Earlier this week, President Nana Akuffo Addo commissioned AngloGold Ashanti’s newly reinvented gold mine amid pomp and pageantry. But the sad truth is that the national attention accorded the event attracted was more the result of the President’s own involvement and enthusiasm than the genuine interest of the general public.
Two decades ago, any news concerning the activities of the then Ashanti Goldfields, particularly if it related to its flagship Obuasi mine, would have dominated not just the news, but the attention of the nation as well. Not anymore.
The fact is that Ghana’s gold industry is losing its luster. Not only has its perceived importance to Ghana’s economic fortunes declined, but its perceived influence on the provision of socio-economic infrastructure has dwindled as well.
But the perceptions are far from the truth. While it is true that the advent of upstream oil and gas activities has diluted golds importance somewhat, especially its percentage contribution to government’s revenues, its contributions to the country’s foreign exchange income still remain absolutely critical – without the revenues repatriated into Ghana by its mining companies the cedi’s exchange rate against the major international trading companies would be much higher than it is now.
Besides this the contributions to Ghana’s socio-infrastructural development remain grossly understated simply because they are measured solely by what the mining companies provide as corporate social responsibility, leaving out the much bigger contribution from the use of their taxes by government for this purpose.
However, there is lots of room for the enhancement of the industry’s contributions to Ghana’s socio-economic fortunes.
Firstly, it is curious that while government has learnt lessons from the gold mining sector’s evolution as an enclave industry, and applied those lessons to the emergent upstream oil and gas industry, this knowledge is still not being applied to the gold mining industry itself. Local content in its operations is the result of the decision by industry operators, through their chamber and is not being enforced by government legislation.
Even more instructively, the local participation regulations being applied to the upstream oil and gas industry are still not being applied to the gold industry despite the clear opportunities such regulation would create for indigenous enterprise with regards to the provision of logistics and support services.
Related to this issue of local participation is the matter of small scale mining. Now that the ban on licensed artisanal mining has been lifted, government should take deliberate policy steps to support its indigenous practitioners – especially since they suffered unfairly during the ban for the antics of their unlicensed, tax evading, environment destroying counterparts. Indeed, there should henceforth be a clear distinction between how the two segments are treated by government which should actively support the one and clamp down on the other.
Another issue which needs to be addressed is the fiscal environment in which the mining industry operates. Successive political administrations in Ghana have been caught between the need to loosen the fiscal framework to attract new investment into gold mining and the need to tighten it to ensure that Ghanaians get their fair share out of their natural resources which are being exploited primarily by foreign corporations.
The solution is simple: loosen the fiscal environment for exploration since at that stage investors have no certainty of recouping the monies they are spending and therefore need to be actively encouraged to lay out expenditure; and tighten the fiscal framework for production by which time the investors have little option but to continue in order to recoup their exploration and mine development expenditure and make a profit on top.
Finally, government needs to spend more of the monies paid it by mining companies as royalties on the host communities, rather than divert it into other things only to turn around and accuse the mining firms of doing nothing to support those mining communities.
Ghana is lucky to be richly endowed with gold; making the best of that endowment does not require genius.
