In January 1994, the French government caved in to pressure and slashed the value of the CFA currency, used by its former colonies in Africa, by half. Overnight, prices skyrocketed, purchasing power dropped, and widespread violence erupted in many cities. In response, the IMF was invited in, France slashed debts owed by the CFA countries and desperate price controls were imposed by many of the governments of the affected countries.

The event sparked a deep dive into the many aspects of exchange rate setting and movements in developing countries. Economists in the hallowed halls of development finance, at the World Bank, the IMF, in academia, took stock of the massive specialist literature on what drives exchange rates, updated a few concepts and reignited many old debates.

All the flurry of reflection however turns around a simple question: how to tell if an exchange rate is overvalued or undervalued?

In the Ghanaian context that seemingly simple question has some profound implications for assessing the government’s attempts to stop the free fall of the national currency, the Cedi. The Cedi has depreciated by a whopping 40% since the beginning of the year. Is this depreciation merely a rational adjustment to balance the country’s true position in the global economic system? That is to say, does the Cedi’s depreciation reflect a true picture of economic fundamentals and therefore is its depreciation merely a movement to an accurate level?

This is a very complicated matter to address. It requires empirical estimation of something called the “long-run equilibrium real (effective) exchange rate” that attempts to compare how the prices of similar and dissimilar goods behave in Ghana versus its trading partners to ascertain if the exchange rate is merely trying to maintain balance. One may even have to make provision for so called “behavioral factors” to balance the current (or “spot”) demand and prices with near-future or “forward” demand and prices etc.

Credit: Esenlik Sanal

Pernicious Supply – Demand Imbalance

A far simpler question may be to ask whether the usual demand for dollars in the economy is being met by the usual supply. Or, whether, as the government now insists, “speculative bubbles” are inflating demand and thereby triggering artificial scarcity. If one reduces the problem to one created largely by speculation, the policy response may favour a lot of “signaling” rather than actions to address real and structural issues.

A government fighting speculators is essentially engaged in a game of bluff. It huffs and puffs that it has enough forex (usually dollars) to meet all legitimate dollar needs in the medium-term so the exchange rate is bound to return to its natural rate at some point, leaving speculators carrying massive losses. If speculators blink first, it wins. In a country with such a fine tradition of political propaganda, such huffing and puffing flows quite naturally. Government spinning goes into overdrive in a style very similar to the one recently witnessed of the Minister of Information threatening speculators to immediately release their hoards back into the market or face annihilation.

If you look carefully though, you will see the old menacing question of how to determine the accurate exchange rate disguised in the implied claim that there is a natural rate that speculators are disrupting. Should it be the case that speculators are merely profiting from a gap between what should be the true, more devalued, Cedi rate and a current, artificially propped up, rate, then it is easy to see how the government’s actions merely increases the eventual profit of bound-to-win speculators.

Africa has seen many instances of such misguided government machoism. One famous instance in Malawi also occurred in 1994, the same year as the titanic CFA devaluation. The country was in that year forced to abandon its commitment to auction adequate volumes of forex to meet legitimate demand. Malawi buckled because the pledge proved unsustainable as it became clear that structural demand rather than speculation was driving the imbalance.

An intuitive survey of recent data and trends in Ghana inclines one to the view that the equilibrium exchange rate in Ghana is influenced more by inflation and changes in rational expectations by investors and other actors in the economy than by interest rates and real incomes. Even a cursory survey of the asset management market will bring up many serious complaints by industry players of a serious outflow of funds from Cedi-denominated assets and uncover widespread perceptions that the central bank’s rate-signaling actions are having zero effect so far. Misguided “government control” interventions in the forex market without due attention to such a reality could strain the balance sheet of the central bank and spillover into the broader financial sector.

Gauging the True Forex Market Balance from Trading Data

To discern a structural demand-supply imbalance of the dollar stock in Ghana, one does not necessarily have to build complex empirical models to ascertain the equilibrium rate. It is possible to glean enough insights to arrive at fairly sound conclusions about the current forex crisis in Ghana by looking at recent trends in actual forex flows in the country supplemented with a brief analysis of the central bank’s forex operations.

The first critical point to note is the sheer expansion of the country’s forex trade in less than a decade. Between 2012 and 2020, commercial banks were able to expand their dollar stocks, earned domestically, from $7 billion to $24.82 billion. Absa Bank alone, in 2020, was responsible for $5.68 billion of this amount, many times higher than the forex repatriated by the entire mining sector. Ecobank accounted for $2.648 billion, and Stanbic $2.508 billion. Note that all these three banks earned more forex from a range of sources such as customers involved in exports and remittances than the country earned from the pre-export financing package for Cocobod that the Ministry of Finance is currently touting as the miracle cure for the depreciation.

In fact, the total amount of forex mobilised in the private sector by the commercial banks – i.e. $24.82 billion – in 2020 was double the $12.18 billion that went through the official Bank of Ghana corridor that year, or the $12.65 billion earned in 2019.

More fascinatingly, the 2020 amount of forex mobilised by the commercial banks was also nearly double the $12.7 billion the same banks earned in 2019, underlying the potential for massive volatile swings in this segment of the forex market that is highly sensitive to investor sentiment. Reinforcing the volatility point is the corresponding 2018 figure of $25.95 billion for commercial bank forex earnings. In summary, aggregate commercial bank forex trades have swung from ~$26 billion to $12 billion and back to $25 billion in a single 3-year cycle.

The Central Bank’s Reserves Muscle

Judging from these numbers, both in respect of scale and volatility, one wonders if the Bank of Ghana has the financial muscle to manage a floating regime when it goes awry as a result of shifting private investor sentiments, especially in the context of a liberalised capital account.

Below we provide snapshots of the forex reserve composition of the Bank of Ghana across the 3-year cycle and a lagging picture from 2015. (PS: Note the rigidity implied by the amount of reserves held as fixed deposits.)

Source: Bank of Ghana

The 2015 comparative is very interesting for two reasons. Firstly, the total forex flows through the official Bank of Ghana corridor amounted to more than $10 billion. Secondly, the reserve composition of $6 billion is highly consistent with the scaled level of forex receipts and payments through the official Bank of Ghana corridor.

Contrast this relatively stable picture with the dynamics in the commercial dealer banks’ corridor, where total flows amounted to $4.27 billion, a far cry from the ~$25 billion range being observed at the peaks of recent cycles. The massive mismatch between Bank of Ghana cyclical forex swings and the cycles observed at the commercial bank level renders any attempt to use the central bank’s meagre reserves to stabilise supply-demand imbalances created by shifts in sentiment among private sector market participants no longer viable in Ghana.

Bridging and Swapping Galore

A further factor worthy of note is the role played by bridge and swap facilities in smoothing liquidity bumps in periods when the country has access to the Eurobond window. These secretive arrangements involve significant flows of forex that have a real effect on local supply. In 2015, these short-end mechanisms yielded over $2 billion spread helpfully across the year.

Source: Bank of Ghana

By 2020, these sources were generating nearly $5 billion in forex value. The Bank for International Settlements, for instance, supplied $3.2 billion in bridge facilities in 2017, $1.5 billion in 2015, $1.6 billion in 2018 and $800 million in 2019. In 2020, the amount picked up again to $1.3 billion. The unscrutinised nature of such bridge and swap facilities (often bundled with the omnibus “international capital market program” and negotiated quietly, away from the prying eyes of parliament) mean that their volatilities are not all that well understood by the broader market.

It is intriguing that in the most recent year that Ghana witnessed a sustained depreciation episode, in 2019 that is, a number of negative shocks can be seen to be operating in tandem in the data. First, we witnessed a halving of forex flows through the commercial banking window. Next, a significant decline in bridge and swap deals. Before a raft of countervailing measures, such as a large Eurobond issuance, took hold, Bloomberg reported the Cedi as the worst performing among 146 tracked currencies worldwide that year.

A stronger tide of similar negative shocks are currently rippling through the commercial banking forex corridors but this time around the country is unable to depend on the Eurobond market for relief. Of course, a vicious cycle then ensues as the liquidity pills of swap and bridging facilities have also, in keeping with their strong correlation with large debt issuances such as those available in the Eurobond market, run short.

In these circumstances, where monetary policy has become accommodating of considerable fiscal recklessness leading to runaway inflation, and private market participants are thus exiting Cedi assets into the refuge of the dollar, the extent of imbalances, given the size of the commercial bank segment of the forex market as described above, and the dwindling capital receipts in the Bank of Ghana corridor, can no longer be addressed by small inflows that merely serve a signaling effect. Unless expectations improve on account of an improved inflation and investor confidence picture.

Afreximbank & Cocobod Facilities

Which discussion brings us to the issue of the Afreximbank and Cocobod facilities that the government has, with customary spinning skill, hoisted as its victory banner over speculators.

Afreximbank is one of the government’s recent partners in its swap and bridge programs. In 2018, Afreximbank offered Ghana a $300 million facility. In 2019, because of the headwinds in the economy, it followed other counterparties in lowering its provision to $150 million. In 2020, it didn’t bite at all. It is curious therefore that in seeking for a facility to signal capacity to intervene in the market, the government had to resort to a project-financing facility from Afreximbank of the sort that it took to Parliament.

Regular readers of this blog will recall that we have in previous commentary questioned the suitability of milestone-tied financing for the kind of signaling interventions the Bank of Ghana is engaged in. As it turned out, the highly provisional term sheet presented to the relevant committee of Parliament was merely cover for what looks like a separate and undisclosed contractual arrangement not available for scrutiny. The government now insists that it has received the project financing in full. Uncharacteristically, Afreximbank itself has remained silent about the facility and its disbursement. The Ghanaian case is more similar to a series of transactions in Zimbabwe that are now the subject of a lawsuit. And less like other project deals that Afreximbank tends to widely publicise. Afreximbank has been known to drive a tough bargain where it is clear that its resources may be put at risk, as evident in recent strained dealings in Swaziland.

To the extent that the Afreximbank – Ghana deal is shrouded in considerable murkiness and opacity, there is little more that can be said except, as repeatedly explained, its total insufficiency in making a dent in the serious forex shortfall situation in Ghana today unless and until confidence is restored to the bulkier commercial bank end of the market.

Regarding the Cocobod pre-export financing facility, the issues are more straightforward. The historical disbursement rate has been in the $600 million for the first tranche, and not the $910 million the government insists will arrive in October.

Source: Bank of Ghana

Given major shocks to output in the Ghanaian cocoa sector, and Cocobod’s heavily deteriorated finances, it is not clear why the government believes that the banks would consent to such frontloading. But, here again, as with the Afreximbank facility, there may well be undisclosed factors that make determinative analysis impossible. It is also important to mention that in recent years there appears to be parallel flows of forex linked to cocoa separately from the pre-export financing facility itself amounting to roughly 30% of the total receipts. The fact remains however that out of a total $1.3 billion facility secured in 2020, only $860 million was eventually disbursed. In the course of 2021, disbursements again fell short despite a much celebrated $1.5 billion raise.

The meat of the matter

In the final analysis, all things considered, neither the opaque and assumed $750 million Afreximbank injection nor the $600 million to $910 million likely to flow from the Cocobod facility in October can defend against the tides should trading in the private markets continue to be driven by negative sentiments about inflation, loose monetisation of the still outsized fiscal deficits, and the willingness of the government to credibly rein in expenditure. Together, they amount to $2 billion if disbursed fully. Ghana’s forex market has in recent years easily absorbed $40 billion. The Cocobod-Afreximbank injection is thus a mere 5% of total throughput. In extreme dislocation scenarios, $12 billion swings have been observed. A $2 billion blip on the radar, with noisy speculation also bubbling in the background, will thus barely make a beep.

So long as the government’s announced fiscal consolidation plans do not show any clear evidence of a selective default on wasteful obligations, of a sincere and serious spending review, nor of adjustments to spending beyond the perfunctory cuts to discretionary funding that per this author’s analysis do not even amount to 2% of discretionary spending, the government’s signaling will fail. The Cedi will continue to suffer acute bouts of depreciation, with periodic relief proving short-lived, until government’s actions start to match the rhetoric. Recall that the government’s public pledge is to cut 30% of discretionary spending. It should start by at least redeeming it.

Unfortunately for Ghana, investors and other private market participants are by their nature less swayed by spin than by action.

As I write this, members of the Bank of Ghana’s Monetary Policy Committee (MPC) are huddled together poring over the dire numbers of Ghana’s ongoing economic tragedy.

Five of the seven members of the committee are basically just senior executives of the Bank of Ghana: the Governor, his two deputies, and two key management lieutenants. The other two are appointed by the BoG’s government-dominated Board. Essentially the same people who have been running the day to day and two friendly economists favoured by the ruling government are having an “emergency meeting” on matters already in their purview, hardly the stuff of disruption.

But there is a quality of the surreal about this whole panic. Ordinarily, the Governor of the Bank of Ghana (BoG) and his MPC deserve our sympathy. Even though we analysts frequently criticise the MPC for its continued refusal to publish minutes of its meetings and disclose the exact positions of members. And though we cannot easily forgive its failure to make public the actual forecasting and evaluatory models it relies on to guide its rate-setting, we always cut it some slack.

We are moderate in our expectation of the BoG’s success in maintaining inflation between its 6% to 10% target band (with a preferred median of 8%) because we agree with the economists who attribute the country’s inflationary and exchange rate problems to something called, “fiscal dominance”.

Credit: Landefek (Blendspace)

Fiscal dominance crudely means that whenever the government is hard up it is unable to rely on increasing tax revenue. It then resorts to measures that forces the monetary authorities (eg. the central bank) to give up on its targets and strictures.

Historically, high government debt in a context of low capacity to increase tax revenue quickly, as is the case in Ghana, has been associated with increased money printing (some of which is then lent to the government by the central bank), financial repression, and various ways of gaming the government securities markets (such as the recent revelations of sweetheart repo deals by the BoG to incentivise some banks to hold on to government securities).

In the current circumstances of fiscal dominance and attempts at financial repression in Ghana, it is not surprising at all if inflation hits 32% instead of the central bank’s targeted 8%. The tools available to the BoG are being used to favour inflation rather than to bring it down because of the central bank’s weak operational independence. Because the government has also chosen at this time to infuse sentiment-dampeners, like the poorly designed e-Levy, into the economy at this sensitive moment, a true “stagflation spiral” has been triggered, throwing all crisis management out of gear. Raising rates will crush ground growth further, but doing nothing will make the inflation hawks scent blood. What a bind!

Credit: Abey Francis

Where we cannot so easily pardon the BoG is its seeming enthusiasm to reinforce wrongheaded government narratives that are all about PR signaling and very little about reality. By applying a veneer of “technocratic credibility” on the government’s strategy of sheer spin over substance, it has become an enabler of the continued postponement of hard decisions in the hopes of a miracle. Our main charge-sheet is the latest BoG release urging calm because it is at work steadying the Cedi.

Let us tackle each of the seven remedies it claims it is applying to the Cedi’s woes.

Gold Purchase Program to increase foreign exchange reserves.

So far all we have is an opaque program in which the government has without any merit-based competition selected a so-called “gold aggregator” from which it intends to buy crude gold, have it refined and stored as a reserve asset. No information as to which company exactly this is, what price indexing formula exactly is at play or the volume commitments.

It is important to emphasise that the BoG does not intend to back any portion of the Cedi supply with gold. This is not a partial replay of the gold standard. So, effectively, it will simply seek to convert printed Cedis for gold. This will hedge the BoG’s own holdings against Cedi inflation but it does nothing to actually address demand for forex or the market’s jitteriness about holding Cedis. In fact, gold producers will seek a counter-hedge against the Cedis they are provided, limiting the exchange volumes involved, seizing up liquidity over the long haul, and bringing everything back to square one.

Unless, the BoG intends to become a major active speculative trader in gold to build its dollar reserves, there is virtually no significance to this policy at all as far as the Cedi’s stability is concerned. Zimbabwe recently abandoned this same bullion-reserves approach, despite at one point hoarding the world’s second largest stash of gold reserves, to focus on getting its citizens to shift from forex to gold coins as a store of value, a somewhat less fraught but equally dubious proposition. Whilst there are channels through which such a policy can impact positively on small-scale mining as a separate objective, research suggests considerable obstacles.

Special Foreign Exchange Auction for the Bulk Distribution Company’s (BDCs) to help with
the importation of petroleum products.

Our inquiries in the downstream fuel market indicate that the BoG has been steadily reducing its supply of forex to the BDCs. Some respondents report a sharp decline from about 30% of forex demand being met in the official BoG window in May of this year to roughly 10% today. It is totally disingenuous for the BoG to create the impression that it is meeting the demand of the BDCs.

Bank of Ghana gold buying cooperation agreement with mining companies

It is not clear how this should differ in effect from the shady/opaque “gold aggregator” approach to bolstering bullion reserves discussed above.

• The Bank of Ghana forex liquidity support to commercial banks

Here also, as with the BDCs, our inquiries in the industry point to massive undersupply.

• USD750,000,000 Afrieximbank Loan Facility
As previously explained, Ghana has not really entered into a loan agreement with Afreximbank. Unless the government signed a secret agreement and only sent the term-sheet to Parliament for approval (a patent illegality), the only documents that were placed before the full Parliament were term sheets opening the door for the negotiation of substantive loan agreements.

There are major factors acting against the swift injection of Afreximbank funds, for which reason it ought not to be treated as an emergency support facility but a complementary bolster for another, true, emergency liquidity injection scenario.

I. A final agreement needs to be completed and approved by the Board of Afreximbank. This usually takes time.

II. The Ukraine Crisis Adjustment Trade Financing Program (UKAFPA), which is the specific Afreximbank program Ghana aims to draw on, was designed to fund simple purchases of commodities meant to be resold so that Afreximbank can get its money back relatively quickly. It is primarily an export and tourism stimulant facility. It was not originally intended for balance of payments support in the traditional way. The UKAFPA is still in fund raising mode and as at last checks was yet to appoint a Fund Manager. Ghana’s request for $750 million for road projects are somewhat misaligned with the program’s objectives and as such may require further work to secure all the necessary approvals and ensure successful matchmaking with ultimate lenders.

III. The UKAFPA is currently oversubscribed, with African countries having requested $16 billion from a total package of $4 billion. Ghana is thus in stiff competition for disbursements.

IV. By choosing to use roads as the basis for borrowing, Ghana has guaranteed longer due diligence intervals between disbursements. Each disbursement will require ESG sign-off, which tends to be more onerous for physical infrastructure compared to traditional trade finance. The erroneous impression that all the $750 million will come at once amounts to an unnecessary inflation of hopes. It should normally take years to disburse road project funds. Even if fast-tracked, it is hard to see how the entire $750 million can be disbursed within three months. Meanwhile, Ghana literally needs money tomorrow, and in much larger quantities than $750 million.

• The Syndicated Cocoa Loan Facility

It is historically true that the annual syndicated cocoa loan facility has been a major booster for the Ghana Cedi in its usual cycles of lows and not-so-lows. This time however there are formidable obstacles. Ghana’s cocoa crop continues to fail due to disease and poor supplies of subsidised inputs farmers have come to depend upon. Liquidity challenges have led to many of the country’s licensed buyers struggling to deliver the right quantities on time for export. Ghanaian deliveries have become unreliable in the international market leading to some frustrated contracts. All these factors are constraining disbursements even from the existing receivables-backed facility. At any rate, it would be many months before Ghana can expect any forex influx from the new facility.

• IMF Program

As everyone now agrees, Ghana’s current fiscal challenges are worse than they were in 2014 when Ghana applied for its last IMF facility (the 2020 general disbursement was not a real program). Even so, it took 8 months for the country to jump through all the necessary hoops to close a program. Considering that Ghana is yet to even submit its Letter of Intent, much less complete an updated debt sustainability analysis, and agree on the shape of a program, there is really no way for an IMF program to commence in less than three months. Even if a substantial amount of the money is frontloaded, IMF programs are milestone-driven. Worse, Ghana is focused on PR signalling and spin rather than doing the substantive work. For example, it has failed to explain why it believes it deserves double ($3 billion) of what its quota should entitle it to and why increasing the amount it intends to obtain at one go should do anything to speed things up. That is of course not to say that $3 billion is an unrealistic ask, but to emphasise that the more IMF funds are at risk, the stricter the scrutiny of the IMF Board.


In short, none of the measures the BoG is trumpeting can address the Cedi’s serious woes in the short-term, which is to say within the next three months, which most analysts believe is the crucial horizon. When a currency loses roughly half its value within a couple of months, prudence will call for real emergency provisions, not spin. Yet, so far, the government has not disclosed a credible short-term remedial strategy. Thus the posturing of the BoG as if there is indeed a short-term response underway is both delusional and dangerous.

As a matter of urgency, the government needs to explore a truly short-term forex commercial loan that is NOT project-tied and one which could be disbursed within the next three months. It should rework the Afreximbank facility as well as the one with the three commercial banks to ensure that they are consistent with an emergency funding scenario.

Above all, the government should stop the PR signalling and take substantive decisions on true cuts to discretionary spending since no short-term forex facility at this point will be of a decent enough size to make a real dent in the $4 billion forex shortfall facing the country. This means an independent spending review by a credible team of external auditors. It also means selective defaults on government obligations tied to programs delivering low or no value such as the various Kelni GVG related contracts, the wasteful IT projects at the Electoral Commission and the discredited flagship program expenditures related to IPEP, 1V1D, and the various so-called “special initiatives” at the Presidency.

It betrays a serious lack of sincerity and seriousness about addressing the ongoing crisis when the only spending areas the government can conclusively point to for cuts are travel and meetings. Areas barely amounting to $15 million even assuming 100% successful execution of claimed cuts.

In fact, the total spending adjustments in the government’s mid-year budget amount to just about $220 million on net when the nation is confronted with a $5 billion fiscal hole.

If the Bank of Ghana is unable to join the rest of us to ramp up the pressure on government to take the crisis seriously and embark on credible short-term remedial strategies, it can at least do all of us a favour and just stop bloviating. Ghana is past that stage.

Interacting with the Press on 9th August 2022, the Director-General (DG) of SSNIT, Ghana’s public pensions operator, provided some numbers to help the discussion about the economic benefits of the Ghana Card, the ID system the government wants to underpin all public services.

In the DG’s estimation, in the event that SSNIT is able to enroll all the 8 million Ghanaians in the informal and formal sector who are currently not contributing to the Scheme, and if those persons happen to have Ghana Cards, then SSNIT would not need to print 18 million cards (for each of the 8 million new members and a survivor each of all 10 million members). Since in SSNIT’s world the cost of each card is $7, then the savings to the pensions giant will be $126 million.

This is a very hypothetical and optimistic analysis. From the time SSNIT was founded in 1972 to the present, it has never seen a 100% working population coverage. In fact, it has never crossed the 20% mark. To tie expectations of cost savings to such an aggressive prospect is rather strange. At any rate, even if we accepted the “$126 million over 10 years” argument, the arithmetic will still yield $12.6 million a year, not the $30 million the government has announced. So where exactly did the $30 million number come from?

But that is not even what is most wrong about the analysis.

First and foremost, the $7 cost per card figure is NOT the cost solely of producing and printing a physical card. It is the cost of everything about the card. From card production to printing and biometric enrolment. We have yet to even consider indirect costs like datacenter construction, software and system configuration. Separate from the direct and indirect card costs as provided in the preceding are the ongoing administrative costs of personnel, systems upgrade, cybersecurity and data management.

An overview of cost buildup for a national digital identity system.
Credit: Clark, Chanda and Wolfe (2018) / World Bank

A blank polycarbonate biometric 256-kb smartcard (the Ghana Card has a 148kb chip with three main applets) and its printing alone, in the volumes we are talking about here, costs less then $2.30 per card, that is: less than 30% of the direct cost of the SSNIT ID card solution on the open market. From the above diagrams, one can infer easily the lower contribution of direct costs to total costs.

  • So, should SSNIT decide to halt further card production (as indeed it has), the cost saved per year for new active members will be $2.3 x number of new active enrollees. In recent years, SSNIT has seen active membership grow by less than ten thousand individuals a year suggesting that total savings will be in the region of $23000 per year ($2.3 x 10,000), quite a distance from the $30 million figure in the press.
Extract from SSNIT Annual Report

Obviously, even if because SSNIT members no longer need a physical card from SSNIT (due to use of the Ghana Card), SSNIT no longer has to incur the costs of printing new cards every year, the fact remains that it must spend considerable sums on all the other aspects of membership management. Pensions management naturally has its own workflows, processes and mechanisms to which any identification mechanism must be customised. Thus, SSNIT is not going to be relieved of those identity-related costs such as data management, linking of identity profiles to individual policies, card readers to verify the Ghana Cards submitted etc. These being the costs forming the bulk of SSNIT’s “total cost of ownership” of any digital identity solution it needs to do its work.

Considering that SSNIT’s total annual operational cost is in the region of $40 million per year, savings of $30 million would suggest that identity management of subscribers alone has been or should be absorbing 75% of all expenditures, a wholly inconceivable notion. In fact, after accounting for compensation, administration, goods purchases and services, SSNIT barely has even a million dollars to invest in subscriber experience services as a whole. No wonder then that it has struggled for years to produce these cards.

Extract from SSNIT’s Financial Disclosures

Nor should it escape readers that a physical ID card is really not essential once biometrics have been collected and stored. Just the membership number of the subscriber and their fingerprint or iris scan are all that one needs for sound identification. Are these then redundant savings?

Why bother correcting the “multimillion dollar savings” narrative though? Because it obscures an important aspect of the Ghana Card that most people don’t understand.

In actual fact, were one to properly understand how the Ghana Card has been designed, it should become clear that SSNIT will actually NOT SAVE ANY MONEY AT ALL.

The reason is the way the public-private partnership between the National Identification Authority (NIA) and the private investors (IMS) was designed. The agreement envisages the government of Ghana guaranteeing a 17% annual return on investment to the investors. With total lifecycle investment pegged at $1.2 billion, the Ghana Card is expected to yield tens of millions of dollars in revenues in order for the government to clear its now mounting debts to the private investors. Because virtually the entire high-end technology stack was provided and is still maintained by topflight technology vendors in the United States and Europe, the private investors have been piling up costs from day one.

A 17% Return-on-Investment (RoI) is however a steal! Few industries report such benchmark average RoIs for deals.

Source: CSI Market (2022)

In short, SSNIT is expected to pay through its teeth to use Ghana Card services for authenticating its subscribers. The original PPP business plan actually anticipated fees from SSNIT to the NIA and its private partners to the tune of tens of millions of dollars every year, money that SSNIT simply does not have. The current merger of SSNIT data with NIA data and subsequent creation of data stores at the Bank of Ghana facility hosting the Ghana Card datacenter is merely the start of a process. The next steps involve finalising the full range of services and associated fees that SSNIT is required to pay NIA so that IMS and its own private contractors can be paid.

If the original NIA-IMS Ghana Card business plan is anything to go by, then one can rest assured that in exchange for saving about $23,000 annually in new card printing, SSNIT should prepare to pay in the range of about $0.05 to authenticate each subscriber everytime it needs to identify them as part of its service provision. These costs could easily rack up to several millions of dollars per year. The problem of course is that the Ghanaian public institutions whose fees are expected to fund the hugely expensive Ghana Card platform – NHIA, SSNIT, DVLA etc – are seriously cash-strapped themselves. A fact that puts the entire financial sustainability of the Ghana Card at risk over time.

With all these factors at play, it is fair to ask again: where did the $30 million savings number come from? A cynic may think that the figure was dropped into the public domain as a way of softening the ground to justify large fees from public institutions to private Ghana Card contractors.