The Reckless Borrowing, Collateralization and Sale of State Assets: Jeopardizing Ghana’S Future

The Reckless Borrowing, Collateralization and Sale of State Assets: Jeopardizing Ghana’S Future
The Reckless Borrowing, Collateralization and Sale of State Assets: Jeopardizing Ghana’S Future


By Roger T.D. Wills, Economist and Financial Analyst

Africa-Press – Ghana. Ghana’s economic policy of borrowing significantly, collateralizing, and selling public assets has proven contentious. While such policies may provide short-term financial respite, the long-term consequences for the country’s future and the weight they impose on the next generation are concerning. Ghana’s economic stability is at a critical juncture, primarily due to its unsustainable borrowing habits and the frequent collateralization and sale of state assets. This approach not only jeopardizes financial sovereignty but also threatens the prosperity of future generations.

Historically, Ghana has relied heavily on loans to boost its economic development. However, this strategy has led to an alarming increase in debt levels, making it difficult to manage without compromising vital state assets as security. The recent tendencies to collateralize these assets to secure loans pose a significant risk. Such actions not only strip the country of its resources but also saddle future leaders with limited options to navigate economic challenges.

The sale of state assets, a quick fix to immediate financial woes, further complicates the scenario. It diminishes the government’s capacity to generate revenue independently, forcing a reliance on external financial aids and loans. This cycle of borrowing and selling off assets undermines the country’s ability to invest in critical sectors such as education, healthcare, and infrastructure, which are essential for sustainable development.

The repercussions of these financial decisions are far-reaching. They endanger the economic freedom of the next generation, limiting their ability to influence policy and make sovereign decisions. The youth of Ghana might find themselves inheriting a nation so indebted that their choices and opportunities are severely constrained.

To secure a brighter future, Ghana must adopt a more prudent fiscal strategy. This includes establishing stricter borrowing guidelines, enhancing transparency in financial dealings, and prioritizing investments in sectors that promise long-term gains over short-term relief. Only through such measures can Ghana hope to safeguard its assets and secure a prosperous future for the next generation

The Current Scenario

Over the last decade, Ghana has increasingly relied on borrowing to fund budget shortfalls and development projects. According to the Bank of Ghana, the country’s public debt would total 78% of GDP by the end of 2023, up from 57% in 2018. This borrowing spree has frequently been supported by the collateralization and sale of public assets, such as critical infrastructure and natural resources.

Collateralization and Sale of State Assets

Collateralization involves using state assets as security for loans. While this can provide immediate financial resources, it poses significant risks. If Ghana defaults on its loans, these assets could be seized by creditors, leading to a loss of national wealth and sovereignty. For instance, the Agyapa Royalties deal, which involved monetizing Ghana’s gold royalties, has faced significant backlash for potentially undervaluing state assets and compromising future revenue streams (Africa Report, 2023).

The sale of state assets is another method the government has employed to raise funds. While selling non-essential assets might make sense under certain circumstances, the divestiture of strategic assets can undermine the country’s long-term economic stability. In 2022, the government sold stakes in key energy and mining sectors to foreign investors, raising concerns about foreign control over critical national resources (Bloomberg, 2022).

Implications for the Next Generation

The consequences of imprudent borrowing and asset sales go well beyond the present economic cycle. Future generations will inherit a huge debt burden, restricting their economic opportunities and capacity for growth. To pay off these debts, higher taxes and less public investment on important services like education, healthcare, and infrastructure development are likely to be necessary.

Furthermore, the loss of governmental assets reduces the nation’s ability to earn revenue independently. This reliance on external financing and control can create economic risks and decrease policy autonomy. As a result, the next generation may find itself in a situation where creditors and foreign investors have more influence over economic decisions than national interests.

Recommendations for Sustainable Economic Management

To safeguard the future of the next generation and ensure sustainable economic growth, the following recommendations are proposed:

Stop Borrowing: The government must shift its priority from borrowing to creating domestic revenue. This includes improving revenue collection methods, increasing the tax base, and enacting progressive tax policy.

Ministries to Generate Their Own Revenue: Most government ministries should be taken off the government budget and be mandated to generate their own revenue and pay themselves. This can be achieved by setting Key Performance Indicators (KPIs) that hold ministries accountable for their financial performance and service delivery.

Improve Domestic Revenue Mobilisation: Improving tax collection procedures and extending the tax base can lessen the need to borrow. Implementing progressive tax systems and fighting tax evasion are critical steps towards this goal.

Strengthen Institutional Oversight: Establishing robust oversight mechanisms to monitor the use of borrowed funds and the management of state assets is essential. Independent bodies such as the Public Accounts Committee should be empowered to hold government officials accountable.

Prioritize Asset Retention and Optimization: Instead of selling state assets, the government should focus on optimizing their use to generate revenue. Public-private partnerships (PPPs) can be explored to attract investment without relinquishing control over critical resources.

Develop Long-Term Economic Plans: Crafting comprehensive long-term economic strategies that prioritize sustainable development and resilience is vital. These plans should include clear guidelines on borrowing, asset management, and fiscal responsibility.


The reckless borrowing, collateralization, and sale of state assets in Ghana pose significant risks to the nation’s future. These practices, while providing short-term financial relief, threaten to undermine economic stability and burden future generations with debt and lost opportunities. By stopping the borrowing practice, requiring ministries to generate their own revenue, enhancing domestic revenue mobilization, strengthening institutional oversight, prioritizing asset retention, and developing long-term economic plans, Ghana can chart a path toward sustainable growth and secure a prosperous future for the next generation.

Source: 3News

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