Mining towns wallow in misery and poverty

Mining towns in Ghana are still grappling with under-development in spite of the benefits the State derives from the minerals being mined in these communities by multinational mining companies, Public Agenda investigations have revealed.

On arrival at Tarkwa, Prestea, Kenyase and Obuasi among other mining communities, one is greeted with a sorry spectacle of abandoned mining pits, degraded lands, polluted water bodies, bad road networks and poor sanitation.

It is to address these resource deprivation and its accompanying quagmire that the Government, in 1993 by an Executive Fiat, established the Minerals Development Fund (MDF) to provide funds for communities which host mining operations to undertake development projects to mitigate the effects of mining on the environment and support the operating budget of mining sector institutions and some specific mineral related projects. The Fund is also to speed up the socio-economic development in the mining communities.

Mining companies are by law required to pay mineral royalties, which is a range between 3 and 6% of the value of gold they mine to the state. This is paid to the Large Tax Unit of the Internal Revenue Division of the Ghana Revenue Authority (GRA) which then pays into the Consolidated Fund. Eighty per cent of the mineral royalties paid by mining companies to GRA is retained by government in the Consolidated Fund, 10% is paid into to the MDF, while 10% is paid to the Office of the Administrator of Stool Lands (OASL).

Since its establishment over a decade ago, this paper's investigations in the last two months has revealed that there is no such development in place even though the fund exists. Till date, no mining community across the country can boast of being a beneficiary of the Fund, neither do majority of Ghanaians know the current status of the Fund.

Furthermore, Ghanaians, particularly those in the mining host communities, do not know what the monies accrued in the Fund are being expended on or how much money is currently in the Fund.

Most of the developmental projects, particularly in the Obuasi Municipal Assembly, where Public Agenda visited to carry out this investigation, are being executed under the auspices of the Assembly and others by the AngloGold Ashanti as their corporate social responsibility.

Mr Edmund Asase, a 45-year-old resident of Tutuka, a suburb of Obuasi, in an interview with Public Agenda said “we are yet to see the infrastructural and socio-economic development that are supposed to come to us, we don't have enough schools and recreational centres”.

Mr Asase told Public Agenda that though he heard about the establishment of the Fund, he could not point out any tangible project that was put in place with revenues from the Fund.

He called on government to be transparent and let Ghanaians know what the monies accrued in the Fund were used for.

In a separate interview with Public Agenda, Mr Richard Annor, a welder at Wawase, said there was no success story to tell about Obuasi as a far as development projects were concerned.

According to him, he would have wished that the Obuasi Township was compared to Johannesburg in South Africa where mineral proceeds have been used to transform their economy.

“I wish we could liken Obuasi to Johannesburg or Botswana where they have used their mining revenues to develop their cities and making them attractive to investors. After several years of mining gold in this town, we cannot boast of anything,” Mr Annor lamented.

The under-development of these communities and the misapplication of the monies in the Fund were partly as a result of the absence of a legal framework to direct the utilisation of the Fund.

Mrs Hannah Owusu-Koranteng, the Associate Executive Director of Wacam, a Non-Governmental Organisation on mining, told Public Agenda that the fund was supposed to be backed by law but as at now there is no such legislation.

She explained that “It goes into the government coffers as far as I know but it does not have any legal backing in the first place”.

Publish What You Pay-Ghana (PWYP-Ghana), a civil society group that advocates for financial transparency in the extractive industry, also attributed the lapse to the lack of guidelines for the application of the Fund.

PWYP-Ghana has called for a legislation to back the Fund in order to avert misappropriation.

Ghana's representative of PWYP-Africa Steering Committee, Dr Steve Manteaw, argued in an interview with Public Agenda that: “without legislative backing, the MDF is open to abuse and all manner of manipulations such as its treatment like a transit accounts for financing programmes and activities that are not necessarily in line with the national interest.”

Dr Manteaw said once a bill for the setting up of the MDF is passed, the risk of potential abuse would naturally diminish; hence, he called on the government to hasten the passage of the Bill.

An official of the Ministry of Lands and Natural Resources who wanted to remain unnamed disclosed to Public Agenda that the MDF Bill was yet to be put before Cabinet.

He said when the Bill becomes law, it would help the mining communities to achieve development and grow the economies of those areas.

He explained that the Bill was similar to the existing Petroleum Revenue Management Act which guides the usage of revenues from the country's oil and gas sector.

Public Agenda's effort to get the Minerals Commission to speak to the issue proved unproductive as the official, Mr Richard Afenu, who was to clarify issues on the Fund was evasive.

A performance audit report of the Auditor-General on Utilisation of Mining Development Fund by Metropolitan, Municipal and District Assemblies (MMDAs) conducted in 2010 disclosed that MDAs were not using the fund for its intended purpose.

The report said: “In particular, MMDAs were neither carrying out effective studies to identify the harmful effects of mining nor applying the funds received solely on projects intended to mitigate the harmful effect of mining.”

The audit was intended to determine whether MMDAs were effectively using their MDF to mitigate the harmful effects of mining in their areas of jurisdiction.