increase the overall cost of operating the programme.
Reduce Costs Without Sacrificing Gains
Dr Sarkodie said the key issue should not necessarily be whether the incentives were justified when GoldBod was introduced, but whether the same policy objectives could now be achieved at a lower cost to the state.
He said incentives may have been required to persuade gold producers and traders to move from informal channels into the state-backed system, particularly as the government sought to curb smuggling and strengthen control over gold exports.
However, with the programme now operational, he believes policymakers should examine its cost structure and identify areas where expenses and concessions can be reduced.
“We should make sure that we get a lower loss or cost of transaction for that,” he said.
Such a review, he argued, could help preserve GoldBod’s strategic benefits while reducing the fiscal burden associated with delivering them.
Calls for Full Cost-Benefit Assessment
Dr Sarkodie consequently called for a comprehensive cost-benefit analysis of GoldBod rather than an assessment based narrowly on whether the institution records an accounting profit or loss.
He said the analysis should capture direct financial expenditure, forgone government revenue, opportunity costs and environmental costs associated with gold production.
These costs should then be weighed against the wider benefits GoldBod is expected to generate for the Ghanaian economy.
Among those benefits, he cited foreign exchange mobilisation, increased national gold reserves, formalisation of the gold trade and reduced smuggling.
Such an approach, he said, would make it possible to determine whether Ghana is receiving sufficient economic value for the concessions and resources committed to the programme.
“The design of the programme is very generous,” Dr Sarkodie reiterated, stressing that improving efficiency should become a priority as the initiative develops.
GoldBod Debate Intensifies
The economist’s intervention comes amid a heated political dispute over GoldBod’s financial performance.
The Minority has accused the programme of recording losses of approximately US$1.7 billion, with Minority Leader Alexander Afenyo-Markin citing an International Monetary Fund report in advancing the claim.
GoldBod Chief Executive Officer Sammy Gyamfi has rejected the assertion, maintaining that the institution has not incurred the alleged losses and has instead generated profits.
The competing positions have fuelled demands for greater transparency over GoldBod’s finances and its broader impact on the economy.
Dr Sarkodie’s argument, however, shifts the debate beyond the question of accounting profit or loss.
He maintains that even if GoldBod is ultimately shown to be profitable, that alone would not establish whether the programme represents value for money for Ghana.
A broader assessment would have to determine how much the country has sacrificed through tax concessions and other incentives and compare those costs with gains in foreign exchange mobilisation, gold reserve accumulation, formalisation and reduced smuggling.
For Dr Sarkodie, the policy challenge is therefore to preserve those gains while reducing the financial and fiscal cost of achieving them.
Such an assessment, he said, would provide a more accurate basis for determining the overall economic value of the GoldBod model.
Source: capitalnewsonline.com
