Cost of illegal mining to economy unsustainable - UN Resident Coordinator

The United Nations (UN) Resident Coordinator for Ghana, Mr. Charles Abani, has observed that addressing illegal mining or galamsey is crucial to establishing a sustainable economy.

He further indicated that illegal mining has devastating impacts on people, poverty, jobs, child-labour, the environment and water, while also driving illicit financial flows.

The UN resident coordinator made this known when delivering the keynote address at the Institute of Sustainability Professionals Ghana (ISPG) launch.

In buttressing his point, he added that a study by the UN estimates the minimum illicit financial flows impact in the region is US$3billion a year.

“Per our estimate in the UN, based on proxy figures from other countries in the sub-region where we have done this study, the minimum Illicit Financial Flows (IFFs) impact in the region is US$3billion a year.”

“That is the size of money you borrowed from the IMF for three years to survive. So, if you address galamsey you will have a sustainable economy,” he stated.

Corroborating UN statistics, a study by the Africa Centre for Energy Policy (ACEP) on IFFs and the extractive industry in Ghanam states that in 2013 IFFS from illegal mining alone cost the country US$1.7billion.

As a result, Mr. Abani urged citizens to keep up with the conversation on illegal and unregulated mining because it is a catalytic issue that can transform the economy and lead to a sustainable economy.

The ISPG is dedicated to advancing sustainability practices and fostering professional development in Environmental, Social and Governance considerations and standards in Ghana.

It aims to be a hub for knowledge-exchange, capacity building and strategic collaboration, providing a platform for professionals and organisations to develop a comprehensive sustainability framework.

President-ISPG, Professor Mathew Tsamenyi, said the institute aims to create a single platform for conversations on sustainability, ensure standardisation, empower companies and SMEs to embrace sustainability for business growth and preserve the environment for future generations.

Indeed, galamsey has emerged as a pervasive issue in discourse across the Ghanaian landscape because it is characterised by environmental degradation, land and water resource depletion, health hazards for miners and social and economic impacts.

That is why concerned citizens and organisations have stepped up their game to ensure the country pursues a path to environmental integrity.

However, in combatting illegal methods of mining it is important that the extractive sector plays a critical role in economic development.

This is exemplified by the fact that the mining sector contributed a record GH₵11.55billion (US$980million) in taxes in 2023, an 81.1 percent increase from GH₵6.38billion in 2022 – making it the largest source of domestic tax revenue.

Thus, the sector accounted for 22.7 percent of all direct taxes; highlighting its significant role in the economy.

Obviously, this surge in tax revenues is expected to provide a significant boost to government coffers as Ghana works to reduce its public debt and stabilise the local currency, the cedi.

Additionally, mineral exports reached US$7.8billion during the year under review – a 15 percent rise from the previous year’s US$6.8billion. The sector accounted for 47 percent of the country’s gross merchandise exports.

Consequently, it places the sector ahead of cocoa and oil – traditionally the economy’s main export drivers, solidifying mining’s dominance in the country’s trade portfolio. Meanwhile, US$4.2billion (71.3 percent) was returned to the economy, data from the Ghana Chamber of Mines indicate.

In addition to foreign exchange contributions, mining companies spent some US$5.4billion on local products, services and community projects – with US$3.146billion dedicated to local procurement.

This development aligns with the country’s efforts to promote local content and enhance Ghanaian businesses’ participation in the mining value chain.

The sector also allocated US$31.53million toward corporate social responsibility initiatives in host communities: including investments in education, healthcare and infrastructure development.

The mining sector’s robust performance provides crucial fiscal relief as government seeks to balance its budget and implement austerity measures.

Despite these positive contributions, concerns about environmental degradation linked to illegal mining remain significant…. with the Chamber severally indicating the danger it poses to investments of member-companies.

Consequently, recent times have seen environmental groups, Civil Society Organisations (CSOs) and organised labour calling for stronger regulation to protect forest reserves and water-bodies.