GoldBod Losses & Profits: Do They Matter, When They Matter and All the Nuances to Note

GoldBod financials have come under heavy scrutiny lately. The Minority Leader in Parliament, Mr. Afenyo-Markin, constantly complains about a GH¢22 billion loss suffered under GoldBod. GoldBod CEO Mr. Sammy Gyamfi, however, defensively attributes that loss to the Bank of Ghana and instead touts a surplus of GH¢5.4 billion generated under his executive leadership of GoldBod.

Are profits and losses the right metrics to assess GoldBod's value to the nation? Otherwise, when are GoldBod's financials fair game?

This article explores these and other critical existential questions about GoldBod and its utility to Ghanaians.

1. GoldBod Losses Don't Matter

Losses and profits are typically paramount in assessing the performance of most financial institutions and enterprises. However, GoldBod is not like other public institutions.

GoldBod is essentially a monetary policy structure created primarily to help the Bank of Ghana accumulate gold reserves and consequently generate ready foreign exchange for the stability of the Ghanaian cedi.

Monetary institutions like the Bank of Ghana are charged with regulating inflation, interest rates, and exchange rates to promote a well-functioning economy. In discharging their monetary policy responsibilities, they are predominantly judged by their ability to meet policy objectives and rarely by the losses or profits they generate as a result.

For example, to regulate inflation, central banks such as the Bank of Ghana buy or sell bonds through transactions known as Open Market Operations. As a result, central banks maintain portfolios of bond assets, and changes in bond prices can create significant profits or losses depending on the composition of those portfolios.

To fixate on such resultant profits or losses and elevate them above the achievement of monetary policy objectives would be a symptom of dire immaturity, if not ignorance, in macroeconomics.

The reason is simple: monetary policy objectives are critical to the health of the economy. Their importance therefore outweighs the costs incurred to achieve them.

Erratic price changes and runaway inflation make it difficult for market participants to plan and make decisions. Such uncertainty can fatally slow or even collapse economic activity. To avoid this, central banks are empowered to do whatever is necessary, even at considerable cost, to regulate fluctuations in general price levels.

The fear is that if we subordinate monetary policy objectives to the costs of implementing them, we may inadvertently paralyze monetary policy and, consequently, the economy.

GoldBod was created to help the Bank of Ghana regulate cedi stability by generating sufficient foreign exchange when needed. Hence, we cannot be overly emotional about all of its operational losses.

Losses and profits associated with monetary policy implementation are as typical as the cock's crow at dawn. To thwart a monetary policy because losses may be suffered is like refusing to sleep because we might die in our sleep. It is simply not sensible.

2. GoldBod Profits Don't Matter

GoldBod's revenues, as confirmed by its CEO, have been generated from fees and licences charged to its clients, whom I suspect are predominantly Ghanaian.

When government institutions use their coercive powers to take money from citizens, the revenues and profits that result should not automatically be celebrated as successes. Otherwise, we may create a perverse incentive for government executives to overtax the citizenry and then tout those collections as marks of achievement, if not genius.

The only reasonable celebration is when government officials use innovation to create new value that generates new wealth for the benefit of the country and its people.

Such new value could take the form of:

• Gold refining that generates additional profits.
• Renegotiation of better gold trade deals that shift greater benefits to Ghana.
• More efficient gold trade processes that reduce costs without sacrificing value.
• Other creative innovations that did not predate GoldBod.

Nothing like these has happened under GoldBod yet. Therefore, the celebration of GoldBod profits must stop.

3. When Will GoldBod Losses Matter?

Although losses incurred in the implementation of monetary policy are normal, they become problematic under certain circumstances.

Corruption Concerns

Losses become a concern if they are shown to result from corruption.

For instance, most of GoldBod's losses have been attributed to incentives, in the form of exchange rates higher than the official Bank of Ghana rate, offered to gold sellers to attract them to GoldBod.

If that narrative is false and the losses instead represent a monetary pipeline enriching politicians and their associates, then the public should be alarmed.

Who Benefits From State Losses?

Even when losses are not due to corruption, losses to state institutions are profits to some group of people within or outside the country.

I highlighted this subtle reality in an earlier article through the following equation:

Losses to State = Profits to People

Profits to State = Losses to People

The beneficiaries of state losses can therefore be analyzed to ensure public resources are not being directed to groups the people themselves would not endorse.

For example, if a monetary policy in an otherwise socialist state inadvertently enriches a small class of aristocrats or foreign interests, then citizens at least deserve to know.

Efficiency Concerns

Another situation in which GoldBod's losses become concerning is efficiency.

If Ghana can achieve the same monetary policy outcomes with lower losses than GoldBod currently incurs, then the institution's efficiency deserves scrutiny.

For example, if Ghana had borrowed the foreign exchange generated by GoldBod, would the total borrowing costs, including interest and transaction expenses, have been lower than GoldBod's operational costs?

Efficiency concerns are always legitimate, especially in countries where the majority of citizens continue to endure severe poverty.

4. When Will GoldBod Profits Matter?

As mentioned earlier, GoldBod profits become meaningful when they arise from genuine value creation rather than government extraction through taxes, licences, fees, and other charges.

The global gold value chain is extensive, with different nations capturing different portions of the overall value generated.

A real value addition would occur when GoldBod discovers creative ways of increasing Ghana's share of that value.

This point is critical:
If GoldBod earns more profits without expanding Ghana's share of the value chain, then it is merely profiting at the expense of Ghanaians.

Such profits would be parasitic and detrimental to public welfare.

However, if GoldBod succeeds in increasing Ghana's share of global gold value creation, then the resulting gains can be deployed for the benefit of the Ghanaian people.

Refining Gold

One obvious opportunity lies in refining gold.

Refined gold is significantly more valuable than raw gold. Therefore, if GoldBod develops a credible and sustainable capital structure for gold refining, it would materially increase Ghana's share of the value chain.

Leveraging Scale

Another, less familiar, opportunity lies in the power of aggregation.

GoldBod's aggregation role provides scale, and scale creates bargaining power, efficiencies, and leverage in commercial negotiations.

It is up to GoldBod's leadership to creatively utilize these advantages to generate greater returns for the state.

5. What Would Be a Better Line of Attack for Afenyo-Markin and the NPP?

Losses associated with monetary policy are normal.

Therefore, Mr. Afenyo-Markin should focus less on headline loss figures and more on GoldBod's underlying purpose.

If that purpose is worthwhile, then he should ask important questions about GoldBod's size, complexity, and efficiency.

As a member of the Danquah-Busia political tradition, he should question whether the state can efficiently manage such an institution and whether GoldBod risks becoming another COCOBOD, plagued by corruption and inefficiency.

If he insistently focuses on losses, he cannot merely emphasize their magnitude because monetary-policy-related losses are often substantial.

Instead, he must demonstrate how Ghana can achieve the same monetary objectives at a lower cost. That would require stronger economic arguments and perhaps stronger economic advisers.

He may even challenge the monetary policy objectives themselves and explain why they may not necessarily serve the interests of ordinary Ghanaians.

There are many meaningful debates to be had about GoldBod. Mr. Afenyo-Markin, as a prominent spokesperson for his party, should learn how to have them.

6. How Sammy Gyamfi and the NDC Can Better Defend GoldBod and Its Sensational Losses

Mr. Gyamfi should not run away from GoldBod's losses.

Doing so makes him appear defensive and weak.

Regardless of how those losses are accounted for, they were incurred in pursuit of GoldBod's primary mandate: generating foreign exchange for the Bank of Ghana. Therefore, they are legitimately GoldBod's losses.

He should instead explain them as necessary expenses incurred in pursuit of a greater monetary objective.

More importantly, he must clearly demonstrate how GoldBod's mission aligns with the interests of the nation and its people, and why Ghana would be worse off without it.

As CEO, he should embrace the role of Educator-in-Chief for the institution.

He must painstakingly explain GoldBod's purpose, the problems it seeks to solve, how those problems were handled before GoldBod's creation, and why GoldBod is a superior solution.

For example, if GoldBod exists partly to generate foreign exchange reserves, then he should explain with facts and evidence why borrowing foreign exchange, as was done previously, would be a less effective option.

Mr. Gyamfi should also stop celebrating revenues generated from licences and fees.

Instead, he should focus public attention on strategies to increase Ghana's share of the gold value chain.

As explained earlier, it is always more honourable to improve Peter's life without robbing Paul.

7. Why Does an Enriched Conversation About GoldBod Matter?

GoldBod is an institution entrusted with a critical monetary policy responsibility: accumulating gold reserves to support the stability of the Ghanaian cedi.

The costs associated with fulfilling such an obligation will naturally be significant.

For that reason, public debates about GoldBod cannot be immature or superficial.

When discussions focus excessively on profits and losses that may not actually matter, they distract from the serious policy questions that could improve lives and strengthen Ghana's economy.

Millions of Ghanaians continue to struggle under severe economic hardship. They deserve rigorous, thoughtful, and evidence-based discussions about institutions like GoldBod.

That is why articles such as this are important. They help cultivate minds that think more deeply and hearts that plan more wisely.

By Gyasi Dapaa
A Trained Economist and Data Scientist Who Has Transformed Multiple Fortune 500 Companies Through Strategic and Evidence-Based Decision-Making