AFRICA | A Golden Promise: Dr. Mahamudu Bawumia’s Vision for the Ghanaian Cedi

ACCRA, Ghana, August 25, 2024—In the midst of Ghana’s vibrant election season, Vice President and presidential candidate Dr. Mahamudu Bawumia presents a visionary economic strategy: reestablishing the Cedi on a gold standard. This bold move aims to stabilize Ghana’s currency and inspire a new era of economic prosperity.

Speaking to a crowd of eager constituents in Accra, Dr. Bawumia outlined his plan to back the Cedi with gold, a move expected to curb the 25% depreciation experienced since early 2024. This approach not only aims to stabilize the currency but also to secure Ghana’s economic future by leveraging its substantial gold reserves.

The Advantages of a Gold-Backed Currency:

1. Stability and Trust: By tying the Cedi’s value to gold, Dr. Bawumia believes it will stabilize the currency through intrinsic value that gold holds universally. This could reduce volatility and make the Cedi a more reliable store of value.
2. Inflation Control: Gold-backed currencies can help prevent excessive money printing, a common cause of inflation. With currency issuance limited by gold reserves, Ghana could see lower inflation rates, preserving the purchasing power of its citizens.
3. Investor Confidence: A gold standard could enhance investor confidence by reducing the risk associated with currency fluctuations and inflation. This can attract foreign investment, crucial for Ghana’s economic growth.
4. Economic Sovereignty: Aligning with global movements toward de-dollarization, such as those by BRICS countries, Ghana could reduce its dependence on foreign economic policies and strengthen its financial autonomy.

However, experts like Richmond Atuahene caution the need for a stable economic base before implementing a gold-backed currency. They argue that strengthening the economy’s fundamentals is crucial for the success of such a monetary system. Atuahene suggests increasing gold reserves by adjusting the percentage of gold export proceeds retained domestically, a necessary step for backing the entire currency supply.

Dr. Bawumia also took the opportunity to highlight the recent inauguration of Royal Ghana Gold Limited, the country’s first gold refinery, as a strategic move in accumulating enough gold reserves to back the Cedi effectively.

Despite some skepticism, particularly regarding the potential constraints on monetary policy, the proposal represents a significant shift towards economic stability and growth. By linking the Cedi to gold, Ghana hopes to not only stabilize its currency but also to secure a more prosperous and resilient economic future.

Despite these reservations, the move could potentially usher in a period of economic stability reminiscent of the prosperity seen in nations during the gold standard era. The initiative is aimed at curbing excessive money printing and promoting investor confidence, which could attract foreign investments and bolster national growth.

Beyond the borders of Ghana, Dr. Bawumia’s proposal aligns with broader global shifts as seen in the strategies of BRICS nations, which are also contemplating a similar detachment from the US dollar in favor of gold-backed regional currencies. Ghana's interest in joining BRICS, as previously expressed by President Nana Akufo-Addo, positions the nation on a potential path towards greater economic autonomy and influence on the global stage.

As the December elections approach, Dr. Bawumia’s promise of a gold-backed Cedi is not just about economic policy, but about instilling hope and confidence in Ghana’s financial future, making it as solid and enduring as the gold it stands upon.

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