A bank’s balance sheet is only as strong as the environment it depends on.
Climate change has moved from a distant global conversation to a daily Ghanaian reality. From the choking red rivers of the Western Region to the eroded farmlands of the Ashanti and Eastern Regions, illegal small-scale mining, popularly known as galamsey, has left visible scars on our land, water, and livelihoods.
But beneath the environmental and social consequences lies a less visible danger. A financial stability crisis in the making. For a sector built on confidence, sustainability, and predictability, unchecked ecological degradation has now become a credit, liquidity, and systemic risk issue.
Let’s start with the economic toll of galamsey on the economy.
According to data from the Ghana Chamber of Mines and the Ministry of Lands and Natural Resources (2024), small-scale mining (both legal and illegal) produced about 1.2 million ounces of gold in 2024, surpassing 2023’s total output. It is estimated that 70–80% of these operations were unregulated, evading taxation and environmental controls.
The financial losses are immense. Ghana forfeits about US$2billion annually in uncollected revenue from illegal mining activities while over 190,000 acres of cocoa farms, which serves as a cornerstone of Ghana’s foreign exchange, have been destroyed or rendered unproductive.
For banks, this translates into declining borrower productivity, impaired collateral values, and increased default risks. Galamsey is not only destroying our rivers, but also quietly eroding bank balance sheets.
Continue reading
What happens when nature hits the numbers?
The environmental crisis compounds Ghana’s broader climate vulnerabilities. Rising temperatures, erratic rainfall, and flooding have worsened soil erosion and crop failure, amplifying physical risks for borrowers.
For financial institutions, this manifests in higher non-performing loans (NPLs), reduced collateral recovery, and potential capital erosion. In parallel, transition risks stemming from tightening environmental laws, global investor scrutiny, and ESG expectations are rising sharply.
