Our worst institutions have not been run by uneducated people. They have been run by some of the most brilliant minds the continent has ever produced. PhDs from Harvard, Oxford, and the London School of Economics. Chartered accountants, senior advocates, Doctor of Philosophy. Men and women whose intellectual gifts would be the pride of any society in the world.

Our worst institutions have not been run by uneducated people. They have been run by some of the most brilliant minds the continent has ever produced.

And yet these institutions remain broken. Most of them have been broken for longer than the people currently running them have been alive. The threat is not a shortage of intelligence in Africa. The threat is intelligence that has been quietly captured. Captured by incentives, by status, by board memberships, by conference invitations, and by the slow comfort of belonging to an expert class that asks very few hard questions about itself.

This includes, it should be said in fairness, the intelligence of whoever is making this argument.

Intelligence Is Not Independence

There is a flattering story we tell about smart people. That they are more rational than the rest of us, less biased, better able to follow the evidence wherever it leads. The story is mostly wrong.

What high intelligence actually gives a person is a much better toolkit for rationalization. The poorly educated man defends a failed government policy with slogans, party colors, and tribal loyalty. The brilliant economist defends the same policy with regression models, citations, and the borrowed vocabulary of whatever intellectual tradition his employer pays him to inhabit. The conclusion is identical. The packaging is just more impressive.

Research by Jonathan Haidt and others has shown that political and moral reasoning is almost always backward in its construction. We arrive at our conclusions first, shaped by self-interest, identity, and who signs our pay slip. Only then do we construct the arguments to justify them. The smarter we are, the more polished those justifications become.

This does not mean smart people are always wrong. It means the correlation between intelligence and institutional loyalty is far stronger than the smart people themselves would willingly admit.

The Ghana School of Law and the Habit of Closing the Door

If you want to see credentialism defending itself in Ghana, watch what happens around the Ghana School of Law admission examination every single year.

Thousands of qualified university graduates with law degrees from accredited institutions are denied admission. Pass rates have at times been scandalously low. Each year, the same brilliant lawyers and academics who control the system explain, often with great care and patience, why this is necessary for quality, for professional standards, for protecting the public from incompetent practitioners.

The economic logic underneath the explanation is much simpler than the explanation itself. The fewer lawyers admitted to practice, the higher the fees the admitted lawyers can charge. The system that controls entry is run by the very people who benefit from restricted entry. This is not a unique Ghanaian failing. It is the universal pattern of any credentialing system left to be run by the credentialed.

The same logic operates in medicine, in engineering, accountancy, and pharmacy. Each profession defends its restrictions on entry by appealing to public safety. Each profession quietly grows wealthier the more restricted that entry becomes. And each is full of brilliant people who would be deeply offended at the suggestion that their professional advocacy has anything to do with their own income.

The economist Joseph Stiglitz won a Nobel Prize for showing that in markets where buyers cannot easily judge quality, certification can serve a genuine purpose. He was not wrong. What his framework also predicts, when followed honestly, is exactly the capture problem we see across professional Ghana. When the certifiers and the certified are the same people, the system stops measuring competence and starts measuring compliance with whoever holds the gate.

When Markets Capture, the Failure Looks the Same

Honesty requires me to turn the argument against my own intellectual tradition here. Otherwise, the rest of this essay is just performance.

Private markets are not magically immune to this problem. The credit rating agencies, Moody’s, Standard and Poor’s, and Fitch, are private companies operating in competitive markets. In the years before the 2008 collapse, they rated mortgage-backed securities stuffed with toxic loans as AAA, the highest possible grade, implying near-zero default risk. They were not government bureaucrats. They were brilliant private analysts whose entire business model depended on being paid by the very issuers whose products they were rating.

Closer to home, Ghana watched a version of this in the banking sector cleanup of 2017 and 2018. Several local banks collapsed despite carrying audited financial statements signed by reputable auditing firms. The auditors had not failed for lack of intelligence. They had failed because their fees came from the same banks whose accounts they were certifying. The conflict was structural, not personal. And it cost ordinary Ghanaian depositors billions of cedis.

Friedrich Hayek’s defense of market processes against central planning remains powerful and correct. Markets aggregate dispersed information that no central authority can possess. But Hayek’s argument is about the superiority of market processes over command-and-control planning. It is not guaranteed that every institution operating in a market is immune to the capture described in this essay.

A market can correctly allocate most of its resources and still produce a rating agency that calls toxic debt safe, or an audit firm that signs off on books it cannot reasonably defend. Conflating these two failure modes weakens both arguments. Honest analysis has to keep them apart.

When Failure Becomes Funding

In a real competitive market, failure carries consequences. The business that consistently produces a poor product loses customers and eventually closes. In the African expert class, failure operates very differently.

When a program collapses, the lesson is almost never that the program should end. The conclusion is always that the program needs more resources, better leadership, a new framework, perhaps a fresh commission to oversee the previous commission. Failure does not shrink the expert’s jurisdiction. It expands it. The administrative budget rarely shrinks because of poor results. It grows in response to them.

Ghana has been to the International Monetary Fund seventeen times since independence. Each visit was led by some of the most brilliant Ghanaian economists alive at the time. Each visit was justified by analyses, projections, and policy frameworks of considerable technical sophistication. And each visit was followed, within a decade or so, by another visit, often led by the same class of economist, defending the next set of structural adjustments.

There has never been a shortage of intelligence in Ghanaian economic policy. There has been a sustained, structural inability of the economic policy class to ever recommend its own reduction in scope or authority. The technocrats who designed the policies that put Ghana back in the IMF’s waiting room are often the same technocrats negotiating the new IMF program. The think tank that recommended the failed intervention publishes the post-mortem analyzing the failure. The professor who advised the previous administration quietly takes a seat with the next one.

A century ago, Julien Benda described this kind of betrayal in his essay The Treason of the Intellectuals. He was writing about a clerisy that had abandoned disinterested inquiry to serve class interest and institutional power. What he called treason in his time is now simply a career track in ours. The betrayal does not happen in a single dramatic moment. It happens grant by grant, consultancy contract by consultancy contract, conference invitation by conference invitation, until it is completely invisible to the person committing it.

Complexity as Camouflage

When institutional defenders begin losing the argument on its merits, the standard response is to make the argument more complicated.

The Bank of Ghana does not have a loss problem. It faces, in the words of its own communications, a challenging interaction of monetary policy operations, sterilization costs, valuation effects, and structural balance sheet considerations. The school that produces illiterate graduates does not have a failure. It has a multidimensional interaction of socio-economic variables, infrastructural deficits, and policy implementation gaps. The state-owned enterprise that burns through public funds does not have a mismanagement issue. It has a unique operating environment requiring nuanced policy support.

Some of that language reflects genuine complexity. The world really is complicated, and pretending otherwise is its own kind of motivated reasoning. But the tell is the asymmetry of when the complexity is invoked. Institutions reach for complicated language precisely when they are being criticized. They reach for plain language when they are claiming credit. A success is always a clear and direct outcome of expert policy. A failure is always a multifaceted phenomenon requiring further study.

Mises described this dynamic with unusual precision in Interventionism: An Economic Analysis. Each intervention creates distortions, and those distortions appear to require further interventions to correct. The expert class whose authority grows in response to these distortions is the very class whose previous interventions created them. The complexity is not incidental. It is load-bearing. It is what keeps the entire system in business.

The Argument Has to Turn on Itself

The intellectual tradition this essay draws from, skeptical of concentrated authority, of expert consensus, of institutional permanence, is not exempt from the dynamic it describes.

Austrian and libertarian commentary has its own publications, its own funders, its own audiences whose comfortable assumptions it would be professionally inconvenient to challenge. If the central claim of this essay is correct, that experts systematically rationalize in favor of the institutions that sustain them, then it has to be a claim about human incentives in general. It cannot be a partisan accusation aimed only at the people the writer happens to disagree with.

What would falsify the thesis? If credentialed insiders regularly and voluntarily recused their own institutional authority in response to failure, if they dissolved programs that did not work, if they recommended deregulation of their own fields, that would be a serious problem for the argument. Such examples do exist. They are rare enough to be remarkable, and that rarity is itself the evidence the argument is asking us to weigh.

Conclusions

Intelligence held by someone who is genuinely free to use it is formidable. It builds companies, advances science, treats the sick, defends the falsely accused. It is one of the most valuable resources a continent like ours has to draw on.

Intelligence held by someone whose income, identity, and social standing all depend on a particular set of institutions remaining respectable is something else entirely. It is the most sophisticated defense attorney any broken African system has ever had. It is the most expensive obstacle to honest reform that we have ever paid for.

The danger across the continent is not that brilliant people cannot see what is wrong with our institutions. The danger is that they are intelligent enough to explain, in sophisticated and patient language, exactly why nothing is really wrong. And occasionally, in their quieter moments, they are honest enough with themselves to catch what they are doing.

Whether they say it out loud is a different question, and the answer to that question is what will eventually decide whether the next sixty years on this continent look anything different from the last.

I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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Both groups share one assumption worth questioning. They both believe that the economy is fundamentally a system that someone, or something, needs to manage from above. That assumption is where the trouble starts.

The idea that production can be designed from the outside, without the continuous involvement of real people making real choices, is not new. It is the oldest error in economics. And it does not become less wrong simply because the system running it now has better processing power and a more impressive name.

Socialists believed a group of experts could plan the economy and fix every problem that free markets created. Statists believed a government ministry or a committee of technocrats could guide production better than the people actually producing and buying. The new version of this old argument simply swaps the committee for an algorithm and calls it progress

Production Is a Discovery, Not a Design

Walk through Kejetia market in Kumasi on any weekday morning. What you see looks like chaos to an outsider. What it actually is is one of the most complex coordination problems in human experience being solved continuously, without a plan, without a coordinator, and without anyone formally in charge.

The tomato seller knows which variety her customers prefer because they told her with their money and their feet. The kente weaver in Bonwire knows which patterns are moving because orders keep arriving. The provisions dealer knows to stock more tinned fish before December because he has watched the same pattern for fifteen years. Each of these people is simultaneously a producer and a consumer, shaping and being shaped by millions of decisions happening around them every single day.

Production is not a process someone designs from a spreadsheet. It is a process of ongoing discovery. Producers discover what consumers want by watching what sells and what stays on the shelf. They adjust, they try new things, they cut what fails. Mises made the foundational argument for this long ago. Production driven by individual human action, responding to real consumer preferences, is fundamentally different from production designed by any external authority.

The question that always defeats the planner is the same one that would defeat the most sophisticated AI system: how will it know what to produce? And how will it know how much? And how will it know when to stop?

The Susu Club and the Meaning of Value

There is no better illustration of subjective value theory in Africa than the susu club. Every week, a group of women in a market, neighborhood, or workplace pools a fixed amount of money. Each cycle, one member takes the entire pot. No bank is involved. No government programme authorises it. No formal financial institution designs it. Just voluntary exchange built on trust, mutual benefit, and the shared recognition that the same sum of money serves each person differently depending on their circumstances.

The woman who takes the pot in December uses it to restock her shop for the festive season. Another uses her March turn to pay school fees. Another saves hers against a medical emergency. Same amount, completely different value to each recipient. This is exactly what Carl Menger meant when he argued that value is subjective. Goods do not carry an objective worth stamped into them. Their value is assigned by individual human beings, in specific circumstances, at specific moments in time.

Think about the kola nut. Deeply meaningful in certain northern Ghanaian and Nigerian ceremonies, it can be largely irrelevant to someone raised in coastal Accra. Palm oil is essential to the chop bar owner, marginal to the office worker who has never cooked. Meat has one value to someone who eats it, a very different value to someone who does not. The same item, the same quantity, but entirely different in value depending on who is evaluating it.

Exchange happens precisely because two people value the same things differently. The buyer values what the seller has more than the money she is giving up. The seller values the money more than the item she is parting with. If both parties placed identical value on everything, there would be no reason to trade at all. It is the disagreement about worth that makes market exchange not just possible, but necessary.

This is why every attempt to assign an objective value to goods through a labor theory of value, a cost-of-production formula, or a government price control has always ended badly. You cannot impose a single measure of worth on things whose worth exists only in the mind of the person deciding whether to want them.

When Africa Tried Central Planning

Ghana has been through this before, and the lesson was not gentle. Under Kwame Nkrumah, the state took direct control of large portions of Ghana’s productive economy. State farms were established to produce food scientifically, guided by planning rather than market signals. State-owned enterprises were created to manufacture what experts believed Ghana needed. Prices were regulated. Foreign exchange was controlled.

The state farms failed to deliver. State enterprises consumed resources without generating returns. Shortages became common because price controls made it unprofitable to supply the very goods they were supposed to protect. By the time Nkrumah was removed in 1966, Ghana’s economic position was considerably worse than it had been when planning had started. The Makola Queens, as historians have documented, survived that period not because of government programs but in spite of them, using susu clubs, informal networks, and bulk purchasing to keep goods moving when official channels collapsed.

Tanzania’s ujamaa experiment under Julius Nyerere followed similar logic and produced similar results. Forced collectivization of agricultural production, guided by a vision of what the state believed African communal life should look like, caused food output to collapse. Peasant farmers who understood their land, their crops, and their trade routes better than any ministry official were told their knowledge was insufficient. The statistics that followed told a different story.

These failures were not accidents of implementation or personality. They were not fixable with better ministers or more diligent officials. They were failures of economic logic. Without private ownership of productive resources and voluntary exchange, there is no mechanism to determine whether resources are being used well or wasted. Ludwig von Mises called this the impossibility of economic calculation under socialism. An AI system handed the same role would hit the same wall.

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What Prices Do That No Algorithm Can Replace

The price of a bag of maize at Agbogbloshie market on any given morning carries more information than any government database. It reflects the harvest from the north, the cost of transport from the farm, the competing bids of dozens of buyers, the seasonal patterns that experienced traders have memorized over years. It summarises the knowledge of thousands of people who will never sit in the same room, and it does so instantly and continuously.

This is the insight Friedrich Hayek made central to economics. The price system coordinates people across enormous distances of space and time. The yam farmer in Brong-Ahafo does not need to call Accra to find out what to plant next season. The price at the market tells her. The buyer in the city does not need a planning committee to identify alternatives when one product becomes expensive. The price of the substitute tells him, immediately, without a policy paper.

Now consider what happens when this system is deliberately disrupted. When Zimbabwe imposed price controls on basic goods in the 2000s, suppliers could not sell at a profit. Shelves emptied within weeks. Not because the goods had disappeared, but because the economic signal that made it rational to bring them to market had been removed. Nigeria’s fuel price controls produced the same outcome: queues stretching around petrol stations, while the fuel existed elsewhere in the system, unable to reach where people needed it.

An AI system controlling production would face the identical problem. If it did not permit voluntary exchange, there would be no prices. If there were no prices, there would be no way to know what to produce. If it tried to simulate prices without real exchange, it would be guessing, not calculating. And when it guessed wrong, as it would, the consequences would not fall on the system. They would fall on the people waiting for goods that never arrived.

The Informal Economy Is Not the Problem. It Is the Point.

One of the most persistent errors in African economic thinking is the belief that the informal economy is a problem to be solved. Development agencies, government planners, and international institutions regularly describe the informal sector as chaotic, unproductive, and in need of formalization and regulation. Ghana’s informal sector accounts for roughly 86 percent of economic activity. The people working within it are not waiting to be brought into a formal system designed by experts. They are already running the most adaptive economic system that African ingenuity has produced.

The informal trader in a container shop in Accra New Town performs economic calculation every single day. She buys wholesale, watches what moves, adjusts her stock, negotiates prices, and extends informal credit to customers whose reliability she has assessed over years of personal interaction. She carries information in her head that no spreadsheet captures and responds to shifts in demand faster than any government program can be drafted and approved.

She is not operating outside the economy. She is the economy. And what she and millions like her across Africa are doing every day is the exact process that Mises described: making profit-and-loss calculations with real private resources, exchanging voluntarily with real buyers and sellers, adjusting continuously to what consumers actually want rather than what a plan says they should want.

Any policy, any algorithm, any planning framework that tries to replace this living network of individual exchange with a designed system of production will immediately encounter the calculation problem. It will not know what to produce. It will not know for whom. It will not know when to stop. And the resources it wastes in the process of not knowing will come from the people it claimed to be helping.

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Conclusions

The AI hype will eventually settle into something more honest, just as every previous wave of enthusiasm about the perfect planning system has settled. The question for Ghana and the rest of Africa is whether this moment will be used to understand the deeper argument, or whether we will simply replace one group of outside experts with more impressive-looking technology.

Production is not a problem to be solved by a better system. It is a process that emerges from millions of individual human beings acting to improve their own circumstances and trading with others doing the same. That process generated the kente tradition, the susu club, the mobile money revolution, and the informal trading networks that kept African families fed through every economic crisis caused by governments and left unaddressed.

No AI system can replace this. Not because the technology is insufficient, but because the problem it is being asked to solve is inherently impossible. Without voluntary exchange, there is no genuine valuation. Without valuation there is no economic calculation. Without calculation there is no rational production. This is not a new finding. Mises established it a hundred years ago. Africa has paid the tuition fees for ignoring it many times since.

What Africa needs is not a better planner. It needs fewer people trying to plan. The market women of Kejetia and Makola have understood this for generations. They do not need a policy committee to tell them what the yam is worth this morning, what credit to extend this afternoon, or what to stock before the rains arrive. They already know. They know because they are inside the process, exchanging freely, reading signals honestly, and adjusting without waiting for anyone’s permission.

We should resist anyone trying to stop us from doing the same.

I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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Others argue that money has value because people accept it. But push a little harder and ask why they accept it, and you get a circular answer: they accept it because they accept it. That explanation satisfies nobody who has watched their savings quietly disappear.

The real question is more interesting than either of these answers. The Austrian economists who grappled with it more than a century ago left behind insights that matter directly to every Ghanaian who has watched the Cedi lose half its purchasing power, every Nigerian who has seen the Naira evaporate, and every African who has lived through a currency collapse that nobody in government ever admitted to causing.

What Money Actually Is

The demand for any good in a market arises from the benefit it offers. A market woman in Kumasi central market buys tomatoes because she needs them to cook or sell. A mechanic in Accra buys engine parts because he needs them to do his work. The goods themselves have direct uses in daily life.

Money is different. Nobody eats the Cedi. Nobody builds a house with Naira notes. As the economist Murray Rothbard put it plainly, money cannot be consumed and cannot be used directly in any productive process. It is, in his words, dead stock. It produces nothing on its own.

What money offers instead is exchange value. Its only usefulness is that you can trade it for something else. The Cedi in your pocket gives you the ability to buy fish at the market or pay your child’s school fees. That power to exchange is money’s entire purpose and therefore its entire value.

And this is where a problem that most economics textbooks quietly skip over begins to reveal itself.

The Circle That Government Cannot Break

If the demand for any good explains its price, then the demand for money should explain its price as well. But there is a trap buried in this logic. The demand for money only arises because money already has purchasing power. Nobody chases a currency that cannot buy anything. Not in Accra. Not anywhere.

So if the demand for money depends on it already having purchasing power, how did that purchasing power get established in the first place? The purchasing power of money seems to explain the demand for it, while the demand for it seems to explain its purchasing power. The two keep chasing each other in a circle.

This is not a minor philosophical puzzle. It cuts directly at the question of whether a government can simply announce a new currency, print notes with its own face on them, and expect those notes to carry genuine value in everyday trade.

Carl Menger and the Cowrie Shell

The Austrian economist Carl Menger dealt with exactly this problem in the nineteenth century, and what he found should feel immediately familiar to anyone who knows West African economic history.

Menger argued that money did not emerge from a government proclamation. It was not invented by a parliament or a ministry of finance. According to Menger, certain commodities became money naturally, as a result of economic relationships that developed entirely independently of state power. No historical record, he noted, points to a formal moment when a society gathered together and decided to invent money. Money emerged because it was useful.

In West Africa, this happened long before colonial governments arrived with their paper currencies. Cowrie shells circulated as money across large parts of West and Central Africa for centuries. No government made them money. They became money because they were durable, difficult to forge, easy to count, and recognized across vast trading distances. A trader in Salaga and a merchant near the coast both understood what they were worth. That mutual understanding grew from long experience, not from any official endorsement.

The Ashanti used gold dust and intricately calibrated gold weights for centuries before colonialism arrived. The gold was not made into money by a chief’s decree. It earned that role because it was scarce, consistently high-quality, and universally trusted across trade networks that stretched far beyond any single political authority. The gold weight and the cowrie shell both make Menger’s case better than any textbook can. Money did not need a government to give it life. The market found it, tested it, and settled on it.

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Mises and the Chain of Trust

Ludwig von Mises developed Menger’s insight into what economists call the regression theorem, and it is one of the most important tools for understanding why monetary policy so often fails in Africa.

The argument runs like this. The demand for money today is shaped by its purchasing power yesterday. If the cedi bought a certain amount of goods last week, history tells you how much of it you are willing to hold today. Yesterday’s purchasing power was shaped by the day before. And so on, going backward through time.

If you trace this regression far enough into the past, you arrive at a point where the commodity being used as money was not yet money at all. It was an ordinary good with a price set by barter. On the day it first began to function as money, it already carried an established value from its previous life as a traded commodity. That history gave it the purchasing power it needed to function in exchange. Without that history, it had nothing.

This is why Rothbard could say without exaggeration that money is simply a commodity. Not an abstract promise. Not a government guarantee. Not a social contract. It began as something people genuinely wanted for direct reasons, and its journey into the role of money grew entirely out of that original usefulness.

For Ghanaians, this is not abstract theory. The gold that the Gold Coast traded for centuries carried value long before the British colonial currency arrived. When the pound sterling was introduced to West Africa, it worked initially because it could be exchanged for something with established value. The colonial power did not create value. It inherited the value that African trade had built over generations.

What the Cedi’s History Is Really Telling Us

The cedi has been re-denominated multiple times since Ghana’s independence. When it was introduced in 1965, replacing the colonial pound, it carried reasonable purchasing power. By 2007, when Ghana re-denominated again and introduced the new Ghana cedi at a rate of 10,000 old Cedis to 1 new cedi, the currency had lost an extraordinary share of its original value.

The colonial power did not create value. It inherited the value that African trade had built over generations.

This is not a story about bad luck or unfortunate global forces. It is a story about what happens when governments consistently treat currency as something they can create by authority alone. Every time the Bank of Ghana printed money beyond what the economy’s real productive capacity could support, the purchasing power of existing cedis weakened. The nominal quantity of money grew. The real value behind each unit shrank.

The Austrian explanation is straightforward. Because money’s value rests on a chain of historical purchasing power, any injection of new money that is not matched by a real expansion in goods and services waters down the links in that chain. Every new cedi issued beyond genuine economic need quietly reduces the worth of every cedi already in someone’s pocket.

The market woman at Makola did not need an economics degree to feel this. She felt it every time she sat down to recalculate her prices.

Mobile Money and the Limits of Electronic Currency in Africa

Mobile money has genuinely changed the way Africans move value. MTN MoMo, Airtel Money, and similar platforms process trillions of cedis in Ghana alone each year. The question this raises for monetary theory is whether it represents a new, more stable form of money.

The honest answer is that it does not. Mobile money is a method of moving existing money, not a creation of something new. When you send GH¢50 through MoMo, you are not generating value. You are transferring cedis that already exist in the banking system into a form that travels cheaply and quickly over a phone network.

These platforms function only as long as users know they can convert their mobile balance back into physical cedis on demand. If that convertibility were ever genuinely in doubt, the entire system would immediately lose its usefulness. Electronic money inherits its value entirely from the underlying currency it represents.

And since the underlying currency carries the vulnerabilities described above, mobile money carries them too. It does not solve the problem of a weakening currency. It just makes the weakening easier to transact within. The screen makes the erosion harder to notice, not harder to feel.

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Why the Government Cannot Simply Decree Money Into Existence

This brings us to the most politically uncomfortable point in the entire argument, and the one most directly relevant to Africans who have lived through currency collapse.

Mises was direct about this. The concept of money as a creature of the law and the state is clearly untenable. It is not justified by a single market phenomenon. To give a government the power to dictate the laws of exchange is to ignore the fundamental principles of how a money-using society actually works.

Consider Zimbabwe. The government there printed its currency with complete confidence in its own authority. One hundred trillion dollar notes eventually became a physical reality. What the government could not print was the value behind those notes, because value cannot be legislated into existence. The result was no more money. It was more paper.

Closer to home, fourteen African countries use the CFA franc, a currency whose stability rests on a French Treasury guarantee rather than on the productive capacity of the economies that use it. Whatever one thinks of the political dimensions of that arrangement, the monetary reality is that the franc’s value does not originate from any African government. It is a value borrowed from somewhere else, sustained by an external commitment rather than by homegrown economic trust.

The regression theorem explains why. A government decree can compel people to use a currency. It cannot compel that currency to hold value. Only the market can do that, and it has always done so. A currency that cannot trace a credible chain of real purchasing power back through history will eventually be abandoned by the market, regardless of what the law says about it.

Conclusions

Understanding how money acquires its value is not an exercise for economists alone. In Africa, where currency devaluation has disrupted lives across generations, it is one of the most practical questions any person can sit with.

The Austrian framework gives a clear answer. Money is not a government creation. It is a market discovery. It begins as a commodity with real usefulness, earns an exchange value through the work of countless voluntary transactions across time, and carries that trust forward through history. The regression theorem shows that this chain cannot be broken by a decree without consequence.

No government in Africa can genuinely create money’s value. It can only inherit that value, preserve it, or spend it. Ghana’s monetary history, from the cowrie shell to the cedi, is a long and honest record of which of those three choices governments tend to reach for first.

What gives money its worth is not the printing press, not the parliament, and not the policy committee meeting in a closed room. It is the accumulated trust of everyone who has ever traded something real for it. That trust is very hard to build. And as every African who has watched a currency collapse already knows, it is very, very easy to spend.

I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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In Ghana today, this framework is under serious test as the Bank of Ghana has just announced an operating loss of GH¢15.63 billion for the 2025 financial year, with the broader comprehensive loss climbing to GH¢34.95 billion. The Minority caucus in Parliament insists that the true loss, after stripping out the gold sale gains, is closer to GH¢44 billion.

In his writings, Friedman held that there is a lag between changes in the money supply and their effects on real output and prices. According to Friedman, in the short run, changes in money supply are likely to be followed by changes in real output. However, in the long run, changes in the money supply will affect only prices.

Friedman held that if the central bank were to follow a constant money growth rule, money would become neutral with respect to economic activity, even in the short run. The only effect that money would have is on the prices of goods and services.

Similarly, in his Nobel lecture, Robert Lucas suggested that if monetary growth is expected, people will adjust to it quickly, and there will be no effect on the economy.

According to Lucas, expected money supply growth will result in a corresponding rise in the prices of goods, which will offset the increase in monetary spending. However, if the money growth rate is unexpected, then, according to Lucas, it will stimulate production. Following this logic, only unexpected monetary growth can cause economic growth, and such economic growth is likely to be unstable.

Both Friedman and Lucas believe that it is desirable to make money neutral in order to avoid instability and unsustainable economic growth.

The Bank of Ghana Loss and the Illusion of Neutral Money

Even if every Ghanaian were to accurately anticipate the Bank of Ghana’s policy moves, there would still be first recipients of the new money and late recipients. The early recipients can purchase goods at unchanged prices, while the later recipients of money would likely have to pay much higher prices. This sets in motion the transfer of wealth from late or non-recipients to early recipients of money, which, in turn, changes the relative prices of goods and services. As a result, money cannot be neutral.

In Ghana’s case, the recent stabilization of the cedi and the fall in inflation from 23.8 percent at the close of 2024 to 3.2 percent by March 2026 did not arrive without cost. The Bank of Ghana paid for that stability by tripling its sterilization liabilities to commercial banks from GH¢32.7 billion to GH¢93.6 billion in a single year. The cost of open market operations alone climbed from GH¢8.6 billion in 2024 to GH¢16.73 billion in 2025. This is the textbook exchange of nothing for something.

The Bank of Ghana issued bills at high yields to absorb cedis it had earlier helped create, and commercial banks parked their liquidity in those bills rather than lending to farmers, traders, and small businesses. Banks booked GH¢15 billion in profits in 2025. The Bank of Ghana booked GH¢15.6 billion in losses. The pool of resources of Ghanaian savers and taxpayers was the silent funder of this transfer.

Even if money is injected into the Ghanaian economy so that everyone receives it instantaneously, changes in the demand for money will vary, since individuals differ from one another. There will always be someone who spends the newly received money before someone else. This will result in the redirection of wealth from the last spender to the first spender. This will deplete the pool of resources through the exchange of nothing for something, which in turn will undermine economic growth.

When Parliament Becomes a Press Conference

Note also that, to stabilize individuals’ expectations, the Bank of Ghana will be compelled to tamper with the growth rate of money supply. This, however, sets in motion disruptions in the form of boom-and-bust cycles. We can conclude that both expected and unexpected money supply growth will weaken the pool of resources, private savings, and stable economic growth.

The transparency that some economists demand from the Bank of Ghana is not real transparency at all. Real transparency means following the law. Section 58 of the Bank of Ghana Act, 2002 (Act 612), is clear. The Bank submits its audited accounts to the Minister of Finance, and the Minister, not later than one month after receiving the report, lays it before Parliament with his comments. Yet on April 30, 2026, the Majority caucus held a press conference at Parliament House to release the financial statement before the Bank had even formally published the document and before the Finance Minister had laid it before the House.

Hon. Kojo Oppong Nkrumah, the Ranking Member of the Economy and Development Committee, made the point sharply when he said the Act does not say the Bank should hand over its audited accounts to a political party for a press conference. This is not transparency. This is political choreography dressed up as accountability, and it is exactly the kind of policy signaling Friedman and Lucas pretended would calm markets.

Additionally, Friedman’s constant money growth rule cannot make money neutral, since the constant money growth rule is still about increases in the money supply, despite being at a constant rate. This means that, in Friedman’s framework, we will also have an exchange of nothing for something, leading to boom-and-bust cycles and economic instability. The Bank of Ghana’s transparent monetary policy cannot prevent the economic bust. It can only delay it and rename it.

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The Hidden Tax of Recapitalizing the Bank of Ghana

In Ghana, the bill for the present stability has not yet been delivered to the public. The Bank of Ghana’s negative equity widened from GH¢61.32 billion at the start of 2025 to GH¢96.28 billion by year's end. Under the January 2025 Memorandum of Understanding between the Ministry of Finance and the Bank, and under the new Bank of Ghana (Amendment) Act, 2025 (Act 1158), the Treasury is committed to recapitalizing the Bank in tranches between 2026 and 2032.

That money will be paid by the Ghanaian taxpayer, the same farmer in Tamale, the same trader in Makola, and the same teacher in Kumasi, who have already paid through inflation, currency depreciation, and the loss of access to credit.

As Dr. Mohammed Amin Adam observed, using gold reserves to offset operational losses does not eliminate the problem. It only masks it. It hides the true cost of policy decisions and delays the necessary correction.

In the words of Ludwig von Mises,

The view that it is possible to stabilize the Ghanaian economy through transparent policies is questionable. Friedman’s constant money growth rule cannot make money neutral. Lucas’s perfect anticipation of the money growth rate cannot eliminate the wealth transfers created by monetary expansion. The Bank of Ghana has spent GH¢15.6 billion from the public balance sheet to deliver private bank balance-sheet profits, and it now wants Ghanaians to call that transfer “stability.”

A better way to end the menace of boom-and-bust cycles in Ghana is for the Bank of Ghana to stop tampering with financial markets. Note that, as a rule, however, central banks respond to the bust by again loosening their stance, thereby starting the new boom and bust cycle phase. The Bank of Ghana has already cut its policy rate from 28 percent at the start of 2025 to 14 percent by March 2026. The next phase of the cycle is being prepared as we speak.

Conclusions

A policy of transparency employed by the Bank of Ghana cannot prevent the boom-and-bust cycles set in motion by the Bank’s tampering with financial markets. Neither Friedman’s constant money growth rule nor Lucas’s perfect anticipation of the money growth rate can eliminate boom-and-bust cycles; these measures are counterproductive and actually set the stage for economic instability. Money is not neutral.

The 15.6 billion cedis the central bank has lost, and the 96 billion cedis of negative equity it now carries on its books, prove the point. Furthermore, what would bring economic stability to Ghana is for the Bank of Ghana to cease inflationary monetary policy. What is required for economic growth is voluntary production, private saving, and capital investment by Ghanaians for Ghanaians. The ever-expanding government and central bank intervention remains the major obstacle to all these things.

I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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The financial statements reveal a central bank drowning in the consequences of its own interventions, trying to control market forces that cannot and should not be controlled. Let me walk you through what happened, why it happened, and what Austrian economics teaches us about the fundamental impossibility of the Bank of Ghana’s mission.

Understanding the Report: Central Planning in Numbers

The Bank of Ghana’s financial statements read like a case study in interventionist failure. The bank earned GH₵22.28 billion in operating income but spent GH₵37.91 billion on operating expenses, resulting in a massive GH₵15.63 billion loss. Think of it this way, for every cedi the bank earned, it spent 1.70 cedis. No private business could survive such economics, but central banks operate under different rules because they can force others to absorb their losses.

The bank’s stated mission is to “maintain stability in the general level of prices” and “promote economic growth and development.” Right there, we see the central planning mindset. The idea that bureaucrats can determine the “right” price level or “promote” economic growth ignores everything we know about how real economies function. Prices are information signals, not targets to be managed. Economic growth emerges from entrepreneurship, capital accumulation, and free exchange, not from monetary manipulation.

When the bank talks about conducting “monetary operations to achieve price stability,” what they really mean is intervening constantly in credit markets, manipulating interest rates, and expanding or contracting the money supply based on what they think the economy needs. The Austrians, from Mises to Rothbard, spent a century explaining why this cannot work. You cannot calculate economic value from a central office. You cannot substitute bureaucratic planning for the dispersed knowledge of millions of market participants.

The GH₵15.63 Billion Question: How Did We Get Here?

The numbers tell a story of accelerating failure. The 64.8% increase in losses from 2024 to 2025 is not random variance. It is the compounding effect of artificial interventions creating distortions that require ever-larger interventions to suppress, each one generating new problems that demand new solutions. This is the interventionist spiral that Ludwig von Mises described nearly a century ago.

But here is what makes this particularly galling: the Ghanaian people will pay for these losses. Central bank losses do not simply disappear. They get absorbed through inflation, through taxation via the recapitalization plan, or through reduced economic growth as resources get diverted to shore up a failing institution. The government has committed to a recapitalisation program from 2026 to 2032, meaning Ghanaian taxpayers will be funding the Bank of Ghana’s mistakes for the next six years.

The Three Horsemen of Central Banking Failure

The financial statements identify three major expense categories that drove the losses. Let me explain each one and what they reveal about the impossibility of central banking.

Open Market Operations: The Price of Pretending to Control Money

The Bank of Ghana spent GH₵16.73 billion on Open Market Operations in 2025, nearly double the previous year. OMO costs represent the interest paid to commercial banks for absorbing excess liquidity that the central bank itself created. Read that again. The central bank creates money, realises this creates inflation, then pays banks to take that money back out of circulation.

This is monetary central planning at its most absurd. The bank expands the money supply to “stimulate growth,” discovers this causes inflation, then conducts OMO to “mop up excess liquidity,” paying massive interest costs in the process. It is like a doctor who poisons you and then charges you for the antidote.

From an Austrian perspective, this entire exercise is counterproductive. The original monetary expansion distorted the structure of production, misallocating resources toward projects that appeared profitable only because of artificially low interest rates. The subsequent contraction through OMO then forces painful readjustments as those malinvestments get revealed. The economy would have been better off if the bank had never intervened in the first place.

But here is the deeper problem: the bank cannot know the “correct” amount of money in circulation. There is no scientific method for determining whether liquidity is excessive or insufficient. These are subjective judgments made by bureaucrats who lack the market signals that would guide private actors. When the bank says there is “excess liquidity,” what they really mean is “more liquidity than we want based on our theories about inflation.” But those theories ignore how money actually circulates through an economy, how velocity changes, how financial innovation affects money demand, and countless other factors that cannot be centrally calculated.

The 94.6% increase in OMO costs reveals the futility of this exercise. The more aggressively the bank tried to control inflation through monetary contraction, the more it had to pay for that control. This is the cost of the interventionist spiral. Each intervention creates distortions that require larger interventions, at ever-increasing cost.

Gold Losses: When Central Planners Play Commodity Trader

The Bank lost GH₵9.05 billion on gold transactions in 2025. To put this in perspective, this single line item exceeds the entire operating income from interest earnings. The bank bought, held, and sold gold, and managed to lose nearly a third of its total deficit in the process.

Why is a central bank trading gold in the first place? The official explanation involves the Domestic Gold Purchase Programme, designed to “strengthen reserve buffers” and “reduce structural pressures on foreign currency demand.” Translation: the bank is trying to manipulate the foreign exchange market by accumulating gold reserves instead of foreign currency.

But here is what actually happened. The bank bought gold when prices were high; when prices dropped, they either sold at a loss or marked down their holdings. This is not reserve management. This is speculation using public resources. The bank essentially gambled GH₵9.05 billion of Ghanaian wealth on gold prices and lost.

Austrian economics teaches us why governments should not be in the business of holding commodity reserves. Market prices reflect the combined knowledge and expectations of all market participants. When a central bank intervenes in commodity markets, it substitutes bureaucrats' judgment for the market's wisdom. The bank cannot predict gold prices any better than private investors can, but when private investors lose money speculating on gold, they bear the consequences themselves. When the Bank of Ghana loses GH₵9.05 billion, Ghanaian citizens bear those consequences.

The proper role of gold in a monetary system is as money itself, not as a speculative asset held by central planners. Under a genuine gold standard, where currency is redeemable in gold at a fixed rate, these “gold losses” would be impossible because gold would be money, not an asset to be traded. But modern central banking abandoned that discipline long ago, preferring the flexibility to manipulate money at will.

Revaluation Losses: The Inevitable Cost of Fiat Currency

The bank recorded GH₵5.47 billion in revaluation and exchange losses, up 151.9% from 2024. These losses result from holding assets denominated in foreign currencies while the cedi depreciates. When the cedi loses value against the dollar, euro, or SDR, the bank’s foreign-denominated liabilities become more expensive in cedi terms.

This is the inevitable consequence of fiat currency. Without the discipline of gold or another commodity backing, there is no anchor to prevent currency depreciation. The bank can print cedis at will, and market participants, understanding this, discount the cedi’s value accordingly. The depreciation then shows up as revaluation losses on the bank’s balance sheet.

But these accounting losses represent real economic damage. Every cedi of depreciation increases the cost of imports for Ghanaian consumers. It makes foreign debt more burdensome for Ghanaian borrowers. It erodes the purchasing power of everyone holding cedi-denominated savings. The revaluation losses on the bank’s balance sheet are just the visible tip of a much larger iceberg of wealth destruction.

Austrian economists have argued for generations that you cannot maintain a currency's value through central bank interventions. Currency value reflects the supply and demand for that currency, and when a central bank has unlimited power to expand supply, depreciation becomes inevitable. The only sustainable way to maintain currency value is to limit the money supply through institutional constraints, ideally by making the currency redeemable for a commodity such as gold.

Where the Money Comes From: Understanding Central Bank Revenue

The Bank of Ghana generated GH₵22.28 billion in operating income during 2025. Let me break down these revenue sources and explain what they tell us about how central banks fund themselves.

The largest revenue source, at 43% of total income, was the sale of refined gold. The bank made GH₵9.57 billion from gold sales while losing GH₵9.05 billion on gold deals, netting just GH₵518 million from its entire gold trading operation. This is speculation, not sound reserve management.

The second-largest revenue source, at 38%, was interest income from holding government securities and foreign assets. But think about what this represents. The bank earns interest on government bonds, but those bonds are ultimately backed by Ghanaian taxpayers. The bank is essentially earning income from the government’s ability to tax. This is not value creation. It is a value transfer.

The “Other Operating Income” category, representing 10.6% of revenue, includes penalties charged to commercial banks for regulatory non-compliance. The central bank fines banks for failing to follow rules it itself created. This is the economics of the protection racket, dressed up in bureaucratic language.

From a free-market perspective, none of these revenue sources represents genuine wealth creation. The bank does not produce anything that people voluntarily purchase. It earns interest from government debt, profits from gold speculation, and collects fines from regulatory enforcement. All of this is ultimately funded by Ghanaian citizens through taxation, inflation, or the regulatory burden imposed on banks.

The Open Market Operations Scam: How Central Banks Create Problems to Solve

Let me explain Open Market Operations in plain language, because this is where central banking’s intellectual bankruptcy becomes most obvious.

When the Bank of Ghana says there is “excess liquidity” in the banking system, what they mean is that commercial banks have more reserves than the central bank thinks they should have. The bank then conducts OMO by selling securities to these commercial banks. The banks pay for these securities, which withdraw reserves from the banking system, reducing the money available for lending.

But here is the question no one asks: who created this “excess liquidity” in the first place? The central bank did so through previous monetary expansion. The bank expanded the money supply, discovered this was causing inflation, and now pays banks to absorb that excess money. The banks earn GH₵16.73 billion in interest for holding these securities, and this cost gets passed on to Ghanaian citizens.

The Austrian Business Cycle Theory explains why this entire process is destructive. When the central bank initially expands credit, it artificially lowers interest rates below their natural market level. Entrepreneurs, seeing these low rates, launch long-term investment projects that appear profitable at the subsidized rates. Capital flows into these projects, workers get hired, and resources get committed.

Then the bank realizes inflation is rising and reverses course, conducting OMO to contract credit. Interest rates rise, the long-term projects that looked profitable at low rates now look unprofitable at higher rates, and the economy enters recession as these malinvestments get liquidated. Workers lose jobs, businesses fail, and capital gets wasted.

The OMO costs on the bank’s balance sheet represent just a fraction of the total economic damage from this cycle. The real costs are the wasted resources, the destroyed businesses, the unemployed workers, and the reduced economic growth that results from this constant interference with market interest rates.

How Commercial Banks Borrow: The Central Bank as Lender of Last Resort

The financial statements reveal that the bank provides several lending facilities to commercial banks: overnight lending for temporary liquidity shortages, Emergency Liquidity Assistance for banks in distress, and repurchase agreements where banks temporarily sell securities to the central bank.

The bank had GH₵2.64 billion in impaired Emergency Liquidity Assistance loans as of December 2025. These are loans to failing banks that will likely never be repaid. The central bank, acting as lender of last resort, props up insolvent institutions that should be allowed to fail.

This creates the classic moral hazard problem. Banks know that if they take excessive risks and fail, the central bank will bail them out. This encourages precisely the kind of reckless behavior that creates financial crises. If banks faced the real prospect of failure without government bailouts, they would manage risk more carefully. But under the current system, profits are private while losses are socialized through central bank rescues.

The Austrian solution is simple: let failing banks fail. Yes, this would be temporarily painful for depositors and creditors of those banks. But it would also teach everyone a valuable lesson about risk, restore market discipline, and prevent the buildup of systemic fragility that central bank bailouts create.

What Went Wrong: The Fatal Conceit of Monetary Central Planning

The Bank of Ghana’s losses stem from attempting the impossible: centrally planning a nation’s monetary system. Let me explain the specific failures and what they reveal about central banking generally.

The bank identifies “high OMO costs” as a problem, explaining that maintaining low inflation required “aggressive monetary tightening with high policy rates.” But this framing assumes that the bank’s inflation target is correct, that monetary tightening is the appropriate tool, and that the bank can successfully calibrate this tightening to achieve the desired outcomes. All three assumptions are false.

There is no scientifically correct rate of inflation. The bank’s target of 6-10% inflation represents a policy choice, not an economic necessity. From an Austrian perspective, any inflation represents monetary debasement that redistributes wealth from savers to borrowers, from wage earners to asset owners, from the politically weak to the politically connected. The “optimal” inflation rate is zero or even slightly negative, allowing prices to fall as productivity increases, making goods and services more affordable over time.

The bank’s “gold trading losses” reveal the hubris of central planners who think they can successfully speculate in commodity markets. The losses on gold deals exceeded GH₵9 billion because the bank tried to time the market, buying gold to diversify reserves and then selling when prices moved against them. But if professional traders with their own capital at risk cannot consistently time commodity markets, why would we expect central bank bureaucrats to do better?

The “Domestic Debt Restructuring” that impaired the bank’s securities portfolio was itself a consequence of government fiscal irresponsibility enabled by central bank monetary expansion. When governments can borrow easily because the central bank keeps interest rates artificially low, they accumulate unsustainable debts. The eventual restructuring then falls on creditors, including the central bank itself. This is the endgame of the monetary-fiscal policy coordination that Austrians have warned against for decades.

Policy Solvency: Rearranging Deck Chairs on the Titanic

The bank celebrates achieving “policy solvency” in 2025, with operating income exceeding OMO costs by GH₵5.50 billion, up from just GH₵794 million in 2024. Here is their policy solvency table:

This is presented as good news, evidence that the bank can cover its monetary policy costs from operating income. But look at what made this possible: GH₵9.57 billion from selling gold. Strip out that one-time commodity sale, and the bank would still be policy insolvent. This is not a sustainable improvement. This is accounting manipulation.

The concept of “policy solvency” itself reveals the intellectual bankruptcy of modern central banking. In what other context would we celebrate an institution that loses GH₵15.63 billion in a year but claims solvency because one particular subset of revenues exceeds one particular subset of expenses? The bank is technically insolvent with negative equity, requires a multi-year government bailout, and yet declares itself “policy solvent” based on cherry-picked numbers.

From a libertarian perspective, the entire framework is absurd. A genuinely solvent institution does not require government recapitalization. A genuinely sustainable institution does not need to redefine solvency to exclude most of its losses. The Bank of Ghana is intellectually and financially bankrupt, and no amount of creative accounting changes that reality.

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The Recapitalization Con: Making Taxpayers Pay for Central Bank Failures

The government has committed to a “phased recapitalization programme” from 2026 to 2032, transferring cash and instruments to restore the bank’s equity. The stated minimum capital will increase to GH₵1 billion under recent amendments to the Bank of Ghana Act.

Let me be clear about what this means: Ghanaian taxpayers will spend the next six years paying for the central bank’s mistakes. The bank made poor investments, lost money by speculating in gold, paid excessive interest on OMO, and now expects the public to absorb those losses through taxation or inflation.

This is a moral hazard at the sovereign level. When private companies fail, they go bankrupt, shareholders lose their investments, and management is replaced. When central banks fail, they get bailed out by governments, management stays in place, and the same policies continue. There is no accountability, no discipline, no consequences for failure.

The Austrian solution would be radically different: liquidate the insolvent central bank, sell its assets to cover what liabilities can be covered, and allow the remaining losses to fall on those who extended credit to the institution. Then establish a new monetary system based on sound money principles, ideally a commodity standard with no discretionary central bank.

But that would require admitting that central banking itself is the problem, not just the particular people running it. And that admission would threaten too many vested interests.

How Central Bank Losses Affect Ghanaian Economic Decisions

The GH₵15.63 billion loss is not just an accounting entry. It represents real economic damage that will profoundly affect every Ghanaian’s economic decisions. Let me explain the transmission mechanisms.

First, the recapitalization program means higher future taxes or inflation. The government must transfer resources to the central bank, and those resources must come from somewhere. If the government raises taxes to fund recapitalization, Ghanaians will have less income to spend and invest. If the government borrows to fund recapitalization, future taxpayers will bear the burden. If the central bank simply creates money to recapitalize itself, all cedi holders will suffer inflation.

This creates a disincentive to save and invest in Ghana. When citizens know that government policies will impose future costs on them, they rationally try to protect themselves. They might convert cedis to foreign currency, reducing demand for the cedi and causing further depreciation. They might reduce savings, since inflation erodes the real value of saved cedis. They might shift economic activity to the informal sector to avoid taxation. All of these responses are individually rational but collectively reduce economic growth.

Second, the OMO costs directly affect interest rates throughout the economy. When the central bank pays 16.73 billion cedis to sterilize excess liquidity, this sets a floor under interest rates. Commercial banks can earn substantial returns simply parking money in OMO securities, so they have little incentive to lend to productive businesses at lower rates. This starves the real economy of credit while enriching banks for essentially doing nothing.

Austrian capital theory explains why this is destructive. Economic growth requires saving and investment in capital goods. When interest rates are artificially elevated to conduct OMO, the cost of capital increases, making long-term investment projects unprofitable. Businesses that could have created jobs and generated wealth never get started because the OMO-distorted interest rates make financing too expensive.

Third, the currency depreciation reflected in those GH₵5.47 billion revaluation losses directly affects every Ghanaian’s purchasing power. When the cedi weakens, imports become more expensive. Fuel costs rise, affecting transportation costs, which feed into the prices of all goods. Food imports become costlier, directly reducing the living standards of poor Ghanaians who spend most of their income on food.

The depreciation also affects capital allocation. Entrepreneurs looking to invest face a dilemma: should they invest in cedi-denominated projects or try to earn foreign currency? The rational response to continuous currency depreciation is to seek foreign-currency earnings, which is why so many talented Ghanaians focus on export businesses or simply emigrate. This brain drain and capital flight reduce domestic productivity and growth.

Fourth, the gold trading losses reveal fundamental uncertainty about monetary policy. If the central bank cannot successfully manage its own gold portfolio, losing GH₵9.05 billion in the process, what confidence should Ghanaians have in the bank’s ability to manage the entire monetary system? This uncertainty increases the risk premium on all Ghanaian economic activity. Foreign investors demand higher returns to compensate for monetary policy risk. Domestic entrepreneurs hold back from long-term investments because they cannot predict future monetary conditions.

Austrian economics teaches us that economic calculation requires reasonably stable and predictable money. When entrepreneurs cannot reliably predict future price levels, currency values, or monetary policy, they cannot accurately calculate profits and losses. This makes rational economic planning impossible. Resources get misallocated, wealth gets destroyed, and living standards stagnate.

The Bottom Line: Central Banking Makes Ghanaians Poorer

The Bank of Ghana’s GH₵15.63 billion loss is not an aberration. It is the logical outcome of trying to centrally plan money. The bank tried to control inflation through OMO, but lost GH₵16.73 billion in the attempt. It tried to bolster its reserves through gold trading but lost GH₵9.05 billion in the process. It tried to manage foreign exchange and suffered GH₵5.47 billion in revaluation losses. Every intervention failed, but the solution, according to the bank’s management, is more intervention.

The Directors’ report assures us that improved macroeconomic conditions, government recapitalization, and better income from operations will restore the bank to health. But this is precisely the fatal conceit. The people who caused these losses think they can fix the problems by doing more of what caused them in the first place. More monetary policy, more OMO, more gold trading, more foreign exchange intervention. The only thing that will change is the scale of future losses.

Austrian economics offers a fundamentally different perspective. Money is not a tool for economic management. It is a medium of exchange that emerges from market processes and works best when left alone. Central banks cannot improve on market outcomes because they lack the knowledge, the incentives, and the mechanisms that guide market actors. Every intervention distorts price signals, misallocates resources, and makes society poorer.

The GH₵15.63 billion loss is not just the Bank of Ghana’s problem. It is Ghana’s problem. It will be paid for through higher taxes, higher inflation, lower economic growth, and reduced living standards. Every cedi that goes to recapitalizing the central bank is a cedi that cannot be invested in productive enterprise. Every hour that entrepreneurs spend navigating monetary policy uncertainty is an hour not spent creating value. Every bit of brain drain and capital flight caused by currency instability reduces Ghana’s long-term prosperity.

The solution is not better central banking. There is no central banking. Free markets in money, just like free markets in everything else. Sound commodity money rather than a depreciating fiat currency. Private banking discipline, rather than government bailouts. Economic freedom instead of monetary central planning.

Will Ghana adopt these reforms? Almost certainly not. The vested interests are too powerful, the intellectual establishment too committed to central planning, the public too conditioned to accept monetary manipulation as normal and necessary. The Bank of Ghana will be recapitalized; the same policies will continue; and future losses will accumulate until the next crisis forces another restructuring.

But for those who understand Austrian economics, the lesson is clear: you cannot plan prosperity into existence. You cannot manipulate your way to sound money. You cannot substitute bureaucratic control for market discipline. The Bank of Ghana’s GH₵15.63 billion loss is the price of this delusion, and Ghanaians will continue paying that price until they embrace the only solution that actually works: economic freedom and sound money.

I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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Autonomous AI agents are beginning to appear in Ghanaian markets, not just as tools but as active economic participants. Banks and fintechs now tout “touchless operations,” with software agents executing credit scoring, lending approvals, and procurement without a human ever looking at the transaction. Crypto platforms market AI‑driven trading to Ghanaian users, with bots holding wallets, rebalancing portfolios, and acting on predictive models around the clock.

At the launch of AI Africa Labs in Accra, the Minister for Communication, Digital Technology, and Innovation framed this as a key pillar of Ghana’s bid to become an AI hub. The praise for speed, consistency, and “24‑Hour Economy” automation is not wrong. It is also missing something crucial. When both sides of a transaction are algorithms optimizing pre‑set objectives, the Ghanaian market stops doing the one thing that justifies its existence. It stops discovering genuine economic value.

Prices Are Discoveries, Not Coordinates

A price is not just a figure on a BoG dashboard or a quote on a trading app. In Friedrich Hayek’s terms, it is a compressed signal that encodes relative scarcity and value judgments across a decentralised economy, synthesising millions of individual experiences, constraints, and trade‑offs into information legible to strangers. In his classic essay “The Use of Knowledge in Society,” Hayek argued that the central economic problem is the use of dispersed, tacit, context‑bound knowledge that no planner can collect. Only the price system can aggregate and transmit this knowledge without any single person understanding it all.

The key thing to grasp is that prices do not simply transmit information that already exists. They create new information in the act of exchange. The trotro passenger who pays a higher fare to avoid waiting in the sun reveals something about her preferences and time constraints that no model could have fully extracted beforehand. The young Ghanaian who chooses a small, reliable local brand over a glossier foreign one at a slightly higher price is revealing a judgment about trust and risk, not just cost.

Much of this knowledge is tacit and non‑quantifiable, discovered only when human beings confront real trade‑offs in real time. Prices, in this sense, are epistemic events. Remove the human actors who generate them, and you do not get the same market running faster. You get a different and diminished institution.

The Complete‑Information Trap

When an AI procurement agent in a Ghanaian telco negotiates with an AI sales agent from a software vendor, each comes to the table with a utility function. The buyer’s function encodes budget, service‑level targets, and risk preferences; the seller’s encodes margins, capacity, and strategic priorities.

The algorithms iterate until they converge on a price that satisfies both objective functions. A number emerges, and a contract is signed. But nothing is discovered that was not already implicit in the objectives the programmers set. The “negotiation” has solved a coordination problem inside a pre‑defined parameter space.

Game theorists distinguish between complete‑information games, where all payoffs and strategies are known, and equilibria are computable, and games of genuine uncertainty, where payoffs are partially constituted by the play of the game itself. Markets are valuable precisely because they are the latter. The Ghanaian entrepreneur who brings shea‑butter products online for the first time does not know what they are worth to customers; neither do the customers.

The price that emerges is a discovery, not a calculation. Israel Kirzner called the ability to notice profit opportunities that do not yet exist as recognised objects “entrepreneurial alertness,” and argued that it is the engine of market progress. That alertness cannot be encoded as a fixed objective function. Autonomous agents, however sophisticated, are structurally incapable of it.

Goodhart’s Law in the Digital Ghana

There is a second pathology that emerges when AI agents dominate transactions: the incentive to manipulate your counterpart’s objective function rather than compete on actual value. If a large Ghanaian bank’s credit algorithm ranks borrowers by a composite score of past repayment, social media activity, and mobile money patterns, the optimal strategy for a would‑be borrower is not necessarily to become more creditworthy. It is to game the score. This is Goodhart’s Law at market scale: when a measure becomes a target, it ceases to be a good measure.

Human loan officers, procurement managers, and advertisers eventually notice when the metrics they rely on are gamed, and they adjust accordingly. AI agents with fixed or slow‑moving objective functions create stable exploit surfaces. Fraudsters are already using AI to generate synthetic identities, deepfake voice notes, and coordinated bot behaviour that satisfies automated checks.

A global Experian forecast has warned that 2026 will be a tipping point for AI‑enabled fraud, particularly as consumers increasingly deploy AI shopping agents that merchants struggle to distinguish from malicious bots. The logic generalises: in any Ghanaian market where both the buyer and seller rely on algorithmic metrics, strategies that game those metrics will outperform strategies that improve underlying quality. As gaming proliferates, the metrics decay as proxies for real value. Yet the AI evaluators keep using them. The price signals, in cedis or clicks, drift away from genuine human preferences.

The Evidence Already in Front of Us

This is not science fiction. Digital advertising is already a global example of what happens when algorithmic buyers meet algorithmic sellers at scale, with human attention largely out of the loop. Global research now estimates that 20 to 30 per cent of all digital ad spend is eaten by fraud—bots and click farms satisfying algorithmic targeting criteria instead of reaching real people. Bad bot traffic accounts for well over a third of internet requests, and much of the rest is designed to please ranking algorithms rather than inform or delight human readers.

Ghana is not exempt from this pattern. Local media houses have quietly acknowledged pressure to produce content optimised for algorithmic recommendations rather than Ghanaian readers. Businesses running online ads complain that they pay for impressions and clicks that do not translate into real visits or sales, suspecting bot activity but lacking tools to prove it.

When a Ghanaian SME’s marketing budget is drained on fake traffic that satisfies an ad platform’s machine‑learned criteria, the “price” of attention in that market is no longer a meaningful signal of what real Ghanaians want. It is a number generated by machines talking to machines.

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Efficiency Is the Wrong Defense

Mainstream defenses of markets in Ghana and elsewhere often focus on efficiency: markets are said to allocate resources efficiently, and so we should preserve them. That defense plays directly into the claim that powerful algorithms, given enough data and authority, can allocate better than messy human processes. It becomes harder to refute as AI tools improve.

But efficiency was never the deepest reason Hayek and the Austrian tradition defended markets. The true insight is that markets generate information that cannot exist before the market process itself unfolds. They are discovery procedures, not just allocation mechanisms. An “agentic” economy, in which Ghanaian firms and consumers outsource most decisions to learning systems that optimise pre‑set goals, is, in this sense, closer to central planning than to a genuine market order, even if it appears decentralised.

The aims are set by a small group of designers, regulators, or executives, much like a planning committee, and then executed through interacting algorithms. The outward form of exchange remains. The inner substance of discovery does not.

What Must Be Done in Ghana

For Ghana, aiming to become an AI hub, the lesson is not to slam the brakes on automation. It is to recognise that human‑in‑the‑loop approval for consequential exchanges is not bureaucratic friction to be eliminated, but an epistemic infrastructure that keeps markets honest.

When a Ghanaian procurement officer reviews an AI recommendation, she brings to bear tacit knowledge of local suppliers, reputations, and context that no model fully captures. When a loan committee overrides a credit score to back a new kind of business in Accra, Tamale, or Hohoe, they are exercising entrepreneurial judgment, not inefficiency.

Regulators must also adapt. As AI‑driven trading, lending, and procurement tools spread through Ghana’s fintech ecosystem, antitrust and consumer‑protection frameworks must look not only for explicit collusion or fraud but also for emergent patterns in which algorithms produce supra‑competitive outcomes or systematically misallocate resources without any human conspiracy.

The Bank of Ghana’s warnings about unauthorised virtual asset schemes show an awareness that automation can scale old scams into new territories. That awareness needs to extend to subtler harms, such as markets where bots trade mostly with bots while human investors bear the risk.

Above all, Ghanaian economists, entrepreneurs, and policymakers must resist the temptation to treat efficiency as the terminal value in market design. Efficiency is a means. Discovery is the end. A fully automated procurement system that buys the wrong things from the wrong people more quickly is not progress. A digital advertising market that routes cedis to bots instead of Ghanaian eyes is not modernisation. A credit system that optimises default probabilities while missing new kinds of entrepreneurs is not inclusive.

The Hayekian case for markets in Ghana was never a case for handing over economic life to opaque models. It was a case for human beings. For the irreplaceable contribution of traders in Kejetia, Makola, coders in Osu, farmers in Techiman, and nurses in Sunyani, each acting on local, tacit, personally discovered knowledge that no objective function can fully encode.

As AI agents proliferate under banners like Digital Ghana and AiAfrica Labs, the question is not whether they are fast or impressive. It is whether they preserve, or quietly extinguish, the one property that made markets worth defending in the first place: the capacity to tell us things about ourselves and our world that we did not know before.

I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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On any given Saturday in Accra, if you sit long enough at a friend’s engagement or wedding reception, you will hear the same quiet joke repeated around the tables. People point at the couple and say, “As for them, they have tried,” followed quickly by, “In this economy, marriage is not easy.” The laughter is real, but so is the nervous truth underneath it. They cut to the heart of what it means to become an adult in Ghana today.

A few months ago, I watched a film about relationships that got my attention with its focus on young people, the marriage market, and the cost of growing up. I was skeptical. But as the story unfolded, it captured with surprising accuracy what younger millennials and Ghana’s Gen Z are feeling. It showed a world where love and commitment are present, but the economic ground under people’s feet keeps shifting, making every step toward marriage feel dangerous.

It put a question on the screen that sociologist Andrew Cherlin has asked for years: Is marriage still the cornerstone of adult life, or has it become the capstone? In Ghana today, we see the same tension. Traditionally, marriage was the starting point of adulthood: you marry, you struggle together, you build a life. Now, especially in urban Ghana, marriage often comes only after a long list of milestones have been checked off: degree, stable job, rented apartment away from family house, maybe some land or even a small building project underway. Marriage has drifted from foundation to finishing touch.

This shift is not a minor cultural detail. It is a civilizational question. Societies built on lifelong monogamous fidelity, where family is the central institution, can be slowly replaced by looser arrangements: serial relationships, informal polygamy, and households centered more on the state than on two committed parents. You can see hints of this already, in rising divorce rates, in young people who openly say they will never marry, and in households that rely more on government programs and remittances than on a present, responsible spouse. The warning is subtle but serious: if we treat marriage as an optional luxury, something only for the rich and fully “settled,” we should not be surprised if the institution weakens.

The Marriage Market in Accra and Kumasi

If you want to see this tension in Ghanaian form, you do not need a New York rom-com. Just look at the marriage prospects of two young men. One is Kojo, a manager at a bank in Accra. He drives a small SUV, rents a two-bedroom at East Legon Hills, has some savings, and sometimes posts pictures from occasional trips abroad. The other is Kofi, a talented photographer and content creator, hustling gigs in Adum, living in a compound house, and praying that the next client pays on time. Both are hardworking. Both may love God, family, and country. Yet when it comes to the marriage market, Kojo is the “unicorn,” and Kofi is quietly told, “Let us wait and see.”

To the trained eye of the economist, this is not merely about taste or “gold digging.” It is exactly what we would expect when inflation, unstable money, and high cost of living distort incentives. Data across many countries, including Ghana, show that marriage rates are higher among men with secure incomes and lower among those facing unemployment or precarious work. In Ghana, where youth unemployment and underemployment remain stubbornly high, especially among graduates, this reality is not an insult. It is a daily frustration. Many young men will tell you plainly: “It is not that I do not want to marry; it is that I cannot afford to marry.”

If we were to dramatize this, we might picture a break-up scene not in Manhattan traffic but on the Spintex Road or around Circle. A young couple sits in traffic on a Friday evening, trying to reach a restaurant at East Legon for an anniversary dinner. The man is frustrated about the cost of fuel, the high price of food, and the non-refundable reservation they are running late for. The woman finally steps out of the car in anger after another complaint about “waste of money.” Later, in tears, he admits, “It is not that I do not love you. It is that my salary cannot carry this life.” And she, torn between affection and anxiety, thinks to herself, “If we marry with this level of struggle, will I not begin to resent him?” It is not a lack of love. It is that they are broke.

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Inflation Culture, Marriage, and the Cedi

How did we reach a point where, despite genuine affection, many young Ghanaian people quietly postpone or abandon hopes of marriage and family? Are they simply lazy, shallow, or consumed by social media fantasies? I think not. Rather, they are among the losers in what I will call Ghana’s inflation culture. By this, I mean the set of habits, expectations, and institutions that emerge when a country lives for decades under chronic currency depreciation, rising living costs, and policies that quietly erode the value of savings.

Inflation in Ghana is not a theory. In recent years, official inflation rates have climbed above 50 percent before easing back into single digits, even as many families still face sharp increases in food, rent, and school fees. The cedi has repeatedly lost value against major currencies, making imports, from fuel to medicine, more expensive. Ghana is now ranked among the more expensive countries to live in Africa, despite falling headline inflation. For a young person trying to plan for the next decade, let alone a lifetime, this environment breeds instability.

Economist Guido Hülsmann has argued that when a state controls money and pursues inflationary policies, it does more than raise prices. It creates new “inflation-specific institutions and habits” that shape how people live. In Ghana, we can see this clearly. Parents rush to buy land as a “hedge,” driving prices beyond their children's reach. Young people obsess over foreign currency as a store of value. Everyone assumes that school fees, rent, and food will always go up. Under such conditions, is it any wonder that marriage and children feel like dangerous financial experiments?

Three Habits of Ghana’s Inflation Culture

To make this practical, let us examine three habits that inflation culture encourages among Ghanaian Gen Z and propose countercultural responses.

Economic Dependency and Prolonged Adolescence

Economic dependency in Ghana takes many forms, but one of the most striking is prolonged adolescence. Important adult milestones are delayed: leaving home, starting a family, building a small house, and even taking responsibility for younger siblings. Some of this delay is reasonable; education lasts longer, and the modern economy is more complex. But inflation and policy choices have distorted this process.

Free SHS, student loans, and heavily politicized public-sector jobs all have good intentions. They reduce immediate costs for families and promise mobility for the poor. Yet, they also make it easier to stay dependent on parents, the state, or political patrons well into one’s late twenties and early thirties. In Europe, highly subsidized education keeps students in school and out of full adulthood into their thirties. In our context, cheap or low-cost education and the hope of “government work” can have a similar effect. The bill arrives later in the form of taxes, inflation, or both.

Ghana’s modest welfare programs, such as Free SHS, LEAP, and NHIS, have improved the lives of many vulnerable households and reduced some immediate suffering. But if expanded without discipline, such programs can create a mindset where the state is seen as the ultimate provider. In the worst case, women and children become more dependent on government transfers than on a present, responsible husband and father. Over time, this can quietly encourage family structures where the welfare state plays the role of absent spouse. We see early signs of this in the rise of female-headed households that rely heavily on politicized income.

Financial Speculation and the Quick-Money Temptation

In an inflationary environment, saving in cash feels like a losing game. The cedi you set aside today buys less next year. This reality pushes many young Ghanaians toward financial speculation. From sports betting to “investment” apps promising unrealistic returns, from risky land deals to get-rich-quick schemes, the temptation is everywhere. Social media amplifies stories of overnight success, rarely showing the quieter, more common stories of ruin.

An Austrian economist does not deny that saving is hard when money loses value. But he warns that abandoning saving altogether is even more dangerous. In Ghana, this means resisting the urge to throw all spare income into speculative bets. It means learning to live below one’s means, building a buffer of real savings in the most resilient forms available, and making investments based on real value creation rather than hype. It also means pushing back, intellectually and politically, against policies that create artificial booms and currency crashes, which punish the prudent and reward the connected.

Cynicism, Distrust, and the Low-Trust Society

Finally, inflation culture feeds a deep cynicism. When people have watched the cedi crash, seen their parents’ savings evaporate, and observed corruption go unpunished, it is easy to adopt a permanently negative view of the future. Many young Ghanaians reflexively mock the idea of staying in Ghana, of marriage with children, or of long-term plans that depend on anything other than personal hustle and foreign passports. In the dating market, this shows up as suspicion: everyone assumes the other person may be there for money, opportunity, or escape, not for love.

To be countercultural here is to cultivate rational optimism, not blind faith. That means building small circles of trust where people can experience honest dealing and mutual support: business networks, church groups, professional associations, study circles, and friendship communities committed to truth-telling and mutual aid. It also means deliberately limiting exposure to “doom porn” that fills timelines with worst-case headlines while ignoring examples of quiet success. If we are always swallowing the black pill, as the saying goes, we will not have the mental energy to imagine, let alone build, a better future.

Policy and Personal Cures

What, then, can be done?

At the personal level, I urge young Ghanaians to cultivate courageous independence early. Take small but wise risks in your youth. If you are a business student or an aspiring entrepreneur, start something modest now, not to prove the doomers wrong, but to learn how to create value for your neighbors. If you are in a professional path, build skills and relationships that are not entirely dependent on government postings or party connections. Ask yourself, seriously: What risks am I willing to take today to become the kind of person who can sustain a household tomorrow?

Resist reckless financial speculation. Commit instead to sound financial practices. Live below your means. Seek out mentors who understand both Ghana’s realities and the basic truths of sound economics. Some of the older generation in our churches, families, and professional circles have quietly navigated inflation culture with integrity. Learn from them. At the policy level, support measures that restrain reckless government borrowing and central bank monetization of deficits. These reforms are not abstract. They directly affect whether the cedi you earn today will hold any value when you are ready to marry or buy land.

On the cultural front, build communities of hope and trust. Use the networking tools at your disposal not only to share jokes and trends but to encourage one another toward marriage, family, and long-term thinking. Push back, gently but firmly, against narratives that treat childlessness as a virtue, that mock early marriage as foolish, or that present permanent adolescence as the norm. Raise your voice in favor of policies that make it easier, not harder, for young couples to afford housing, education, and healthcare without becoming wards of the state.

Finally, Ghana’s Young Millennials and Gen Z face real economic challenges. Yet, armed with a clear understanding of how inflation distorts culture, and with a renewed commitment to family, freedom, and sound money, they are not condemned to repeat the mistakes of older generations. They can see through the smoke and mirrors, refuse to be tamed by inflation culture, and help make tomorrow’s Ghana freer, more peaceful, and more prosperous.

I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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As anyone who has followed the news knows by now, the Strait of Hormuz is a major energy and fertilizer chokepoint, and Iran has done exactly what it repeatedly warned it would do if attacked: block ships tied to its enemies from passing through. No Western navy has managed to reverse that basic fact.

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Most of the discussion about this war’s economic impact on Africa has focused on the fuel pump. Headlines highlight the higher prices drivers now face in Accra, Lagos, Nairobi, and Johannesburg. That is understandable.

Petrol and diesel are among the earliest and most visible costs that consumers see, and they hit immediately. But this focus on pain at the pump badly understates the depth of the damage and feeds a dangerous illusion. It encourages the belief that, if a ceasefire holds and the war “ends” quickly, fuel prices will fall almost as fast as they rose and everything else will quietly normalize. It will not.

To understand why, we need to keep a few basic economic truths in view. The entire purpose of any economy, African or otherwise, is to produce goods and services that consumers value enough to pay for. All the factories, farms, trucks, ports, and power stations exist for that purpose. It is easy to see this in consumer goods.

A Nigerian farmer makes palm oil because he expects consumers to value it enough to pay more than the total cost of production. A Kenyan poultry farmer raises chickens because she believes the market will pay her enough to cover her feed, her time, and her capital.

But this is just as true, and more important, for the vast network of production that is not directly tied to finished goods. African businesses produce or import capital goods such as tractors, tires, cement, plastic packaging, glass bottles, fertilizer components, and aluminum sheets to meet downstream firms' demand.

Those firms may be making everything from bottled water and bread bags to roofing sheets and IV drips. The consumer only sees the last step in this long chain, but each step depends on many others.

Consider a single loaf of bread sold in a market in Kumasi or Kampala. It requires imported fertilizer to grow the wheat, diesel to run the tractors and transport the grain, polyethylene or paper for the packaging, aluminum trays or steel pans for the ovens, LPG or fuel to bake the bread, and then more fuel to bring it into town.

Every loaf of bread in Kumasi or Kampala hides a chain of global inputs that runs straight through the Strait of Hormuz

Behind each of these stages stand higher-order goods: urea and phosphates for fertilizer, sulfur for processing, natural gas as feedstock, petrochemical resins for plastic, and metals like aluminum and steel for machinery. Economists call these early-stage inputs “higher order goods.” They are far from the consumer, but they are essential.

Two facts about higher-order goods matter especially for Africa right now. First, most of them are non-specific. They are used across many production lines simultaneously. Sulfur is used for refining oil, producing fertilizer, and processing minerals like copper and zinc. Polyethylene is used for packaging food, making pipes, producing household containers, manufacturing medical equipment, and much more.

When the supply of any such good is disrupted, the effects ripple through dozens of industries, not just one. Second, production and delivery of these goods take time. The fertilizer that African farmers need for this planting season comes from gas drilled months ago, processed in Gulf plants, shipped through the Strait of Hormuz, and then brought by sea to African ports. If any stage is damaged, the shortage hits months later at the farm gate.

All of this matters because the war with Iran is primarily disrupting higher-order goods, and it goes far beyond crude oil. About one-third of the world’s fertilizer trade passes through the Strait of Hormuz, including urea, ammonia, and phosphates produced in Qatar, Saudi Arabia, Oman, and Bahrain. More than 40 percent of global polyethylene exports come from the Middle East, much of it passing through the Strait of Hormuz.

Around 8 percent of global aluminum passes through the region, and nearly a third of the world’s helium supply comes from Qatar, a key supplier to MRI makers and semiconductor producers. These are the quiet workhorses of modern production, and Africa relies heavily on imported supplies.

The fertilizer channel alone is enough to explain why this war is already a time bomb for African food security. Sub-Saharan Africa imports over 90 percent of its fertilizer, much of it directly or indirectly linked to Gulf producers. When shipments through Hormuz are disrupted by mines, missiles, or prohibitive insurance costs, the supply of urea, ammonia, and sulfur-based inputs shrinks.

Producers in Morocco, Nigeria, and elsewhere on the continent can fill some of the gap, but not nearly all, and not at old prices. As fertilizer becomes scarce and expensive, farmers must cut application rates, switch to less nutrient-hungry crops, or reduce planted area altogether.

This has a clear chain of consequences. Less fertilizer used during planting means lower yields at harvest. Lower yields mean less maize in Ghana, less wheat and teff in Ethiopia, less rice in Senegal, and less cassava and sorghum in Nigeria. That, in turn, means less animal feed for poultry and livestock, fewer calories available in societies where food already eats up a large share of household income, and higher prices in markets already under strain from past shocks. For middle-class urban Africans, the shock will be felt as steeper grocery bills. For the poor, it will be felt as outright hunger and malnutrition.

The same logic is playing out in other sectors. Polyethylene prices have jumped sharply since February as Middle Eastern exports have been rerouted, delayed, or halted. That means higher costs for every plastic bag, sachet, container, pipe, and bottle used in African supply chains. Aluminum prices have surged by around 10 percent, affecting everything from beverage cans to construction materials and solar panel frames.

Helium import prices have jumped by 50 percent, threatening the availability and affordability of MRI services that African health systems are still struggling to scale. Each of these is a higher-order good whose shortage today becomes a consumer shortage tomorrow.

It is crucial to remember that the rising prices we see now are not the core problem. They are symptoms of the underlying fact that there is now less physical supply of key inputs than there was six weeks ago. When a Ghanaian importer of plastic packaging faces a 37 percent rise in polyethylene prices, that is not just a story about a greedy supplier or a volatile market.

It is the price system telling the truth about real scarcity created by bombed infrastructure, blocked shipping lanes, and war risk insurance that has priced many ships out of the Gulf entirely. Denouncing price increases does not bring back the destroyed gas trains or unsink the damaged tankers.

Unlike gasoline prices, which move quickly and visibly and are easily tied to headline events, the fuller effects of this war on Africa’s economic life will take time to show up and will be less obviously linked to the conflict in most people’s minds. Shortages of packaging will make it harder to source bottles and containers in Nigerian and Kenyan factories. Scarcity of petrochemical feedstocks and higher fuel costs will raise operating expenses for transport firms and logistics networks.

Construction projects will be delayed or canceled because asphalt, plastics, and aluminum inputs are harder to obtain at viable prices. Hospital administrators will quietly notice that ordering new MRI machines has become far more expensive or subject to long wait times. Consumers will see the consequences, but very few will connect them back to Hormuz.

This disconnect matters because it encourages people to blame the wrong targets and demand the wrong solutions. When Coke becomes more expensive in Accra or Nairobi because aluminum can prices have risen and glass bottle production is constrained by higher energy and input costs, the average consumer will not think of South Pars or Ras Laffan.

When IV bags and syringes cost more, families will not think of fertilizer shipments stuck east of Hormuz. The temptation will be to blame “middlemen,” “hoarders,” or “foreign companies” and to call for price controls, subsidies, or export bans. Each of those responses might feel satisfying in the short term. Each will worsen the underlying supply problem if pursued aggressively.

From an Austrian perspective, the tragedy here is not only the war’s destruction of capital and disruption of higher-order goods, though that is immense. It is also the way those disruptions are likely to be used to expand state control over African economies in the name of “managing” the crisis.

Governments facing angry populations and skyrocketing import bills will be tempted to fix prices, ration fuel, subsidize fertilizers and food, and use central banks to ease the fiscal pain through money creation. Each such step deepens what Mises called the interventionist spiral. The first intervention creates new distortions, prompting further interventions, until the economy becomes a maze of controls in which rational calculation becomes impossible.

The alternative is painful, honest, and far more effective. It is to let the price system do its work, to allow higher prices for scarcer goods to signal the real situation, and to focus policy on removing barriers that prevent supply from responding and people from adapting. That means no price ceilings on fuel that cause queues and shortages.

No blanket fertilizer subsidies that are financed through opaque borrowing and central bank monetization. No export bans that trap farmers in low prices at precisely the moment the world is willing to pay more for their crops. Instead, governments should clear bottlenecks at ports, reduce customs delays, allow private traders and importers to seek alternative suppliers, and protect property rights so that entrepreneurs can invest in new capacity without fear of expropriation.

Targeted support for the most vulnerable is compatible with this approach, but it must be transparent, temporary, and funded from real resources rather than inflation. Cash transfers to poor households, financed from existing budgets or reallocated spending, are vastly preferable to blunt price controls that distort signals for everyone.

Policies that encourage local fertilizer blending, the use of alternative inputs, and efficient water management can mitigate some of the damage, but only if they are not smothered by a web of inconsistent regulations and political favoritism. In every case, the guiding principle should be simple: do not interfere with the information that prices are sending about real scarcity, and do not try to hide the true costs of war from the people who must adjust their plans in response.

The war in Iran has already guaranteed significant economic pain for Africa. That pain is not limited to high fuel prices. It is embedded in the disrupted flows of fertilizer, plastics, metals, and gases that underpin the continent’s production structure. The shortages of higher-order goods today mean fewer consumer goods and more fragile livelihoods tomorrow, even if tankers resume moving more freely through the Strait of Hormuz.

That reality cannot be wished away. The only real choice for African societies is whether to face it honestly, letting prices relay the truth and freeing markets to respond, or to hide it temporarily behind controls and subsidies that will only deepen the damage when the bill finally comes due.

I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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Africa, which imports most of its refined petroleum, fertilizer, and industrial energy, now faces a shock it did not cause and cannot negotiate away. Ghana raised petrol prices by roughly 15 percent and diesel by 19 percent in the April pricing window; Malawi’s petrol rose 34 percent; Mauritius is running low on reserves after a scheduled shipment failed to arrive; Uganda and Kenya are urging citizens not to panic-buy.

The pattern unfolding across African governments is familiar to anyone who has read Mises or Hayek. South Africa announced a temporary reduction in fuel levies, framing it as fiscal relief while assuring the public that supply is adequate. Ghana’s president suggested lowering fuel margins and reviewing a newly introduced petroleum levy. Ethiopia introduced fuel subsidies to shield consumers from pump price increases.

The Gambia absorbs the difference between market and regulated prices through a state mechanism that keeps retail prices below global market levels. Each response, however well-intentioned, follows classic interventionist logic: the state creates a gap between real scarcity and reported prices, then fills that gap through taxation, borrowing, or money creation, transferring the shock’s cost from the moment of impact to later in a more disguised and destructive form.

This is not a minor accounting problem. It is a question of whether African economies will allow the price signal to do its only job: communicate the truth of sudden scarcity to millions of producers, entrepreneurs, and consumers simultaneously, or suppress that signal and create the illusion that scarcity has been managed. When the Nigerian farmer cannot obtain fertilizer because the Hormuz shipping route is disrupted, his production costs rise, whether the state admits it or not. When the Kenyan transport firm buys diesel at a regulated price secretly subsidized by the government, the cost has not vanished; it has shifted onto future taxpayers, borrowers, and holders of a currency that will be quietly devalued to cover the difference. The subsidy does not remove the shock. It hides it from those who need to respond most urgently.

Austrian praxeology, starting from Mises’s axiom that humans act purposefully toward chosen ends, tells us that the most important thing a price can do during capital destruction is tell the truth. Energy is suddenly much scarcer across the continent and globe. That truth, reaching households, firms, farmers, and entrepreneurs without political dilution, coordinates a response no planning bureau can replicate.

Higher pump prices in Accra prompt trotro drivers to reduce empty trips. Higher diesel prices in Kampala tell logistics firms to consolidate loads and invest in more fuel-efficient vehicles. Higher fertilizer costs in Zambia tell farmers to seek alternatives, use fertilizer more precisely, or pressure governments to fast-track local fertilizer production. Each decision is made without a committee, a subsidy form, or a government office staying open late. The price acts as the committee, subsidy form, and government office simultaneously and in real time across every household and business on the continent.

This is not a call for indifference to the pain of ordinary families. The hardship is real, immediate, and deeply unequal. The market woman in Lagos, the smallholder in Malawi, and the motorcycle taxi rider in Nairobi all absorb a price shock they did not cause and cannot bear without serious strain. The Austrian argument is not that the poor should suffer in silence. It is that solutions like fuel levy cuts, subsidies, and price reviews create an artificial floor below which market reality cannot be heard.

This delays supply responses that would end the shortage. When a fuel retailer in Kumasi cannot raise prices above a regulated ceiling, he has less reason to source aggressively, less reason to diversify supply routes, and every reason to quietly run out of stock and blame a distribution bottleneck. This outcome is worse than allowing prices to rise and targeting direct relief to the genuinely vulnerable, rather than spreading a blanket subsidy across all consumers, including those who can adjust.

The deeper trap Africa must avoid is the one the original article identifies precisely: the manufactured scarcity from war and capital destruction becomes a justification for expanding state control over economic life. Governments that impose fuel rationing, digital payment systems tied to energy allocations, or centralized distribution schemes in the name of crisis management are not solving the energy shortage. They use the shortage to expand administrative reach into areas previously governed by voluntary exchange.

Once a rationing infrastructure is built, it does not disappear when the crisis passes. It waits for the next emergency, which always arrives. The price signal, by contrast, needs no bureaucracy. It emerges from decentralized decisions of millions acting on their own knowledge, which is what Hayek meant when he described the price system as a mechanism for using knowledge no single mind can possess.

Africa also faces a specific financial trap due to the global energy shock. Central banks across the continent will face pressure to ease conditions and support growth by expanding credit and lowering policy rates, even as rising fuel and food prices would normally demand tighter money to protect purchasing power. The Bank of Ghana has already cut rates significantly over the past year as inflation fell from crisis levels. A renewed commodity shock could revive inflation just as credit conditions loosen.

If African central banks respond to energy-driven inflation by printing money or monetizing fiscal deficits from fuel subsidies, they will turn a painful but temporary external shock into a permanent devaluation of real wages and savings. The shock from Hormuz lasts as long as the war. The devaluation from inflationary finance lasts for years after the war ends.

The sound money prescription is straightforward, even if politically uncomfortable to enforce. African central banks should not allow fuel subsidy spending to be financed through monetary expansion. Governments that choose to shield consumers should do so through explicit, time-limited, fiscally transparent transfers funded by existing revenues, not by borrowing that will eventually be monetized. The fiscal cost should be visible in the budget so that citizens can judge whether the tradeoff is worth making and so that the government faces real pressure to end the subsidy when the crisis passes, rather than allowing temporary relief to calcify into a permanent structural drain.

There is also a positive case to be made from the Austrian perspective, not just the defensive one. Capital destruction of the scale now happening at South Pars, at Ras Laffan, and across Gulf shipping lanes will not be reversed in months. It may take three to five years to restore Qatari LNG production capacity alone. That is a structural, long-term tightening of global energy supply that will last well beyond whatever ceasefire or diplomatic arrangement eventually ends the shooting.

For African countries that have exploitable energy resources, whether that is Mozambique’s natural gas, Tanzania’s offshore reserves, South Africa’s coal, Nigeria’s oil, or the continent’s vast untapped solar and wind potential, this is a price signal of historic proportions telling private and public capital alike that African energy development is now far more economically viable than it was before February 2026. A continent that allows that signal to reach investors and entrepreneurs without strangling it in regulatory delays, state capture, and subsidized competition from imports will attract the capital flows and technical know-how needed to build genuine long-term energy independence.

The window for that response is open precisely because the price is screaming the truth. Entrepreneurs who receive that signal, who see that energy is scarce, that supply routes are unreliable, and that governments are desperate for alternatives, will act on it if they are allowed to do so. They will drill, build, connect, install, and distribute. They will do it faster and more efficiently than any state procurement process, and with private capital that does not burden future generations with debt.

What Africa’s governments owe their citizens in this moment is not a subsidy that hides the reality of scarcity. It is legal freedom, secure property rights, and stable money that allow entrepreneurs to invest in solving the problem rather than waiting for a minister to approve a tender.

Rothbard’s insight that war is the health of the state applies as directly to African governance as it does to Washington. Every energy crisis, every shortage, and every price spike is an opportunity for the state to expand its role in allocating scarce resources, and that expanded role never fully retreats when the crisis ends. The only durable defense against this pattern is a political culture that has internalized why free prices and sound money produce better outcomes than official plans, a culture that does not simply accept the next subsidy announcement as generosity but asks instead who will pay for it, when, and whether the hidden cost is really smaller than the visible benefit.

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Free prices, sound money, and secure property rights are not slogans suited only for peacetime prosperity. They are the tools that work best precisely when times are hardest.

The Africa that emerges from this energy crisis with stronger free-market institutions, more honest monetary policy, and a broader base of domestic energy production will be far better placed for the next shock than the Africa that emerged from the pandemic with more debt, more subsidies, and more dependence on political decisions made elsewhere.

Every energy crisis is an opportunity for the state to expand its role in allocating scarce resources, and that expanded role never fully retreats when the crisis ends.

The crisis was manufactured by a war Africa did not start. The response must be crafted by a continent that refuses to let manufactured scarcity serve as a pretext for manufactured control. Free prices, sound money, secure property rights, and voluntary exchange are not slogans suited only for peacetime prosperity. They are the tools that work best precisely when times are hardest, because they mobilize the intelligence and energy of every African household, every entrepreneur, and every investor without waiting for anyone in power to notice, approve, or commission a report.

I wish everyone a pleasant and productive day.

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Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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Two monetary and currency paradoxes have emerged as the war between the United States, Israel, and Iran rages across the Persian Gulf. The first paradox is that although the war is causing monetary disinflation, meaning slower growth or declines in the money supply or inflation in parts of the global system, consumer prices are rising sharply across Africa and much of the developing world. The second paradox is that both the US and Chinese currencies have gained ground. Still, for different reasons: the US dollar’s appreciation is driven by global demand for safety during conflict, while the renminbi’s strength stems from trade flows and capital controls, with varied consequences for Africa. For a continent that imports much of its refined fuel, fertilizer, and food, these paradoxes pose immediate, tangible challenges.

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The claim that Africa can “handle” the US, Israeli, and Iranian war overlooks the continent’s economic vulnerabilities. While Africa may seem distant from the conflict, it is closely linked through oil, shipping, fertilizer, currencies, and fragile budgets. Any war that increases global energy prices or disrupts the Strait of Hormuz quickly impacts African markets, leading to higher transport costs, higher food prices, and reduced purchasing power for already strained households.

Africa is not a single economy. While oil-exporting countries may benefit temporarily from increased revenues, most African nations are net importers of refined fuels and rely on food and fertilizer imports. As a result, a war-driven oil shock acts as a tax on the majority, offering only brief gains to a few.

Higher oil prices may boost export earnings in cities like Accra, Lagos, Luanda, and Algiers, but they also increase the cost of transporting goods, generating electricity, and operating businesses across the continent. For most households, this leads to tighter budgets and higher expenses.

This is the hidden cruelty of war funded by monetary power and empire. Leaders who start or prolong these wars rarely pay the cost up front. Instead, costs surface as inflation, shortages, and supply shocks that reach consumers after speeches fade. In Africa, with vulnerable currencies and strained finances, the shock grows. When Brent crude tops $100, African importers must pay the world price, pushing that burden to commuters, farmers, and shopkeepers.

A war may begin in the Gulf, but in Africa it ends at the fuel pump, the market stall, and the food basket.

Governments may continue spending during wartime, much as a family would with an overdrawn credit card. However, this does not make such spending sustainable. Many African states already face significant challenges, including high debt, weak revenues, and currency pressures. An external shock can force them to choose between absorbing the hardship and allowing living standards to decline or resorting to printing money, borrowing, and risking a deeper crisis. The first option is painful; the second is often catastrophic.

The war highlights African economies’ dependence on imported energy and foreign logistics. Disruptions in the Strait of Hormuz affect crude oil, gas, shipping insurance, and freight rates. Fertilizer prices, essential for African food production, also rise as many countries rely on imports to increase yields. As fertilizer becomes more expensive, farmers use less of it, resulting in smaller harvests and higher food prices. This directly connects the conflict in the Middle East to food security challenges in Africa.

The term “manageable geopolitical risks” is misleading. Manageable for whom? Not for the market vendor facing rising transport costs, the farmer unable to afford fertilizer, the manufacturer facing higher diesel costs, or the central bank struggling to control inflation and support a fragile currency. For African consumers, war results in a steady loss of purchasing power.

Policymakers often cite global uncertainty, rising oil prices, and imported inflation to justify subsidies, controls, emergency spending, and new debt. However, this approach turns temporary shocks into lasting distortions. The state may offer short-term relief, but it often finances this by devaluing currency or increasing debt. The immediate pain may subside briefly, but the long-term cost is paid through weaker currencies, higher prices, and diminished real savings.

If a government must print, borrow, or subsidize its way through every external shock, it is not building resilience. It is borrowing time.

Africa cannot ignore the consequences of this war. The continent is already under pressure from inflation caused by global monetary expansion, war financing, and energy disruptions. As major powers fund conflicts on credit, smaller economies bear the effects through higher fuel and food prices and currency devaluation. Africans are often told to “tighten their belts,” despite having already endured years of hardship.

The lesson is clear: to build greater resilience, Africa must reduce its dependence on imported fuel and fertilizer, as well as on external monetary systems. State spending cannot substitute for real wealth, and inflation merely shifts the burden of external shocks. War carries a cost. If taxpayers do not pay immediately, savers, workers, and consumers will pay later through diminished purchasing power. Africa has too often borne the consequences of others’ decisions and cannot afford another setback.

The next steps are not only diplomatic but also economic. Will African governments use this crisis to justify inflation and increased intervention, or will they recognize it as a warning that stable currency, affordable energy, and economic self-reliance are essential safeguards against the impact of foreign conflicts?

I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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One of the most cherished assumptions in Ghana’s Fourth Republic is that “the people” govern themselves through Parliament and the presidency. We are told that taxes, regulations, and new debts are legitimate because they are “approved by our representatives” in Accra. The message is simple: as long as you can vote every four years, you must accept whatever follows as your own choice.

This story comforts many. Yet it relies on a fragile belief that Ghanaian politicians genuinely represent those who put them in office. Before declaring government morally acceptable based on taxation with representation, we must ask if our claims of representation hold up to scrutiny. Both political theory and everyday practice in Ghana cast doubt here. The gap between citizen and ruler is not accidental. It is built into our system.

In private life, representation is clear. When you hire a lawyer or agent, that person must pursue your defined interests. You can fire him for betrayal. In Ghanaian politics, mechanisms work differently. Members of Parliament are not legally required to defend voters’ material interests. Citizens cannot recall them for voting against local preferences. Yet it is often said that when MPs approve new taxes or debt, this counts as the “consent” of the people. This stretches the agent‑principal idea beyond everyday practice.

To see the limitations of this idea of representation, we must face two hard truths. First, even if Ghanaian politicians genuinely want to represent all their constituents, the task is extremely difficult. They cannot know or reflect the views of hundreds of thousands of individuals in each constituency. Second, for many, the focus is shaped by party elites, financiers, and a narrow circle of delegates. Once these complexities are considered, the slogan “we are represented” becomes less clear.

The Impossibility of Representing “Ghanaians”

Let us be generous and assume some MPs sincerely wish to serve their people. Even then, a basic question arises: who exactly are “their people”? A typical Ghanaian constituency contains urban and rural dwellers, public servants, farmers, unemployed youth, pastors, traders, and professionals. Their economic, cultural, and moral interests differ. No single MP can honestly claim to embody all these competing preferences.

Research from larger democracies shows that the bigger and more diverse the constituency, the less likely it is that a politician’s ideology matches that of the average voter. For example, studies in the United States find senators and voters frequently differ, sometimes as much as if senators were randomly matched with states. The same may apply in Ghana, despite smaller constituencies; heterogeneity can make genuine representation difficult.

A 2024 Afrobarometer survey found that satisfaction with democracy has dropped by 29 percentage points since 2017, and only 16 percent of Ghanaians believe that MPs listen to ordinary people. If representation worked as advertised, we would expect citizens to feel heard and aligned with their legislators. Instead, many experience Parliament as distant, unresponsive, and often disconnected from their daily struggles. This suggests a deeper structural challenge rather than merely a communication issue.

Delegates or Trustees?

Many MPs see themselves as trustees, chosen to do what they believe is right, even when it conflicts with their voters’ wishes. In theory, this outlook may seem noble. In practice, personal ideology, party interest, and private benefit can become important considerations alongside the “will of the people.”

Evidence from other democracies helps us understand this mindset. One significant study found that when a legislator’s personal preferences differed from what he believed his district wanted, he voted with his district only 29 percent of the time. In most cases, he followed his own views. There is no reason to believe Ghana is entirely different. Interviews with Ghanaian MPs indicate that their main focus is often on “delegates,” “party people,” and “foot soldiers” rather than the broader mass of voters. When making decisions, MPs must balance personal convictions, party orders, and public opinion, with the outcome often reflecting these multiple influences.

This is not only speculation. Analysis of Ghanaian MPs suggests they devote much of their time and resources in their constituencies to party insiders who select candidates in primaries, rather than to ordinary voters.

An MP who fears losing a party primary more than losing the general election does not wake up thinking about ordinary voters.

In a political environment where over 60 percent of seats are strongholds of either the NPP or the NDC, MPs’ main career risk is losing their party ticket, not necessarily disappointing the broader public. They appear to act rationally, paying particular attention to those who strongly influence their political future, who are not always typical voters.

If we add campaign finance to this picture, the image becomes more complex. Recent research on party financing in Ghana indicates that corporate elites and wealthy individuals often fund parties and candidates in exchange for contracts, regulatory favors, or influence over key decisions. Many candidates borrow heavily to fund their campaigns and may seek to recover costs once in office. In such a setting, MPs may find themselves balancing the interests of ordinary citizens with those of sponsors when voting on mining leases, road contracts, or tax waivers. ​

When business sponsors and party financiers shape who gets to Parliament, representation quietly shifts from citizens to patrons.

The Myth of “Our” Parliament

Despite these realities, Ghanaians are told they live under a “representative democracy” and that Parliament is “our” Parliament. The language of ownership is powerful. It suggests that, when taxes go up, new loans are contracted, or controversial laws are passed, our representatives produce these outcomes.

This narrative can discourage deeper questioning about legitimacy: do these people actually speak for us in a meaningful sense? Scandals in Ghanaian politics may deepen public doubt. Payroll irregularities, procurement concerns, and reports of interference in high-profile trials lead citizens to perceive patterns of self-interest rather than consistent representation.

Transparency International’s Corruption Perception Index shows Ghana scoring 42 out of 100 in 2024, down from 43 the previous year, reflecting persistent challenges despite reform efforts. For some, holding elections every four years may not narrow the gap between rulers and the ruled as expected.

The Afrobarometer findings are even more telling. Satisfaction with democracy has fallen sharply, and very few citizens feel that MPs listen to them. In a genuinely representative system, one would expect a strong link between voter demands and parliamentary action.

Instead, voters complain that campaign promises disappear after elections. These are replaced by new taxes, new debts, and new perks for the political class. The belief that casting a ballot equals real consent to everything that follows is hard to defend.

Representation and Consent

Supporters of Ghana’s political status quo often argue that “if you do not like what they are doing, vote them out.” On the surface, this sounds fair. But it assumes that voting itself is meaningful consent to whatever policies the winners pursue. It imagines a world where casting a ballot for a candidate implies agreement with every decision he might later take under party pressure, elite influence, or personal conviction. That is a generous reading of consent.

In everyday life, we do not treat consent so lightly. If you sign a contract for one service and your agent uses it to justify something different, we call it fraud. Yet in politics, this is normalised. A Ghanaian might vote for a candidate because of a promise to improve roads. Later, that vote is used as a license for new taxes, more borrowing, and controversial deals the voter never supported. To interpret this as consent is to stretch the concept beyond recognition.

The menu of choices is often restricted. Constituencies frequently face two-party contests. Both major parties are supported by similar networks of business interests and face comparable challenges. In this context, voters may feel that choosing between the parties is less about distinct representation and more about incremental differences. When options are limited and structurally similar, this raises further questions about whether a vote fully reflects a positive, specific will regarding particular policies.

Yet this myth of representation is invoked whenever citizens resist. When people complain about taxes that feel punishing, they are reminded that “Parliament approved it.” When they criticise debt levels that mortgage the future, they are told: “Your MPs agreed.” When they point to corruption, they are advised to “wait for the next election.” In each case, the appeal to representation acts as a moral shield for the state. It portrays submission as voluntary and dissent as impatience or ignorance.

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Time to Drop the Illusion

None of this means voting is pointless or that every MP is malicious. Some legislators do try to stay close to their communities, and elections can sometimes remove particularly abusive officials. But we should stop using the language of representation to justify whatever the state chooses to do.

If MPs are structurally unable and often unwilling to act as delegates of the citizenry, their decisions cannot automatically be treated as expressions of popular will. They concern liberty and accountable government, with serious implications. It suggests that relying solely on elections, petitions, and polite appeals to “our leaders” will never be enough.

It also suggests that arguments defending taxes, regulations, and the expansion of state power on the grounds that they are “democratically approved” are far weaker than they appear. If the link between citizen preferences and political outcomes is as thin as the evidence suggests, the moral authority claimed by the state begins to crumble.

The experience of the last decade, with rising public frustration, repeated scandals, and declining trust in institutions, should be a wake-up call. Ghanaians are not irrational when they say, “They only remember us during elections.” The system pushes politicians toward party elites, financiers, and narrow delegations rather than ordinary citizens. Recognising this is the first step toward thinking more honestly about how power should be constrained and how communities might govern themselves more directly.

If we continue to cling to the myth that “the people rule” simply because ballots are cast, we will keep granting moral cover to actions most Ghanaians never genuinely consented to. It is time to retire the slogan that “we are represented” and face a harder truth that Ghanaian politicians mostly represent parties, patrons, and themselves, no matter how we vote. Only when we drop the illusion can we begin to imagine forms of self-government and local autonomy that do not hide behind a false language of consent.

I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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The current conflict involving the US, Israel, and Iran is not only causing instability in the Middle East but is also driving inflation that affects ordinary Ghanaians. Oil prices are rising, freight routes are changing, and Ghanaian fuel importers project higher costs. As Ghana enters 2026 with its lowest inflation in years, this hard-won progress stays fragile. War and monetary expansion now risk reversing these gains by raising prices and eroding purchasing power, rather than through transparent taxation.

Major central banks such as the Federal Reserve, Bank of England, and European Central Bank have never explicitly supported making war easier to finance. However, the ability of states to create money through central banks has removed the traditional fiscal restraint of funding wars through current taxation. This change has made it easier for governments to finance conflicts devoid of immediate public scrutiny.

Sound money makes war difficult, slow, and politically costly. Fiat money makes war tempting, fast, and deceptively cheap.

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The current conflict with Iran follows a familiar pattern. As oil prices rise, US officials focus on stabilization and security, yet rarely address funding. The expectation is that financing will be available through bond issuance and monetary expansion. As a result, the costs of war appear as gradual inflation and reduced purchasing power, rather than as direct taxes.

Ghanaians have no influence over the Federal Reserve’s decisions, yet they still experience their consequences. Ghana imports most of its refined petroleum and operates a deregulated pricing system, so global price increases are quickly reflected at the pump. When oil prices rise due to conflict, the impact is felt by everyday consumers through higher fuel and food costs.

Ghana’s recent reduction in inflation is significant, with headline rates falling to around 3.8 percent due to a sounder cedi and better food supply. This has provided households with relief after years of high prices. However, this firmness is fragile, as inflation is sensitive to energy prices and exchange rates. A war-driven oil shock could quickly reverse these gains.

The link between war and inflation did not begin with this conflict. Every major modern war has leaned heavily on money creation. Governments confront a choice: tax openly, borrow from genuine savers, or counterfeit through their central banks. Taxation is unpopular and risky.

It can trigger protests, electoral punishment, and even revolution. True borrowing is limited by savers’ willingness to part with their funds. Inflation financed through central banking, by contrast, appears painless at first. The printing press seems to offer something for nothing.

Yet there is never something for nothing. Newly created money can dilute the value of existing money. Those who receive it first, often governments and their contractors, may spend before price levels rise. Those who receive it last, such as ordinary workers and small businesses, tend to face higher prices before their incomes catch up.

In this way, inflation can act as a hidden tax on those less protected. In wartime, this effect can become particularly important. Without it, public response to the financial cost of war might be swifter, as tax increases make the cost clearer. With inflation, the effect is more gradual and less visible.

The current conflict also impacts energy markets. Oil is essential to logistics, agriculture, and manufacturing. When Gulf region tensions intensify, oil prices can increase by 7 to 10 percent in a week, and costs rise across fertilizer, transport, electricity, and imports. Central banks, including the Bank of Ghana, must then address renewed inflation risks.

In Ghana, local groups like COPEC are already warning of imminent fuel price hikes due to tensions in the Middle East, the cedi’s weakness, and higher freight costs. The government has been urged to cut some petroleum taxes to soften the blow, but taxes are only part of the final price. The underlying problem is that Ghana is a price taker in a situation where war premiums are built into every barrel. That war premium is a direct manifestation of global monetary and geopolitical choices that Ghanaians did not make but must live with.

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There is a bitter irony here. Central banks were sold as scientific institutions, guardians of price stability, and managers of rational economic policy. In practice, they have become key enablers of both welfare and warfare states. The same institution that pledges to keep inflation at 2 percent in peacetime quietly funds missiles, bases, and occupations in wartime.

The inflation that Ghanaian households feel at the pump and in market stalls is partly a trace of distant policy choices. These choices come from Washington, Brussels, and other capitals that rely on central banks to finance their ambitions.

Ghana’s central bank has likewise played a role in these developments. In the past, deficits have been monetized, credit has been directed to the government, and the banking system has absorbed domestic debt. These policies have contributed to cedi depreciation and higher prices, eventually requiring the Bank of Ghana to respond with substantial interest rate increases.

Ordinary Ghanaians experienced higher living costs and a less active private sector as a result. Should the US‑Israel‑Iran war provoke new global inflationary impacts, Ghana may face two challenges: imported inflation from oil and a greater incentive for local authorities to respond with further monetary accommodation.

The temptation may be strong. Political leaders rarely stand before voters to explain, “Fuel prices are rising because of a war far away, and we will not print money to soften the blow.” It can appear easier to encourage central bank action, provide subsidies, and allow currency adjustments to absorb shocks.

However, each of these choices can reduce the value of money and lessen the discipline that sound monetary policy imposes. Inflationary finance spreads the expense of war and higher government spending gradually, sometimes affecting people who did not directly participate in these policy negotiations.

Some argue that if monetary expansion can fund war, it can also support beneficial programs such as education, health insurance, or agricultural subsidies. Others believe it can finance military operations while limiting domestic spending. In reality, a state with the power to print money commonly prioritizes expansive and coercive uses, resulting in increased conflict and patronage rather than lasting prosperity.

For Ghana, the key lesson is that while it cannot prevent conflicts among major powers, it can manage its exposure to the resulting monetary effects. By relying on stable, market-based money and avoiding deficit monetization, Ghana can better protect itself from global inflation. Maintaining prudent fiscal policy and allowing prices to reflect actual market conditions will help limit the impact of imported oil shocks.

This is not an argument for isolation. Ghana must continue to engage with global markets. Instead, that is a call for prudent monetary and fiscal management. Just as households must live within their means, so must the state. Sound monetary discipline is more effective than policy statements in curbing excessive public spending. When governments seek tax revenue transparently, they are more likely to evaluate the true costs of their commitments.

The present war between the US, Israel, and Iran will almost certainly lift global energy prices, strain supply chains, and add new inflationary pressure on countries like Ghana. The question is whether this pressure will be used as an excuse to further weaken money or as an indication of why sound money is essential.

If Ghanaians hate the way rising prices silently erode their wages, savings, and business plans, they must learn to hate their real enemy: not the local fuel station, not the trotro driver, but the direct printing presses that make endless war and endless inflation possible.

In the end, the message is simple enough for any Ghanaian household to understand. If you hate war, oppose the money system that makes it cheap for politicians. If you hate watching your food and fuel bills climb for reasons you did not choose, demand money that governments cannot debase at will. If you want your children to inherit a Ghana in which peace and production, not distant wars and hidden inflation, shape their future, then the fight for sound money is not an academic debate. It is the front line.
I wish everyone a pleasant and productive day.

Thank you for your continued support. For concise weekly analysis rooted in free-market economics, I encourage you to remain subscribed and to share this newsletter with colleagues. I am Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality.

By 2026, you can expect increased consistency in publication. I will continue to publish regularly and uphold the standards you value: clear arguments, rigorous reasoning, and a commitment to principles rather than propaganda.

Disclaimer: You are receiving this newsletter because you subscribed. If you no longer find value in these updates, you may unsubscribe at any time. This content does not constitute financial advice. Please conduct your own research.

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After two years of crisis-level tightening, Ghana is suddenly living in a different interest rate world. Policy rates that climbed to 30 percent in late 2023 have been brought down to 15.5 percent in early 2026, the lowest level in years. Treasury bill rates that once hovered above 30 percent have dropped back toward pre-crisis levels, with recent 91‑day bill auctions around 6 to 7 percent. Inflation, which once ravaged household budgets and destroyed confidence in the cedi, has fallen steadily for more than a year, reaching 3.8 percent in January 2026.

Many observers look at these changes and quickly conclude that the fall in interest rates is simply a story of “tamed inflation” and a central bank that has decided to “ease policy.” That description may fit the surface, but it does not tell us why the underlying structure of interest rates has shifted.

From an Austrian perspective, the key question is not only what the Bank of Ghana has done but also how Ghanaians' time preferences have changed. When we say “time preference,” we mean how individuals weigh present consumption against future consumption.

A high time preference means “I want it now.” A low time preference means “I am willing to wait, save, and invest to have more later.” In a genuine market setting, interest rates are nothing but the visible expression of these choices. The lower the time preference, the lower the natural rate of interest; the higher the time preference, the higher the natural rate.

Time Preference and the Ghanaian Saver

In every Ghanaian home, decisions about susu contributions, mobile money savings, and buying extra stock for the shop reflect time preference. A trader in Kaneshie who spends all of today’s revenue on immediate consumption reveals a high time preference.

A teacher in Cape Coast who sets aside part of her salary into treasury bills for the future reveals a lower time preference. Interest is the premium that present goods command over future goods. People must value present consumption more highly than future consumption before any interest rate can emerge.

Consider a household in Kumasi during the 2022 inflation spike. Prices of basic goods such as rice, cooking oil, and transport soared, while the cedi weakened sharply. In such a setting, saving in cedis looks foolish. People rush to spend money quickly or convert it into dollars, gold, or other tangible assets. This is high time preference in action.

To persuade anyone to postpone consumption under such conditions, lenders must offer very high interest rates. It is no surprise that policy rates and short‑term government yields were pushed toward 30 percent when inflation and currency fears were at their peak.

As conditions stabilize, the calculation changes. With inflation falling from above 20 percent in 2024 to single digits in 2025 and then to around 3 to 6 percent by early 2026, holding cedi savings no longer feels like certain self‑destruction. When households and firms are less desperate to get rid of money, they can begin to think more calmly about the future.

Once the fear that “prices will double again” fades, people are more willing to keep funds in savings accounts, fixed deposits, and treasury bills even at lower nominal yields. This willingness to delay consumption is exactly what a lower time preference means.

Beyond Inflation: Low Time Preference Versus Pure “Liquidity”

Mainstream analysts often present the story in reverse. They say: the central bank expanded “liquidity,” inflation came down, and then the policy committee “decided” to reduce the policy rate. That description treats interest rates as if they were mechanically set by the central bank. In this framework, individuals appear as robots responding to a few aggregates: money supply, inflation, and growth. This picture ignores that every change in “liquidity” affects only because individuals choose how to respond.

From an Austrian perspective, the decisive element is not “liquidity” in the abstract but the pattern of individual decisions about present and future consumption. When Ghana lost access to international markets and relied heavily on domestic financing, treasury bill rates rose sharply as investors demanded higher returns for lending in a risky environment. That was not an impersonal “liquidity shortage.” It reflected high time preference and fear: lenders required a large premium to give up present control over their resources.

As policy and fiscal behaviour became somewhat more disciplined under the IMF programme, external buffers improved, and inflation fell. The Bank of Ghana then cut its policy rate step by step, first from 30 percent to 25 percent in 2025, then to 21.5 percent, and finally to 15.5 percent in early 2026. These formal decisions only became possible because enough Ghanaians were willing to hold cedi assets at lower yields.

In other words, the public’s time preferences had shifted downward. If households and businesses had continued to insist on extremely high returns in exchange for giving up current consumption and liquidity, any attempt at aggressive rate cuts would have triggered capital flight and renewed inflation.

When savers accept lower interest rates on Treasury bills or bank deposits, they reveal a reduced premium on present consumption relative to future consumption. No central bank decree can enforce that attitude. The decree may alter the numbers printed in official releases, but if it does not align with the population's underlying time preferences, it will be resisted through capital outflows, dollarization, hoarding, and informal financial arrangements. For the recent easing cycle to hold, there must be a genuine, if fragile, move toward lower time preference.

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Savings, Capital Structure, and Genuine Recovery

Low time preference is best demonstrated through saving. When individuals spend less than they earn, the surplus becomes savings that can be invested. In Ghana, this is evident as more funds flow into treasury securities, banks, and productive projects instead of immediate consumption.

The IMF-supported program and the domestic debt exchange did not generate genuine savings on their own; they only restructured financial claims and slowed down the rate of monetary and fiscal growth. The key question is whether Ghanaians themselves have actively chosen to rebuild the savings pool, which was heavily depleted during the crisis years.

When savings expand, it becomes possible to lengthen the production structure. Farmers can invest in irrigation and improved seeds rather than barely surviving from harvest to harvest. Manufacturers can acquire better machinery, and service firms can build more robust capital systems.

These investments require someone, somewhere, to forgo immediate consumption to free resources for longer projects. Lower time preference makes such forgoing acceptable. The reward for waiting is interest, but that interest can now be lower because the urgency of present wants has eased.

If the recent decline in interest rates simply reflected government pressure on banks and auction houses to lower yields, without any real growth in voluntary saving, then the groundwork is being laid for another crisis. In that scenario, interest rates are suppressed below the level consistent with actual time preferences.

Entrepreneurs, misled by cheap credit, embark on projects that can be sustained only if the public continues to save in ways it has not truly chosen. When reality asserts itself and people return to higher time-preference behavior, the necessary funds dry up, projects fail, and interest rates must spike again. Ghana’s experience with repeated boom‑bust cycles shows how dangerous this path can be.

If, however, the lower interest rate environment is backed by genuine increases in savings, it signals a healthier alignment between the capital structure and people’s preferences. The fall in inflation, the relative strength of the cedi in 2025, and improving growth in services and agriculture all suggest that at least part of the current easing rests on a real rebuilding of the savings base. People are not merely reacting to lower rates; they are choosing to look further ahead than the next market day.

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Ghana’s Current Rate Decline: Time Preference or Policy Illusion?

How should we interpret the current decline in Ghana’s interest rates? On the surface, official statements cite improved macroeconomic conditions, lower inflation, and stronger external buffers as the justification for rate cuts. Mainstream analysis stops there, treating these factors as the full explanation.

An Austrian approach asks a deeper question: what do these developments reveal about Ghanaians' time preferences?

The consistent decline in inflation over 13 months, reaching 3.8 percent in January 2026, is more than just a numerical milestone. It indicates a slowdown in the consumption frenzy and a renewed confidence in money as a safe store of value. The easing of pressures on the foreign exchange market and the partial strengthening of the cedi imply that people are somewhat less eager to convert their money into dollars.

Attempts to hold interest rates below genuine time preference do not abolish scarcity; they only postpone the crisis that scarcity will later reveal.

Households are once again willing to invest in medium-term financial instruments, and banks can lend under conditions that do not presuppose rapidly rising prices. These trends align with a decline in time preference.

At the same time, Ghana remains heavily indebted, and the government remains a major borrower in the domestic market. The temptation to lean on the banking system and captive savings to finance deficits is ever-present. If fiscal restraint weakens and monetary policy once again accommodates large deficits by creating new money, the public’s time preference will rise.

People will respond by trying to protect themselves, not by obeying central bank statements. They will spend faster, dollarize their savings, and demand higher nominal returns. Interest rates will then rise again, not because “liquidity tightened,” but because individuals refuse to sacrifice present consumption for a future they no longer trust.

The best way to understand Ghana’s current decline in interest rates is to view it as a partial return to lower time preference after a period of extremely high time preference created by reckless policy and inflation. To the extent that Ghanaians are once again willing to save, hold cedis, and think in years rather than weeks, the natural rate of interest falls. The Bank of Ghana’s cuts can then be seen less as the cause of low rates and more as a reflection and reinforcement of this shift in underlying preferences.

This perspective also clarifies what is at stake. If policymakers want lower, more stable interest rates, they must stop policies that destroy savings and force people into a high time-preference stance. That means refraining from inflationary finance, ending the habit of using domestic debt markets as a permanent bailout, and allowing interest rates to reflect genuine saving and borrowing decisions rather than political convenience.

In such an environment, low time preference is not imposed by decree; it emerges from the peaceful choices of millions of Ghanaians who sacrifice for the future. When that happens, falling interest rates are not a mystery. They are the natural price signal of a society that has chosen to look beyond today.

I hope you all have a great day.

Thank you for reading and supporting my work. If you appreciate clear, weekly analysis based on free-market trade policies, Austrian economics, and liberty in an era of growing statism, please stay subscribed and share this newsletter with a friend. You are part of over 100 readers who believe in sound money, free markets, and individual sovereignty. This Substack is authored by Samuel Frimpong, an economist and writer dedicated to defending free trade and economic rationality amidst policy mistakes.

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This week’s headline looks better than the mood in the market. The cedi strengthened modestly on the interbank market, and the official inflation series remains low. At the same time, Ghana has made a major DDEP interest payment, which is a real signal of fiscal effort and short-term credibility. Both facts matter. But neither should be misread.

The cedi’s move tells us something about near-term FX pressure. The DDEP payment tells us something about the state’s willingness and ability to honor restructured obligations. Together, they point to a simple conclusion: Ghana is stabilizing at the edge, but the deeper question is still institutional. Is this the beginning of a durable correction or another pause before the next fiscal strain?

That is the issue this week.

This week’s macro dashboard

The Bank of Ghana interbank USD/GHS weighted median rate is 10.9700 on 20 Feb 2026, with buying at 10.9645 and selling at 10.9755. Compared with last week’s 10.9985, the cedi strengthened modestly on the interbank mid-rate. In the series we are tracking, headline inflation remains 3.8% YoY, food inflation 3.9% YoY, and the policy rate remains 15.50%. Short yields are still high in practical terms, with 91-day bills at 10.8260% and 182-day bills at 12.3806%.

This is a better FX print. It is not yet a change in regime.

What this means for households and SMEs

The cedi’s improvement is useful, but it does not immediately reduce the prices people face in the various markets. Businesses do not reprice on one day’s FX screen. They reprice when they restock, when they settle supplier invoices, and when they judge whether current costs will hold. That is why a stronger cedi this week can coexist with sticky prices this week.

For households, the main point is simple. A lower FX sounds good, but fuel, transport, electricity, and rent still shape the lived cost of life more than a single headline number. The limitation is much more evident for small and medium-sized businesses. Electricity bills remain high, working capital is still expensive, and uncertainty forces defensive pricing. So the benefit of a stronger cedi is not instant relief. It is the possibility of slower cost pressure, if the improvement persists.

That “if” matters. Markets respond to consistency, not one-off moves.

Ghana’s DDEP Interest Payment Is Good News. It Is Not a Free Pass.

Ghana has paid GH¢10 billion (about $909–910 million) in interest under the Domestic Debt Exchange Programme (DDEP). This is the sixth coupon settlement since the restructuring began, and the Ministry of Finance says it was a full cash payment with no payment-in-kind component. The government is presenting it as proof of stronger fiscal capacity, improved solvency, and a sign of stability for banks and pension funds.

That is the correct short-term reading. It is also incomplete.

This payment matters because Ghana’s DDEP was not a routine refinancing exercise. It came out of a severe fiscal squeeze and a broader debt crisis that forced a restructuring and put pressure on banks, asset managers, and pension funds heavily exposed to government paper. Ghana launched the DDEP in late 2022 as part of the effort to restore debt sustainability after losing market access and entering a deeper debt overhaul.

So yes, paying this coupon is a positive signal. But it is a signal about discipline under stress, not proof that the underlying model is fixed.

What the DDEP was, and how it affected Ghanaians

The DDEP was the domestic side of Ghana’s debt restructuring. In plain terms, the government reworked obligations on local debt instruments to reduce near-term debt-service pressure and buy time for stabilization. That may sound technical. In reality, it touched ordinary life.

Why? Because Ghanaian banks, pension funds, asset managers, and other institutions held large amounts of government securities. When those holdings were restructured, balance sheets were hit. The effect was not only financial. It spilled into credit conditions, savings confidence, liquidity management, and risk appetite across the economy. Reuters notes that the restructuring weighed on precisely these institutions because of their large exposure to government paper.

That helps explain why many Ghanaians experienced the crisis not just as “government debt trouble,” but as tighter credit, weaker business confidence, and a general loss of economic momentum. When the state over-borrows and then restructures, the cost does not stay in official documents. It moves into lending, jobs, retirement assets, and household planning.

Why the $909 million payment matters for the economy

This payment contributes to the economy in one central way. It restores some trust in the state’s willingness and capacity to honor restructured domestic obligations on schedule.

Trust matters in debt markets because a government bond is not just a financial product. It is collateral, a pricing benchmark, and a confidence anchor for the financial system. When the state pays as promised, it reduces uncertainty around the value and cash flow of those instruments.

That supports balance-sheet repair for institutions holding DDEP bonds and lowers the probability of renewed panic pricing or liquidity stress. The Ministry of Finance explicitly frames the payment as supporting financial-sector stability, including banks and pension funds.

It also matters because this was a timely cash settlement, and the ministry stresses that it is the second full cash coupon without payment-in-kind. That distinction is important. Full cash payments are harder to fake than accounting fixes. They suggest real fiscal space has improved, at least relative to the most acute phase of the crisis.

How it reassures investors and strengthens market confidence

Domestic and international investors watch three things after a restructuring: payment discipline, policy consistency, and the direction of macro fundamentals.

On payment discipline, this coupon helps. A government that keeps meeting DDEP obligations on time is reducing perceived rollover and execution risk. On policy consistency, the Ministry of Finance is signaling that DDEP servicing sits within a broader debt-management and fiscal-consolidation strategy, not a one-off public-relations gesture.

On macro direction, the government points to declining inflation, lower interest rates, and cedi stability as part of the support for future payments.

That combination can strengthen market confidence and support Ghana’s credit outlook because investors care less about speeches than about whether a country can keep paying while stabilizing its macro framework. This shows that the government itself is positioning the payment as a signal to reassure investors, support the credit outlook, and stabilize the financial system as Ghana prepares to return to the domestic bond market.

The key phrase is “as Ghana prepares to return.” This is a bridge back to market credibility, not the destination.

How it helps stabilize the financial sector

The financial sector has been vulnerable because government debt sat at the center of many balance sheets. When that debt is restructured, institutions face valuation losses, income disruptions, and asset-liability strain. That can weaken their ability to lend, absorb shocks, and maintain confidence.

Regular DDEP coupon payments help by making the restructured instruments more predictable. Predictability improves liquidity planning. It reduces uncertainty around income streams. It supports capital and solvency management for institutions that depend on those cash flows. That is why the ministry explicitly links the payment to stability in banks and pension funds.

This is not a complete repair, but it is the kind of repair that actually counts. Financial systems recover through repeated performance, not declarations.

How Ghana says it will meet future DDEP obligations

The Ministry of Finance says the government remains fully committed to future DDEP obligations and will support this with stronger buffers, improving macro fundamentals, declining inflation, lower interest rates, and a stable cedi.

Translated into economic terms, that means Ghana’s path depends on four things.

First, fiscal discipline must hold. If expenditure overruns and quasi-fiscal pressures return, liquidity buffers will shrink, and debt service will again compete with everything else.

Second, inflation and interest rates must continue easing in a durable way, not merely in headline form. Lower rates reduce the cost of refinancing and ease pressure on the domestic debt market.

Third, exchange-rate stability matters because FX volatility quickly spills into inflation, debt sentiment, and risk premia.

Fourth, market access must be rebuilt carefully as Ghana plans to return to the domestic bond market this year, which will test whether confidence has truly improved.

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In short, future DDEP payments will be easier to meet if macro stabilization is real, broad, and sustained.

How this can improve ordinary Ghanaian life

The ordinary Ghanaian does not celebrate coupon settlements for their own sake. What matters is the chain of effects.

If DDEP payments continue on time and confidence improves, banks and other financial institutions face less uncertainty. That can gradually support credit conditions. If macro stability strengthens, inflation and interest rates can ease further, and that helps households and SMEs through lower financing costs, more stable prices, and better planning conditions. If the cedi stays more stable, imported-cost pressure falls, and everyday prices become less volatile.

The practical benefit is not that people suddenly feel richer. It is when the economy becomes less chaotic. Businesses can quote prices with more confidence. Households can plan without assuming another shock next month. That is what stabilization is supposed to deliver.

But the improvement will be gradual, and only if the fiscal state does not relapse.

The Austrian critique: the crisis was not an accident

From an Austrian economics perspective, this crisis is not a mystery and not a one-time misfortune. It is the predictable result of chronic fiscal excess, debt dependence, and policy trying to postpone adjustment.

When the state spends beyond what the economy can sustain and finances itself through repeated borrowing, it creates a perception of stability. That lasts until funding conditions tighten. Then the hidden costs emerge all at once through inflation, interest-rate spikes, debt restructuring, and financial-sector stress. The energy of the economy is drained not by “bad luck” but by a state that repeatedly consumes capital and calls it management.

The DDEP itself shows the political economy clearly. Government debt was treated as a safe anchor across the financial system. When the state could no longer carry the burden, the restructuring pushed losses and disruptions onto institutions and savers. In Libertarian terms, this is what happens when price signals are distorted by fiscal dominance and moral hazard. Risk is underpriced on the way up and socialized on the way down.

So yes, paying the sixth coupon is good. But it is good in the way paying arrears is good. It corrects a symptom. It does not erase the cause.

The deeper lesson

Ghana’s problem has never been a shortage of announcements. It has been the repeated transfer of costs from the state to the private economy. When the state over-borrows, the bill eventually shows up in inflation, debt restructuring, higher interest costs, and weaker private balance sheets. The DDEP simply made that transfer visible.

A Rothbardian reading keeps the focus where it belongs. The issue is not whether the government can make one large payment. The issue is whether the institutions that produced the crisis are being restrained. If the answer is no, then today’s success becomes tomorrow’s setup.

Bottom line

This week brings two encouraging signals: a modestly stronger cedi and a major DDEP interest payment delivered on schedule. Both are good news. Both support confidence. Both help reduce short-term instability.

But neither is a free pass. Ghana’s recovery will hold only if fiscal discipline remains real, debt management stays credible, and policy stops using the private economy as a shock absorber for public-sector mistakes. That is how stabilization becomes recovery, and recovery becomes growth.

I hope you all have a great day.

Thank you for reading and supporting my work. If you value clear, weekly analysis grounded in free-market trade policy, Austrian economics, and liberty in an age of expanding statism, I invite you to stay subscribed and share this newsletter with a friend. You are joining 100+ readers who believe in sound money, free markets, and individual sovereignty. This Substack is written by Samuel Frimpong, economist and Substack writer, with a consistent focus on defending free trade and economic rationality in an era of policy folly.

In 2026, you can also expect greater consistency. I will publish regularly and maintain the standards you have come to expect: direct arguments, careful reasoning, and a firm commitment to principles over propaganda.

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This week, Ghana’s macro story is split in two. On one side, the official numbers look calm. Inflation is reported at 3.8% (food 3.9%). On the other, the economy feels tight: the cedi is still inching weaker, fuel floors remain elevated, electricity bills are painful, and cocoa farmers are being asked to absorb a major price cut.

Austrian economics trains you to distrust slogans and follow incentives. Prices, not speeches, tell the truth. And when the state controls a sector, the truth is often a transfer of costs from the center to the periphery.

This week’s macro dashboard

The BoG interbank USD/GHS mid-rate is 10.9985 (13 Feb 2026), with buy at 10.9930 and sell at 11.0040. Inflation remains 3.8% YoY (food 3.9% YoY) on the latest reference. The policy rate is 15.50%. Short yields remain high, with 91-day at 10.8260% and 182-day at 12.3806% (kept unchanged for continuity). Fuel remains a live transmission channel: petrol floats up to GH¢9.99 and diesel is pegged at GH¢10.95.

What this means for households and SMEs

The first mistake people make is treating inflation as a single number. Households don’t live in an index. They live on food, transport, power, and rent. A 3.8% headline rate does not protect you if the costs that dominate daily life are still under pressure.

The cedi at 10.9985 matters because it quietly raises restocking costs for medicines, packaged foods, spare parts, and any input priced off dollars. Fuel moves faster than the CPI. With petrol near GH¢9.99 and diesel at GH¢10.95, transport and distribution costs bleed into market prices quickly, especially food. Electricity is the second inflation channel: high and unpredictable bills force households to cut elsewhere, and firms add buffers to prices because operating costs become harder to forecast. And SMEs will price for cash flow, not comfort. With short yields still around 10.83% and 12.38%, working capital is expensive, credit tightens, and cash sales become the rule.

Ghana’s Cocoa Pivot: Local Processing, Falling Farmgate Prices, and the Cost of State Control

Ghana is trying to reform its cocoa sector for “financial viability and long-term sustainability.” The new policy direction, local processing, is intuitively attractive. It promises value addition, jobs, and less dependence on raw bean exports. But the same week we hear this, farmers are hit with a sharp price cut: cocoa has reportedly fallen from GHS 58,000 to GHS 41,392 per metric ton, and the 64kg bag from GHS 3,625 to GHS 2,587. That gap is not a rounding error. It is a redistribution.

This note explains two things. First, why the price cut will bite farmers and ripple through the broader economy. Second, why local processing can help, but only if Ghana avoids turning “industrial policy” into another state-managed bottleneck.

The new local processing policy, what it actually says

The policy direction is clear and unusually explicit.

COCOBOD can now sell beans “of any volume” to local processing companies under a new financing model. Cabinet has also directed that the remainder of the 2025/26 crop season be allocated for domestic processing. From 2026/27, at least 50% of cocoa beans should be processed locally. The state-owned Cocoa Processing Company (CPC) is to be revived as a priority, and the government reports agreement with domestic processors who claim capacity and willingness to process more than half of Ghana’s cocoa.

On paper, this is a deliberate shift from exporting beans to exporting value-added products.

The farmgate price cut, and why it matters

A farmer does not sell “macroeconomic hopes.” He sells bags.

When the 64kg bag drops from GHS 3,625 to GHS 2,587, the immediate effect is a collapse in farm cash flow. Cocoa farmers are not sitting on diversified portfolios. Their income is seasonal, their costs are real, and their ability to absorb shocks is thin.

The consequences follow a predictable chain.

First, lower farmgate prices reduce maintenance and replanting. Cocoa is a long-horizon crop. When the reward is cut today, the farmer delays pruning, reduces inputs, and postpones rehabilitation. That decision does not show up in next month’s inflation print. It shows up later as lower yields, poorer bean quality, and a weaker supply base.

Second, price cuts worsen rural credit stress. Many farmers borrow informally against the harvest or rely on traders for advance financing. When expected income falls, repayment becomes harder. Defaults rise, and future credit becomes more expensive or disappears. That is how a price cut today becomes a productivity problem tomorrow.

Third, lower official prices increase incentives to side-sell and smuggle. If there is a meaningful price wedge between Ghana and neighboring markets, or between official channels and informal buyers, the rational response is leakage. A marketing board can post a price. It cannot repeal arbitrage.

Fourth, rural demand contracts. Cocoa income supports consumption in cocoa-growing regions: transport, food, repairs, school fees, and small retail trade. When the cocoa cheque shrinks, local commerce shrinks with it. That is not abstract. It is the real economy.

What this does to the national economy

Cocoa is not just a farmer issue. It is a foreign exchange and fiscal issue.

Cocoa exports are a key FX earner. When farmer incentives weaken, production and quality risks weaken. If beans leak into unofficial channels, official export volumes suffer. That reduces FX inflows, pressures the currency, and complicates monetary management. Ghana can run a low headline inflation rate and still face FX pressure if core FX earning capacity is undermined.

There is also the fiscal and quasi-fiscal channel. COCOBOD’s financial position matters because it sits between farmers, exporters, lenders, and government. If COCOBOD carries debt, forward sales obligations, or financing gaps, it will seek relief somewhere: through lower farmgate prices, through levies, through delayed payments, or through state support. In practice, these costs do not vanish. They are shifted.

The central lesson here is that, the state systems do not eliminate costs. They reassign them.

Why local processing can be economically significant

Local processing can be a genuine step forward if it is driven by profit-and-loss discipline rather than political targets.

Processing keeps more of the value chain in-country. It can create skilled jobs and industrial capabilities, not only in factories but also in packaging, logistics, quality control, and services. It can reduce Ghana’s dependence on exporting raw beans at the mercy of global price swings, and it can diversify export receipts toward butter, liquor, powder, and branded products. Over time, that can stabilize FX inflows and broaden the tax base without squeezing farmers.

There is also a strategic point. A country that processes more is less exposed to being treated as a mere commodity appendage. Value addition is not a slogan. It is bargaining power.

Potential disadvantages, and why the details matter

Local processing can also fail, even while sounding patriotic.

If the policy becomes a quota or a directive that overrides market signals, it risks forcing beans into domestic processors that are not efficient, not competitive, or not adequately financed. Processing is capital-intensive and energy-intensive. If electricity is expensive and unreliable, and logistics are costly, local processing becomes a high-cost activity that survives on subsidies, protection, or cheap bean allocations. That is not value addition. That is value destruction disguised as industry.

One disadvantage of reviving a state-owned processor as the “leading processor” is that it can crowd out private discipline. When a state firm is insulated from failure, it can underperform indefinitely while consuming cheap inputs and public support. The result is a processing sector that looks large on paper but weak in competitiveness.

The best version of this policy is not “process 50% because Cabinet said so.” It is “create the conditions where processing is profitable without coercion.”

Why COCOBOD’s state management is the deeper problem

From a libertarian and Austrian perspective, the core flaw is institutional. COCOBOD is a state-managed marketing board. That means prices, purchasing, and allocation are shaped by politics and bureaucracy rather than by decentralized competition and entrepreneurial discovery.

In a market, inefficiency is punished. In a monopoly board, inefficiency is financed. Losses are socialized through farmers, taxpayers, or hidden borrowing. The board can overborrow, misprice risk, mishandle hedging, or run patronage networks, and the system does not automatically correct. It merely searches for the next group to squeeze.

The administered farmgate price is the clearest example. It is presented as protection, but it often becomes a tool of extraction. When the board’s balance sheet is strained, the easiest adjustment is to cut the price to the farmer. The farmer is dispersed. The state is centralized. That asymmetry is the political economy of marketing boards.

Austrian economics also emphasizes knowledge and incentives. The right price is not a committee’s opinion. It is a market outcome that coordinates millions of plans. When a board sets prices and controls purchases, it suppresses the information and incentives that would otherwise improve productivity, reward quality, and allocate capital efficiently. You get a system that is orderly on paper and fragile in reality.

If Ghana wants sustainability, it should not merely shift from exporting beans to processing beans under state direction. It should reduce monopoly control, open competitive buying and processing, and let farmers and entrepreneurs respond to prices without bureaucratic permission.

Bottom line

This week’s numbers tell a disciplined story. FX is still creeping weaker. Fuel and electricity remain high-cost channels that shape market prices faster than CPI can capture. And the cocoa price cut shows how state systems “balance” themselves: the adjustment lands where resistance is weakest, on the farmer.

If Ghana wants a cocoa sector that is financially viable and sustainable, the target should not be “more state plans.” It should be a system where farmers are paid transparently, buyers compete, processors win by efficiency, and failure is allowed to fail. That is how you build an industry rather than a bureaucracy.

I hope you all have a great day.

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Thank you for reading and supporting my work. If you value clear, weekly analysis grounded in free-market trade policy, Austrian economics, and liberty in an age of expanding statism, I invite you to stay subscribed and share this newsletter with a friend. You are joining 100+ readers who believe in sound money, free markets, and individual sovereignty. This Substack is written by Samuel Frimpong, economist and Substack writer, with a consistent focus on defending free trade and economic rationality in an era of policy folly.

In 2026, you can also expect greater consistency. I will publish regularly and maintain the standards you have come to expect: direct arguments, careful reasoning, and a firm commitment to principles over propaganda.

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This week’s brief explains a simple idea: inflation is a pipeline. FX shocks enter first through imported costs, then travel through fuel and logistics, and finally reach retail prices. The timing is uneven because prices adjust with lags and markups.

Executive summary

• FX is upstream. When the cedi weakens, import costs rise first, and then the rest of the chain adjusts.

• Fuel and electricity amplify the shock. They push costs across almost every sector, even when CPI is low.

• 3.8% CPI can still feel painful. Households do not live in averages. They live on food, transport, rent, utilities, and fees.

  ---

This week’s macro dashboard

• FX (official/interbank, USD/GHS mid): 10.9800 (06 Feb 2026)
  Buying 10.9745, Selling 10.9855

• Market FX proxy: Not used this week

• Headline CPI (YoY): 3.8% (Jan 2026)

• Food CPI (YoY): 3.9% (Jan 2026)

• Policy rate (MPR): 15.50%

• 3m/6m T-bill yield: 10.8260% (91-day), 12.3806% (182-day) (Issue date 02 Feb 2026, Tender 1992)

• Fuel adjustment: Yes. Petrol floor up to GH¢9.99, diesel pegged at GH¢10.95 (Feb window)

• Fiscal stress proxy: recent tenders still show large funding volumes, so financing conditions remain part of the FX story.

What this means for households and SMEs (weekly practical guide)

• Expect waves, not a smooth trend. Prices often jump when shops restock, not when the FX rate moves.

• Fuel is the fastest transmitter. Changes in petrol and diesel show up quickly in transport costs and food distribution.

• Electricity is a second shock channel. High power bills force households to cut elsewhere, and they raise business costs across the board.

• SMEs will price to protect cash flow. When short yields stay high, working capital is expensive. Businesses reprice faster, reduce credit, or switch to cash sales.

• Stability is about predictable costs. If FX, fuel, and power are uncertain, sellers add a “risk buffer” to prices, even when CPI is low.

What changed this week (facts only)

• Inflation: Headline CPI slowed to 3.8% YoY (Jan 2026). Food inflation is 3.9% YoY.

• FX: The Interbank weighted median (USD/GHS) is 10.9800 on 06 Feb 2026.

• Policy: The BoG policy rate is 15.50%.

• Rates: T-bills (02 Feb 2026) are 10.8260% (91-day) and 12.3806% (182-day).

• Fuel: NPA adjusted the February price floors: petrol up to GH¢9.99, diesel GH¢10.95.

The imported-inflation pipeline

If you want to understand Ghana’s prices, track this chain.

1) FX hits the importer first

Most essentials are imported directly or rely on imported inputs: fuel, medicines, packaging, spare parts, fertilizers, equipment, and even some food supply chains.

When FX moves, the first change is the importer’s cedi cost per dollar. That cost does not wait for CPI.

2) Fuel spreads the shock quickly

Fuel is not just “one item” in the basket. It is a cost that sits under

• transport and distribution,

• cold storage and refrigeration,

• generators,

• wholesale market logistics.

That is why fuel changes often show up in market prices before the CPI story feels believable.

3) Logistics adds its own markup and lag

A bag of rice or crate of tomatoes reaches your neighborhood after paying for:

• trucking,

• storage,

• handling losses,

• sometimes informal fees,

• and the risk of next week’s FX and fuel costs.

That risk becomes a markup.

4) Medicines often reprice in steps

Pharmacies and distributors usually reprice when they restock. If FX is uncertain, they protect themselves by pricing with a buffer. So prices can look stable for weeks, then jump suddenly.

5) Retail prices reflect uncertainty, not only costs

Retailers reprice not only because costs rise, but also because restocking becomes risky. When sellers don’t trust next month’s FX, fuel, or power costs, they price defensively.

Why 3.8% inflation doesn’t match what people feel

Three reasons explain the confusion.

1) CPI is an average; your life isn’t

Your personal inflation rate is driven by what you buy most: food, transport, rent, utilities, and school fees. If those categories rise faster than the average basket, the headline number will feel detached.

2) Some costs are “administered,” not discovered in open markets

Electricity tariffs and related charges are shaped by regulatory decisions, sector debts, and FX exposure. Even if CPI slows, power bills can rise because the system is trying to close a financing gap.

3) Price pressure hides in size, quality, and fees

When businesses cannot raise sticker prices smoothly, they adjust through:

• smaller quantities,

• lower quality,

• delivery fees,

• cash-only pricing.

People notice this immediately.

Electricity bills: why this is a big problem (libertarian + Austrian lens)

Expensive electricity in Ghana is not a routine inconvenience. It is a structural barrier that raises costs across the entire economy. Power is a foundational input into production, storage, transport, and basic household life, so when tariffs surge, even goods that appear “local” become more expensive.

From a libertarian perspective, the deeper problem is institutional: when utilities are insulated from competition and the discipline of loss, inefficiencies are not corrected; they are shifted onto the public through tariffs, levies, and periodic bailouts.

From an Austrian perspective, high and unpredictable power costs also damage the capital structure by shortening time horizons. Firms move from building to surviving, postpone long-term investment, cut hiring, and retreat into quick-turnover activities.

The result is not development but defensive adaptation. Liberty, in this setting, is practical rather than rhetorical: it is the ability of households to plan and of entrepreneurs to produce without constant, policy-driven cost shocks.

Three scenarios for the next 4–8 weeks

Scenario 1: Base case, gradual pass-through

FX stays relatively orderly. Fuel and power costs remain manageable. Prices rise slowly through tradables and logistics, with uneven food effects.

Scenario 2: Upside, stabilization cools markups

FX steadies for long enough to reduce defensive pricing. Retailers stop building large buffers into prices. The market starts trusting the disinflation story.

Scenario 3: Downside, a repricing wave

FX pressure rises or spreads widen. Fuel or utility costs reset. Importers demand cash. Medicines, transport-heavy goods, and staples are repriced in batches. Headline CPI then catches up after the damage is already done.

What to watch next week (5 items)

1. FX pace: is depreciation steady or accelerating?

2. Fuel and transport: the quickest channel into food prices.

3. Electricity signals: any adjustment that forces businesses to reprice.

4. Short yields: if working capital stays expensive, markups stay high.

5. Medicines and essentials: watch for step repricing around restocking.

Bottom line

Ghana’s inflation is best understood as a pipeline, not a headline. FX moves into import costs first, then fuel and logistics, and only later into the retail prices households feel.

That is why people distrust the 3.8% number. They are not rejecting statistics. They are reacting to the cost structure of food, transport, medicines, and power.

I hope you all have a great day.

Thank you for reading and supporting my work. If you value clear, weekly analysis grounded in free-market trade policy, Austrian economics, and liberty in an age of expanding statism, I invite you to stay subscribed and share this newsletter with a friend. You are joining 100+ readers who believe in sound money, free markets, and individual sovereignty. This Substack is written by Samuel Frimpong, economist and Substack writer, with a consistent focus on defending free trade and economic rationality in an era of policy folly.

In 2026, you can also expect greater consistency. I will publish regularly and maintain the standards you have come to expect: direct arguments, careful reasoning, and a firm commitment to principles over propaganda.

Disclaimer: You are receiving Samuel Frimpong’s Substack because you subscribed. If this is no longer useful to you, please feel free to unsubscribe. This email does not provide financial advice. Please do your own research and make your own decisions.

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Executive summary (read this first)

• Market Signal: As of December 2025, headline inflation stands at 5.4% year-over-year, with food inflation recorded at 4.9%. The current policy rate is set at 15.50%. The current rates for T-bills are approximately 11.20% for the 91-day term and 12.67% for the 182-day term.

• Mechanism: In Ghana, the main upstream driver is the pressure from foreign exchange, as it influences the costs of imported inputs and informs expectations. Inflation cannot be accurately described as merely a singular phenomenon related to a “general price level.” It progresses through adjustments in relative prices between tradable and non-tradable, with frequent frictions and lags.

• Forward view: Over the next 4–8 weeks, outcomes depend on

(i) whether the cedi’s depreciation stays orderly,

(ii) whether liquidity and fiscal funding needs force the market’s hand, and

(iii) whether utility price adjustments materialize.

This week’s macro dashboard (baseline for the next 8 weeks)

• Headline CPI (YoY): 5.4% (Dec 2025)

• Food CPI (YoY): 4.9% (Dec 2025)

• Policy rate (MPR): 15.50% (cut 250 bps on 28 Jan 2026)

• T-bills: 11.1969% (91-day), 12.6656% (182-day), latest shown 26 Jan 2026

• FX (BoG internal transaction rates, Friday):

  • 23 Jan 2026: mid ≈ 10.87 GHS/USD

  • 30 Jan 2026: mid ≈ 10.94 GHS/USD

The cedi weakened modestly between 23 Jan and 30 Jan (BoG internal transaction mid-rate: ~10.87 → ~10.94).

One-line read: Inflation is presently under control; however, foreign exchange continues to be the limiting factor. The reduction in monetary policy rates heightens the significance of maintaining credibility, managing liquidity effectively, and upholding fiscal discipline to ensure stability in foreign exchange markets.

What changed this week

• The BoG reduced the policy rate to 15.50% (28 Jan 2026).

• The cedi depreciated modestly week-on-week from mid ≈ 10.87 to ≈ 10.94 GHS/USD (23 to 30 Jan).

• T-bill yields remain elevated relative to inflation: ~11.20% (91-day) and ~12.67% (182-day).

• In the latest tender snapshot, demand was strong versus target (coverage above 1x), with acceptance also above target.

The FX-inflation machine (Ghana’s causal chain)

1) FX pressure is upstream

In a small open economy with high import dependence for fuel, equipment, medicines, and intermediate inputs, the exchange rate is not just another price. It is a coordinating signal for a large share of production costs. When the cedi weakens, imported input costs rise in cedi terms. Firms respond by repricing, substituting, or compressing margins.

2) FX becomes inflation through pass-through and expectations

Pass-through is not mechanical and not instantaneous. It depends on:

• Inventory lags: firms reprice when old stock runs out.

• Competitive pressure: not all firms can reprice equally fast.

• Expectations: if businesses believe depreciation will continue, they reprice preemptively.

From an Austrian perspective, this matters because inflation is not “uniform.” It is a sequence of relative price changes. Some groups bear the cost first (tradables, fuel-linked transport, import-dependent SMEs), while others adjust later. The distributional pattern is the story, not just the headline CPI.

3) Rates matter, but mainly through credibility and liquidity

Inflation also redistributes purchasing power through the monetary system, often without the transparency of a normal budget debate. In Ghana, this is why credibility and liquidity discipline matter as much as the policy rate. If FX markets become segmented by controls or shortages, you typically get wider spreads, more volatility, and defensive pricing. The durable route to disinflation is simple but hard: fiscal restraint that reduces monetization pressure, clear liquidity management, and fewer distortions that block price discovery in trade and payments.

With headline inflation at 5.4%, Ghana is now in a world where nominal rates look tight on paper. But what matters is whether policy remains consistent with foreign exchange stability. A rate cut can be reasonable if the disinflation is durable. It becomes risky if it is perceived as premature or if it coincides with liquidity expansion and fiscal pressure that markets interpret as future depreciation risk.

The lag structure (why timing confuses people)

• Foreign exchange moves show up first in fuel-linked prices and imported essentials.

• They show up later in services, rent, and wages.

• That is why inflation can stay “sticky” even after the FX rate stabilizes, or why inflation can re-accelerate even when the weekly FX move looks small.

• The right question is not ‘problem solved.’ It is whether the FX path is stable enough for disinflation to continue.

Three scenarios for the next 4–8 weeks

I use scenarios because Ghana macro punishes false precision.

Scenario 1: Base case (most likely)

• Trigger: depreciation remains gradual and orderly (no sharp widening of Foreign exchange stress indicators), liquidity conditions remain managed, and fiscal funding does not force abrupt monetization signals.

• FX: slow depreciation or stabilization in a narrow range.

• Inflation: stays low to moderately sticky. Food remains the swing factor.

• Rates: easing bias persists, but BoG remains cautious if Foreign exchange pressure intensifies.

Scenario 2: Upside case (disinflation consolidates)

• Trigger: improved confidence and inflows plus stable funding conditions in government paper, reducing perceived near-term Foreign exchange risk.

• Foreign exchange: stabilizes more convincingly.

• Inflation: decelerates further, and pricing behavior normalizes.

• Rates: more room for gradual easing later, without destabilizing Foreign exchange expectations.

Scenario 3: Downside case (Foreign exchange shock re-prices the system)

• Trigger: a credibility hit, a funding stress episode, or cost-push pressure from utility price adjustments (flagged as a risk), interacting with market expectations.

• FX: faster depreciation and/or widening spreads.

• Inflation: re-acceleration through imported inputs and expectations.

• Rates: forced tightening, or tightening through market yields even if the policy rate lags.

What to watch next week (my 5-item checklist)

1. FX pace, not just level: does the weekly depreciation remain around the recent order of magnitude, or does it accelerate?

2. T-bill auction tone: bid-cover and accepted amounts versus target are a real-time fiscal liquidity signal.

3. Yield direction: do short bills drift down after the rate cut, or does the market resist?

4. Policy communication discipline: is the cut framed as conditional, data-driven, and foreign exchange-aware?

5. Cost-push risks: any movement on utilities and administered prices, which can reset inflation expectations.

Bottom line

Ghana is currently enjoying low measured inflation alongside still-high nominal rates. The BoG’s cut to 15.50% makes the next phase mostly about foreign exchange credibility and liquidity discipline, not slogans. The system is stable until the exchange rate path stops being orderly.

I hope you all have a great day.

Thank you for reading and supporting my work. If you value clear, weekly analysis grounded in free-market trade policy, Austrian economics, and liberty in an age of expanding statism, I invite you to stay subscribed and share this newsletter with a friend. You are joining 100+ readers who believe in sound money, free markets, and individual sovereignty. This Substack is written by Samuel Frimpong, economist and Substack writer, with a consistent focus on defending free trade and economic rationality in an era of policy folly.

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In that sense, the recent fascination with “gold policy” is revealing. Ghana’s new Ghana Gold Board, GoldBod, was created to centralize and formalize small-scale gold trading, curb smuggling, and channel more gold through official routes. Foreigners were prohibited from trading artisanal gold, and GoldBod was designated as the sole legal buyer, seller, assayer, and exporter for licensed small-scale output. This is not a free market in gold. It is a state trading model justified in the language of order and stability.

The more interesting question is not whether GoldBod can buy gold. It is why governments everywhere, including Ghana, reach for gold only to avoid the discipline that a true gold standard would impose.

The Real Target Is Not Gold, but Restrictions

Mises’s point travels well to Accra. The loudest enemies of gold are rarely motivated by technical disputes about “stability.” They want discretion. They want the power to push credit outward, spend without taxation, and postpone the day of reckoning. They cannot do this comfortably under a hard monetary standard, because a genuine gold standard makes monetary expansion costly and forces the monetary authority to answer to something other than Parliament, party financing, and fiscal emergencies.

That is why the propaganda always returns to the same moral theater. The gold standard is described as outdated, rigid, or “anti-development.” Paper money is described as modern, flexible, and compassionate. But “flexibility” is simply a polite word for the right to change the purchasing power of money by political choice.

If you want to know what a system is designed to do, look at what it reliably permits. Ghana’s fiat regime permits chronic deficits, periodic liquidity rescues, and the quiet taxation of cash balances through inflation and depreciation. It also permits officials to deny responsibility. The cedi “fell” because of global shocks (Covid-19, the Russia-Ukraine war), speculators, or bad sentiment. It rarely falls because policy was built to allow it to fall.

The Ghana Variant: Buying Gold to Support Fiat, Not to Replace It

The Bank of Ghana has run domestic gold purchase arrangements that, in effect, convert locally produced gold into reserves. The Bank’s own responsible gold sourcing framework describes an approach in which gold produced by licensed small-scale miners is purchased within an official structure. Reuters has also reported Ghana’s efforts to buy a share of mining output to build reserves and stabilize the currency, including figures showing a material rise in official gold reserves over recent years.

GoldBod is now positioned as a key institutional node in this ecosystem, with public arguments that spot price purchases can discourage smuggling and feed a gold-for-reserves pipeline. The state’s strategic logic is straightforward. If gold inflows improve reserves, reserves can soften currency volatility, and softer volatility can buy political time.

But this is not the same thing as adopting a gold standard. It is gold used as a supporting asset for a discretionary paper regime. The steering wheel stays in the same hands.

The Mirage of “Stability,” and Why It Keeps Returning

Ghanaians have heard the promise of stability for decades. Pegs, managed floats, redenominations, forex auctions, moral suasion, import restrictions, special credit lines, and new “market reforms” arrive in cycles. Each is sold as economic relief, which eventually collides with the same reality: the state cannot spend beyond its means and also maintain the currency’s purchasing power.

So when “stability” is invoked against gold, the claim is often disingenuous. The real desire is not stable purchasing power. The real desire is the ability to change purchasing power without an external check.

Even credible analysts caution against attributing cedi performance to gold operations alone, noting other drivers such as global gold prices, output, and fiscal conditions. That skepticism matters. It reminds you that the deeper variable is not gold mechanics. It is policy credibility, which ultimately means fiscal restrictions and monetary restraint. A country cannot launder bad policy through a shiny reserve asset.

Will the Bank of Ghana Adopt a Gold Standard?

Not in any meaningful sense, unless Ghana is prepared to accept what the gold standard actually means.

A real gold standard is not a press release about reserves. It is a binding rule. It means the central bank cannot create new cedis at will. It means deficits must be financed transparently through taxation or honest borrowing, not through monetary back doors. It means banks cannot count on inflationary rescues when credit booms turn to busts. It means politicians lose one of their most effective tools for distributing benefits today and pushing costs into the future.

That is why the political incentives run against it. The people who gain from discretion will not voluntarily surrender it. They may buy gold. They may speak warmly about gold. They may even wrap gold policy in nationalist language. But they will avoid the institutional reform that turns gold into a leash.

If You Want a Higher Living Standard, Start With the Real Reform

From an Austrian and libertarian standpoint, the Ghanaian path is not to give the same discretionary institution a larger pile of gold and hope it behaves. The path is to reduce discretion itself.

A serious reform agenda would mean ending monetary financing in all forms, forcing fiscal honesty, and liberalizing money so citizens can protect themselves. If people prefer to hold value in gold, foreign currency, or competing payment media, the law should not criminalize that preference. When citizens can exit, policy discipline improves. When exit is blocked, “stability” becomes a slogan used to justify control.

GoldBod may reduce smuggling and improve official capture of gold flows. It may even marginally strengthen reserves under favorable conditions. But none of this answers the central question. The question is whether Ghana wants honest money or only the appearance of it.

As long as we keep fiat discretion and merely decorate it with gold purchases, we are not restoring sound money. We are trying to make inflation look respectable.

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I hope you all have a great day.

Thank you for reading and supporting my work. If you value clear, weekly analysis grounded in free-market trade policy, Austrian economics, and liberty in an age of expanding statism, I invite you to stay subscribed and share this newsletter with a friend. You are joining 100+ readers who believe in sound money, free markets, and individual sovereignty. This Substack is written by Samuel Frimpong, economist and Substack writer, with a consistent focus on defending free trade and economic rationality in an era of policy folly.

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The review of the Council of State raises an uncomfortable question. Advisory bodies that lack clear purpose often exist to legitimize decisions already taken. Reforming judicial appointments and limiting administrative overreach by the Chief Justice addresses a deeper issue. Concentrated authority corrodes even institutions designed to resist it. Judicial independence is not preserved by rhetoric. It is preserved by structure, finance, and clarity of role.

The proposal for a constitutional Anti-Corruption and Ethics Commission reflects frustration with fragmentation. Ghana does not lack watchdogs. It lacks enforcement insulated from politics. Yet creating new bodies is not automatically reform. Without strict limits and transparent mandates, anti-corruption institutions risk becoming tools of selective justice. The same caution applies to clarifying the role of the Attorney-General. Prosecutorial discretion must be shielded from political convenience, or it becomes a weapon rather than a safeguard.

Chapter Five turns to the public service, where reform is least glamorous and most essential. A depoliticized bureaucracy is the backbone of any functional state. Fragmentation, partisan pressure, and weak asset declaration regimes have transformed public administration into a revolving door of loyalty and reward. Strengthening merit, enforcing conduct, and clarifying appointment rules are not technocratic obsessions. They are prerequisites for competence. A state that cannot rely on its own administrators becomes increasingly authoritarian as it compensates for failure with control.

Chapter Six expands rights, and here restraint matters most. Rights inflation is a global constitutional trend. Every social aspiration becomes a constitutional entitlement. While the CRC’s emphasis on equality, legal aid, and due process is defensible, constitutionalizing broad socio-economic rights carries risks. Rights that cannot be enforced become symbolic. Worse, they justify expanding state power without guaranteeing delivery. Liberty is not strengthened when promises multiply without capacity.

Digital privacy protections stand out as necessary and timely. Power today is exercised through data as much as law. Protecting citizens from arbitrary surveillance is consistent with constitutional liberty. Yet rights must be paired with limits on enforcement authority, or they dissolve into declarations.

Chapter Seven addresses decentralization, long promised and rarely delivered. Ghana’s governance is centralized not because decentralization is impossible, but because it is inconvenient. Electing local executives, strengthening fiscal autonomy, and rationalizing districts are steps toward accountability. Power exercised closer to citizens is harder to hide. Yet decentralization without fiscal discipline merely relocates dysfunction. Local governance must be constrained by rules, not enthusiasm.

The reform of the security architecture in Chapter Eight confronts a silent danger. Politicized security institutions undermine constitutional order long before elections fail. Clarifying civilian deployment, strengthening oversight, and securing tenure for leadership aim to professionalize coercive power. This matters because liberty collapses when force answers to politics rather than law.

Finally, Chapter Nine addresses constitutional rigidity. A constitution that cannot adapt invites informal erosion. Allowing popular initiative and reducing over-entrenchment recognizes that durability depends on relevance. Stability is preserved not by freezing institutions, but by permitting controlled evolution.

The CRC report, taken seriously, is not a sentimental document. It does not promise salvation through symbolism. It identifies discretion, politicization, and weak constraints as Ghana’s central failures. The risk is political selectivity. Governments embrace reforms that expand legitimacy while resisting those that limit power.

Constitutional reform is not about national pride or historical closure. It is about designing rules that make abuse costly and liberty ordinary. Ghana’s opportunity lies not in rewriting identity, but in constraining authority. Whether this moment produces substance or sentiment will depend on what political actors choose to give up, not what they choose to announce.

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I hope you all have a great day.

Thank you for reading and supporting my work. If you value clear, weekly analysis grounded in free-market trade policy, Austrian economics, and liberty in an age of expanding statism, I invite you to stay subscribed and share this newsletter with a friend. You are joining 100+ readers who believe in sound money, free markets, and individual sovereignty. This Substack is written by Samuel Frimpong, economist and Substack writer, with a consistent focus on defending free trade and economic rationality in an era of policy folly.

In 2026, you can also expect greater consistency. I will publish regularly and maintain the standards you have come to expect: direct arguments, careful reasoning, and a firm commitment to principles over propaganda.

Disclaimer: You are receiving Samuel Frimpong’s Substack because you subscribed. If this is no longer useful to you, please feel free to unsubscribe. This email does not provide financial advice. Please do your own research and make your own decisions.

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