Extraction of minerals like gold and its associated economic activities serves as strong catalyst for socioeconomic development. The mining sector no doubt plays an important role in the Ghanaian economy. According to Mining Partnership for Development 2015, the sector has attracted more than half of all foreign direct investment (FDI) into Ghana by generating more than one-third of all export revenues as well as being the largest tax paying sector in the country.
It also contributes significantly to the gross domestic product (GDP)and creates both direct and indirect employment.It appears for a very long time, Ghana can only boast of 10% carried interest in the Mining Operations that do not have a wholistic stabilisation agreement from the Government of Ghana.
We often complain the 10% is not enough and Ghana has nothing to show after mining for over 100 year but I will be quick to call for a holistic and comprehensive review of the existing fiscal regime of the industry and application of the royalty payments by the mining companies.
In 2013, the government made some drastic fiscal regime changes in her policy statement contained in the budget. This saw an increase in corporate taxes from 25% to 35% in line with the Oil and Gas, capital allowance regime also reduced from 10 year to 5 years. We can clearly see that the regime had a positive impact on government tax revenue mobilisation in a short to medium term but we did not look at the long-term effect on the mining companies.
Since the changes in 2013, Ghana has not seen new entry of mining investment as happened in the past, current operators are not spending on exploration activities which is denying jobs and revenues from direct mining taxation. Again, some operating mining firms in Ghana have cut their exploration budgets and slowdown on expansion works which has direct impact on production and accompanying tax revenue to the government.
It appears a mining company in Nzema has transferred (sold) their mine interest and moved to expand projects in neighbouring Mali, Ivory Coast and Burkina Faso because Ghana has become too expensive for mining investors. Some may attribute the reduction in mining investment to the gold price but our neighbouring countries are attracting mining investment.
We hope to have a sustainable industry for the young graduates we are preparing for the mining industry. I pray the government take a holistic review of the fiscal regime for the industry with the Chamber of Mines and all players in the industry. This can help ascertain the impact the 2013 fiscal regime changes had on the industry as the government anticipates to open and regulate the small-scale mining.
Frank Boateng, PhD
