A Historical Overview Of Ghana’s Mining Sector Fiscal Regimes

By Benjamin Nii Ayi Aryee

A must have, well-researched reference work, tracing fiscal regimes that have been associated with Ghana’s long history of mining, documenting the rationale for changes that occurred, all the way from precolonial times, when traditional authorities in charge of the sector collected fiscal/pseudo-fiscal levies, through colonisation and independence to contemporary times.

“This work is thus seminal for the mining industry in Ghana. The book is the collected and compiled distillation of the learning and experiences of the author as the key industry actor and active consultant he was in the mining field for well over two decades.

... provides a structured approach to help policymakers, researchers, industry actors and ministries in charge of finance and mines to analyse and identify ways to address challenges linked with ... mining tax policy.... Other categories of persons who will find the book very useful include students and lecturers of mineral resources taxation/law, tax practitioners, lawyers, and judges.”

Abdallah Ali-Nakyea (Managing Partner/Director, Ali-Nakyea & Associates (A-N & A)

“From an historical angle, A Historical Overview of Ghana’s Mining Sector Fiscal Regimes provides interesting insights, which have not been previously brought together in such a way, into some aspects of the Ghanaian economy-mining sector interplay from the time of pre-independence”.

Kwame Addo-Kufuor FCA (President of the Ghana Chamber of Mines)

“... a novel compendium of such information and it will serve as a valuable resource of information on Ghana’s attempt to equitably share the benefits from mining. It is my opinion that it will facilitate policy formulation as well as research in the subject”.
Edward Gyamerah (Deputy Commissioner, Ghana Revenue Authority)

The author is a mineral economist by training; a well-respected mining-sector policy formulator and implementer with several years’ experience, some 13 years of which he was the CEO of Ghana’s Minerals Commission (2001-2014) and then as Advisor on Mining to the Minister of Lands & Natural Resources.

• Language: English
• Publisher: Benjamin Nii Ayi Aryee
• Release date: Oct 3, 2018
• ISBN: 9780463151051

Book preview

A Historical

Overview of Ghana’s

Mining Sector

Fiscal Regimes

A Historical

Overview of Ghana’s

Mining Sector

Fiscal Regimes

Benjamin Nii Ayi Aryee

Copyright © 2018 Benjamin Nii Ayi Aryee

Published by Benjamin Nii Ayi Aryee Publishing at Smashwords

First edition 2018

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage or retrieval system without permission from the copyright holder.

The Author has made every effort to trace and acknowledge sources/resources/individuals. In the event that any images/information have been incorrectly attributed or credited, the Author will be pleased to rectify these omissions at the earliest opportunity.

Published by Benjamin Nii Ayi Aryee using Reach Publishers’ services,

P O Box 1384, Wandsbeck, South Africa, 3631

Edited by Bronwen Bickerton for Reach Publishers

Cover designed by Reach Publishers

Website: www.reachpublishers.co.za

E-mail: [e-mail]

Benjamin Nii Ayi Aryee

P. O. Box CT 6810, Cantonments, Accra, Ghana.

Email: [e-mail]

Phone: [phone]

Dedication

To the glory of the Most High God who successfully saw me through my rather lengthy association with the mining industry; in acknowledgement of all whose support sustained me through the period when I hopefully made a lasting contribution to the development of Ghana’s mining sector.

To how far EITI in Ghana (GHEITI) has come with transparency and accountability in the extractives and in memory of my being a member of Ghana’s three-member delegation to the 17 June 2003 first EITI multi-stakeholder Conference in London.

Foreword

Research/Academic Perspective

Ghana is blessed with mineral and other natural resources. And minerals development and extraction have been at the core of Ghana’s development agenda for well over a century – straddling the colonial period through independence and several intermittent coup d’etats and constitutional governments – to the present. In all these years, various studies on the developmental impact of mineral extraction on Ghana have been commissioned and promoted, not least by succeeding governments of Ghana but also by multilateral institutions such as the World Bank and International Monetary Fund (IMF), as well as industry players, like the Chamber of Mines and even individual mining companies. There has in fact been a recent groundswell of research and debate over the resource governance gains that Ghana could transport from its over a century of mining experience to its relatively new oil and gas industry. While existing studies on the mining sector have mostly focused on mining’s overall costs (including environmental costs) and benefits to Ghana, the peculiarities of the Ghanaian local environment in concert with structural limitations of the global economy, which may impede mining-based development, have received significantly less attention. Similarly, the historical underpinnings of mineral and mining development in Ghana have revealed a legacy of ad-hoc solutions to critical mining sector challenges. Above all, the evolution of Ghana’s mineral and mining fiscal regime has been underexplored, academically. This book examines holistically the critical issues confronting mineral and mining development in Ghana, and advocates a new approach to mining therein that would leverage good extractive industry governance practices to deliver realistic development benefits to Ghana and its people.

This work is thus seminal for the mining industry in Ghana. The book is the collected and compiled distillation of the learning and experiences of the author as the key industry actor and active consultant he was in the mining field for well over two decades. The author admirably illuminates the spectrum of fiscal policy interventions Ghana embraced in its mineral and mining journey; recognising and emphasising the political and institutional context, as well as giving a detailed historical account of the organisation of the mining industry in Ghana, while providing illustrative examples and useful citations from the literature. The role of the law and fiscal policy as it applies to mining in Ghana is thus thoroughly discussed throughout the book. Readers of this book will no doubt note that the evolution of Ghana’s mineral and mining fiscal policy plays a major role in and offers a crucial orientation to an understanding of the country’s current growth status and overall future development needs.

This book is designed to provide a structured approach to help policymakers, researchers, industry actors and ministries in charge of finance and mines to analyse and identify ways to address challenges linked with mining generally and mining tax policy in particular. Other categories of persons who will find the book very useful include students and lecturers of mineral resources taxation/law, tax practitioners, lawyers, and judges.

Given that countries often formulate mining fiscal policies with clear investment attraction and revenue collection objectives in mind as well as the myriad of challenges of natural resource governance, the author not only critiques some aspects of Ghana’s mineral and mining fiscal policy, but also suggests ways to approach some forward-looking policy alternatives and good practices as a way of leveraging minerals and mining for sustainable development. As an historical overview, it is possible that some of the author’s observations are controversial, and readers will not necessarily agree with all the positions taken. No doubt, the author succeeds in setting the stage for continuous research and scholarship in the area of mineral and mining fiscal regimes in Ghana. While any explicit and implicit controversy over the sector can be debated and settled in the future, the book is an important new tool in our hands that will help to shed light on the path ahead.

Abdallah Ali-Nakyea

Managing Partner/Director

Ali-Nakyea & Associates (A-N & A)

(Tax Attorneys, Solicitors and Consultants)

and

Lecturer

Natural Resource Law

Ghana Law School

Mining Industry Perspective

The challenge of aligning the aspirations of stakeholders in the mining industry has over the years proven to be an elusive goal in rich and poor countries alike. Central to the often vibrant debate is whether resident mining companies are paying the right quantum of taxes to the national economies hosting them, and even if they are, whether the full benefits of the mining operations are being fairly and equitably distributed to those entitled to receive them.

The story of Ghana’s mining sector is no different, with many well-informed citizens being of the view that mining (in particular gold mining) has contributed very little to national development in its over 100 years of activity. They have pointed out the fact that in spite of Ghana having been known as the Gold Coast, reflecting the extent of endowment, little is shown as benefits gained. Indeed, the famous comparison between the infrastructure and look of Ghana’s iconic mining town Obuasi, with South Africa’s Johannesburg, is cited in most discussions on the contribution of mining.

But the irony of the situation is that mining has for many years been a leading contributor to both foreign exchange earnings and tax revenues in Ghana – indeed consistently being a top contributor of both since 2014, ahead of cocoa and oil.

The discussions about equity often have at their heart concerns about what the real quantum of mineral revenues is (‘what is the true size of the pie’) and then whether the national fiscal regulations are rigorous and sophisticated enough to ensure that all mining operators pay their fair share of taxes to the Ghana Revenue Authority (government) and do so on a timely basis.

Mining companies are of course quick to question government’s usage of mineral revenues, pointing out, to put it mildly, the lack of transparency. For example, it is a well-known fact that very little of the royalties paid to central government find their way back to mining communities, although the current legislation gives clear percentages for distribution among central government, local government and traditional authorities.

Benjamin Aryee, for many years CEO of the Minerals Commission and a brilliant mind, has traced the history of mining in Ghana to precolonial times and has outlined the corresponding fiscal regimes, attempting a dispassionate evaluation of their strengths and weaknesses in this book.

The debate about whether mining has played its proper role in the economic development of Ghana will go on for many years to come, but it is important that those who participate in the debate do so from an informed position. This page turner is a must read for those who seek such knowledge and a full picture of the role the industry has played in Ghana’s story, starting from the Gold Coast era. The writer could not conclude the book without alluding to his passion; the critical need to migrate mining from the myopic ‘source of foreign exchange earnings and taxes’ to the broader perspective of achieving sustainable development through ‘an industry with strong linkages to other sectors of the economy’.

From an historical angle, A Historical Overview of Ghana’s Mining Sector Fiscal Regimes provides interesting insights, which have not been previously brought together in such a way, into some aspects of the Ghanaian economy-mining sector interplay from the time of pre-independence.

Kwame Addo-Kufuor FCA

President of the Ghana Chamber of Mines

December 2017

Tax Authority/Fiscal Perspective

Ghana’s mining sector has been no less dynamic than the global industry of which it is part. It has faced uncertainties, but has made a significant contribution to the country’s economy. This contribution has also seen its swings as the performance of the mining sector has fluctuated over time.

Minerals have been one of the resources in which Ghana has a comparative advantage, and this industry should therefore be properly expected to contribute its quota to the country’s development. Governments over the years – from colonial days to date – have therefore tried various fiscal instruments to ensure the industry contributes its due towards development, both at the national and local levels.

Benjamin Aryee, in this book A Historical Overview of Ghana’s Mining Sector Fiscal Regimes, attempts to document the historical context of the development of the fiscal regimes that have governed the mining sector, starting from pre-colonial days, when traditional authorities were responsible for the sector and therefore collected fiscal/pseudo-fiscal levies, through colonisation and independence to contemporary times.

This is a novel compendium of such information and it will serve as a valuable resource of information on Ghana’s attempt to equitably share the benefits from mining. It is my opinion that it will facilitate policy formulation as well as research in the subject.

Edward Gyamerah,

Deputy Commissioner,

Ghana Revenue Authority

Acknowledgements

I hereby acknowledge the contribution of the following people, whose roles in getting this publication to you have been significant:

• My wife Gloria and our children, Abigail, Benjamin Jnr. and Beryl, who sacrificed quality family time and encouraged me to complete the task , also Beatrice, who is on her own now, is hereby acknowledged;

• Mr Kwame Addo-Kufuor (of Newmont and the Ghana Chamber of Mines); Mr Abdallah Ali-Nakyea (lecturer/trainer and consultant); Messrs. Edward Gyamerah and B.C.D. Ocansey of the Ghana Revenue Authority; my former colleagues at the Minerals Commission Mrs Irene Demanya, Mr Charles Afeku and Mr Oppon Kyekyeku, as well as Mr Samuel Bekoe of G.O.G.I.C. and Mr Kojo Bentsi-Enchill (Senior Partner of Bentsi-Enchill, Letsa & Ankomah), and Mr Kwesi Bentsi-Enchill (formerly of the Lands Commission), who sacrificed time and effort to review the book wholly or in part;

• Messrs. Addo-Kufuor, Ali-Nakyea and Gyamerah who additionally, at no small sacrifice to themselves, also put together the foreword for the book;

• Staff of the Ghana Law School Library, National Archives, George Padmore Library, and also the many Internet sites which assisted me greatly in the rather arduous task of data collection/information gathering; and

• Messrs. Kofi Ansah and K.S. Manu, whose grooming got me interested in mining sector fiscal regimes when I joined the Minerals Commission, Mr. Fui Tsikata who by inviting me to make presentations on Ghana’s mining fiscal regime to his Natural Resource Law class at the Law Faculty of the University of Ghana, initiated me into documenting the subject, as well as Dr. Osei Baffour who introduced me as an undergraduate student to fiscal regimes at the Economics Department of the University of Ghana.

My gratitude would not be enough for the contributions and sacrifices made by these individuals and many others.

However, while I have tried to represent facts, interpretations and views as accurately as I can, for a work of this nature any errors and omissions which