The prolonged delay of a Minerals Revenue Management Act for Ghana’s mining sector remains one of the biggest resource governance issue confronting the sector, and which also undermines the sector’s contribution to the country’s development.
Unlike the oil and gas sector, the mining sector— the leading and larger of the two, has no revenue management act to ensure good governance and prudent management of revenues accrued.
This is evident in the historical performance of the country’s mining sector as the sector’s resource governance index still lags potential. Based on the recent governance index, the mining sector scored 69/100, representing a satisfactory performance, albeit outperformed by the oil and gas sector (78/100).
Similar to the Petroleum Revenue Management Act (PRMA), the government must ensure the enactment of a Minerals Revenue Management Act (MRMA). This will not only provide a framework for the use of mineral revenues but also streamline the collection, allocation and management of mineral revenues.
Such a legal framework would galvanize good governance of the mining sector. This would not only play out at the national level but also at the regional and district levels. Following the model of the PRMA, such a law should also include a public oversight body duly empowered. This is to ensure government accountability to the provisions of the law.
Revenue performance of Ghana’s mining sector
In 2020, mineral royalty receipts as a share of total fiscal receipts attributable to the mining and quarrying sector increased from 25.1 per cent in 2019 to 33.3 per cent in 2020. Also, corporate income tax (CIT) amounted to GHS2.139 billion in 2020, employee income tax (PAYE) was GHS641.868 million.
According to the Mining Industry statistics and data report, the mining and quarrying sector was the leading source of direct domestic revenue in 2020. Overall, the sector’s contribution to the national fiscal purse rose from GHS4.013 billion in 2019 to GHS4.172 billion in 2020. And this was as a result of a 3.97 per cent increase in mineral royalty receipts.
However, mining communities did not receive their just due of the mineral royalties. Out of the total royalties to the government, mining communities received only 13 percent, representing a shortfall of 7 percent.
Although this allocation is required by law as stipulated in the Minerals Development Fund Act (2016), the government’s non-payment of all the amount due mining communities is not a ‘talked-about issue any longer’. Thus, with a public body for accountability present, all of such occurrences will undergo monitoring and hopefully minimized.
Other areas to consider in establishing Mineral Revenue Management Act
As part of the above efforts, the Ghana Natural Resource Governance Institute (NRGI) advocates for the development of a sovereign wealth fund for mineral revenues. And for a fact, the RGI does not assess sovereign wealth management in the country’s mining sector.
Along these lines, Nasir Alfa Mohammed, a policy Advisor with the NRGI notes that, “the RGI has never assessed sovereign wealth management in Ghana’s mining sector simply because there is no appreciable framework or fund to assess.
“Although the Minerals Development Fund (MDF) Act of 2016 and the amended Minerals Income Investment Fund (MIIF) Act of 2018 are modest attempts at managing mineral revenues, they, unlike the PRMA in the oil sector, did not create a mining sector sovereign wealth fund with clearly defined rules governing its management.”
Nasir Alfa Mohammed, Policy Advisor, NRGI
Accordingly, he emphasized that the MDF Act and MIIF Act have inherent in them, some accountability deficits.
Considering the finite nature of the country’s mineral resources and the more than expected benefits mineral revenues could have on the economy, a suitable legal framework should not be written off.
Ignoring this very essential endeavour— a mining revenue management law like the PRMA— may continue to undermine the sector’s potential to accelerate the country’s progress. An action without which the country cannot move away from ‘the resource curse’ rhetoric.
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