Enact a mineral revenue management law
The Head of Policy and Energy Policy Advisor at the Africa Centre for Energy Policy (ACEP), Dr Ishmael Ackah, has asked the new administration to enact a mineral revenue management law similar to the Petroleum Revenue Management Act 2011 (Act 815) to guide the disbursement and utilisation of revenues in the mining sector.
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He said the mineral revenue management law was crucial to guarantee more efficient management and the use of revenues from the mining industry.
He explained that an opportune period for the country to enact a law to address the fiscal challenges in the allocation of mineral revenue was now.
“To enhance transparency and accountability in the management of the country’s mineral revenue inflows, we think that enacting mineral revenue management law similar to the Petroleum Revenue Management Act is a perfect timing for the sector, especially at a period where the country is considering mining other minerals such as iron,” Dr Ackah told the GRAPHIC BUSINESS in Accra.
He added that the new administration needed to operationalise the local content policy in the mining industry and ensure that mining companies adhered to local regulations.
Implement local content policy
“The Minerals and Mining Act 2006, for example, clearly mandates mining companies in Ghana to purchase a certain percentage of their materials locally, as well as employ local people to prevent communities from rising against the companies,” he added.
Ghana has faced significant fiscal and development challenges over the years where for instance, cash fiscal deficits reached 14 per cent of Gross Domestic Product (GDP), which is unprecedented in Ghana’s history, and only reduced to 9.5 per cent of GDP in 2014 which is still very high.
Dr Ackah noted that the management of mineral revenue in Ghana was nothing to write home about because it had defied international best practices of oversight, accountability and development focus.
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He stressed that because the law had not been fully operationalised, multinational mining companies had disregarded the Minerals and Mining Act, 2006 (Act 703).
The policy advisor indicated that the sector needed a minister who was abreast of issues within the mining industry in order to add meaningful growth to the country’s economy.
Sector’s contributions
The mining sector remains a major backbone of Ghana’s economy as the leading foreign exchange earner for the country. It is not only the largest tax contributor to the exchequer, it also accounts for about 40 per cent of mechanised exports while attracting foreign investments running into hundreds of millions of US dollars annually.
Data from the Ghana Revenue Authority (GRA) showed that in 2013, outflows from the mining sector into the country’s coffers was approximately GH¢1.1 billion, representing 18.7 per cent of total domestic revenue mobilised by the GRA.
Revenue from mining includes compensation, royalties, salaries and wages, import and export duties and tax on profits. In 2013 alone, compensation, wages and salaries to personnel in the mining industry amounted to US$670 million.
The total workforce in the industry in that year stood at 17,103, made up of 16,819 Ghanaians and 284 expatriates. These figures did take into account the operations of uncontrolled and illegal mining popularly known as ‘galamsey’.
Apart from those directly employed in the industry, there are tens of thousands, approximately 50,000 people who indirectly depend on the mines for their income.
Wrong perception
Notwithstanding these impressive statistics, many Ghanaians do not see mining in favourable terms. Some people believe that the sector operates as an ‘enclave’ with few positive ‘spillover’ effects, meaning that few within Ghana benefit from gold mining in particular, while most of the profits go offshore.
Illegal mining, Dr Ackah said, had not in any way helped to change this perception, due to its related widespread destruction of farms and farmlands, water bodies, flora and fauna and the unregulated use of dangerous chemicals such as cyanide.
Attempting to go in defence of gold mining in the country, therefore, has to be done with caution in order not to step on already sore toes. The biggest problem with mining is its environmental challenges and this could be greatly minimised or totally controlled if well regulated and the rules rigidly enforced.
Once that is done, the local policy advisor said, gold mining can be a profitable enterprise with enormous benefits to the nation, businesses and the immediate communities in which they are located.—GB