Open Letter to the Finance Minister

Dear Dr. Ato Forson,

A medium-scale hard-rock mining concession may not cost more than $200 million to acquire. Three such assets , enough to establish genuine, formal, mechanized production, would cost in the neighborhood of $600 million. This is not a marginal sum, but neither is it an unreachable one, by the current standards of moving billions of dollars a year through a single gold-purchasing apparatus called Goldbod. And that is precisely what makes the choice actually so difficult to explain on economic grounds alone.

We have directed billions toward the purchase of galamsey gold that is degrading our water bodies and our arable lands in real time. We have, in effect, constructed a subsidy for the very activity we claim to be formalizing, and we have done so under the banner of reserve accumulation and currency stability. I do not doubt the sincerity of that objective. I doubt very much whether this is the instrument that achieves it at a cost the nation can actually bear, and whether the accounting being used to justify it reflects the true price being paid.

It is worth asking what else that money could have built. More than 1,200 schools in this country still hold class under trees. Millions of our citizens live in conditions the data insists on calling multidimensional poverty, a term with the unfortunate property of making deprivation sound abstract.

Dr. Ato, there is no version of development economics, however heterodox, in which capital allocated to subsidizing informal ore extraction outranks capital allocated to a child’s first classroom. Economic history will offer only little comfort to those who believe unprocessed mineral exports are a foundation for prosperity. No economy has ever ascended to durable, high-income status on the strength of raw commodity exports alone.

South Africa may be the standing rebuke to that hope. A country with among the deepest mineral endowments on the continent, and still contending with levels of structural inequality that a century of extraction did remarkably little to resolve. Wealth pulled from the ground rather proved a persistent tendency not to reach the people standing on it.

Australia, Canada, and China each extract far more gold annually than we do. Not one of them would describe its economy, or permit itself to be described, as a gold exporter. Mr. Minister, that is the empirical signature of diversification and it is proof that when a nation’s economic identity collapses into a single raw commodity, what you are observing is not strength but the absence of it. It is a structural fragility being readied for a season.

Real, cumulative national development has always rested THE CAPABILITIES of a nation’s people. India did not become a $200B/year exporter of IT and software services by discovering a mineral. It became one by investing, deliberately and over decades, in human capital, in education, in the institutions that let talent compound. That is the harder path. It is also the only one with a track record of arriving anywhere durable.

To degrade our rivers and our farmland for a short-term foreign exchange gain is not a defensible trade-off, least of all when better alternatives sit in plain view, unfunded. So I put the question plainly, because I believe it deserves a plain answer.

Is this a failure of quantitative rigor in how the policies are designed, or is it simply that our leadership lacks the patience for genuine national development demands? Because on the numbers alone, this does not add up and a policy that does not add up is not a strategy but simply a bet. It is a bet made with our country’s patrimony, on someone else’s watch. Don’t supervise this.

Respectfully,
Hubert
Investment Research Analyst