The President of Ghana Chamber of Mines, Mr. Eric Asubonteng has urged government to pay equal attention to local manufactures, as being done to attract foreign investors.
At the Chamber’s high-level forum on local production of mining inputs in Accra, on Wednesday, Asubonteng noted, “the government spends a lot of effort in attracting foreign investment, be it oil and gas or mining, and when these investors are coming in to make the big investment, we give them concessions so they can establish.”
“Why don’t we extend some of this concession to small manufacturing companies who are Ghanaians, thereby impacting the economy in a more sustainable way?” he questioned.
He stressed on the need for the country to have a robust manufacturing sector that is capable of meeting the input requirements of the mining industry, which is likely to internalize a significant share of mineral revenue.
On the topic of local content, Asubonteng stated that the recent development in the mining sector implies that local content is more likely to yield sub-optimal outcomes in terms of its multiplier effect on the economy if the status quo remains.
Asubonteng notes that procurement of inputs serves as a major cost item of mining firms.
A research report by McKinsey suggests that mining companies spend between 40 percent and 80 percent of their mineral revenue on purchases of inputs. In Ghana, data from our producing member companies show that they spend 70 percent of their mineral revenue on inputs.
Data from the Minerals Commission indicates that, the proportion of inputs on the Local Procurement List procured exclusively from local manufacturers has declined from 78 percent in 2014 to 63 percent in 2017.
He said this has culminated into lower employment creation, fiscal revenue and other economic parameters.
“This stems from the fact that manufacturing leads to higher retention of value in the domestic economy rather than supplies or retailing due to the marked differences in degree of value added,” he explained.
Asubonteng insisted that the country should put necessary steps in place to take advantage of the immense opportunities in sector.
“If you look at where the mining sector in Ghana is at, we have a unique opportunity to build capacity in the critical mass that can serve the West Africa mines industry,” he said, adding that, “If we don’t take advantage of that, the industry in Mali, Burkina Faso and Ivory Coast are coming up and we will miss that opportunity.”
“If we give ourselves another three to five years we would miss the opportunity,” he intimated.
By Joshua W. Amlanu