Experts back royalties monetisation as government considers Agyapa reboot

A financial expert, Dr. Carl Odame-Gyenti, has justified the need for the country to monetise its gold royalties, explaining that it will help reduce Ghana’s heavy budgetary risk.

According to him, Ghana has been mining gold for over 100 years but has nothing to show for it, and that an innovation in the form of royalties monetisation would enable the country build a buffer to shore up the economy.

“Monetising a portion of our gold royalties prudently reduces Ghana’s heavy budgetary risk. It would help all of us,” said Dr. Odame-Gyenti at a public forum held by the Minerals Income Investment Fund (MIIF) in Accra on monetisation of mineral royalties.

He said Ghana has historically failed to realise the full benefits of its gold resources because of factors including the failure to use the resources to leverage additional income for development.

He added that there has been a failure to track the use of gold revenue by the government, while the gold sector has experienced limited reinvestment.

Outlining key recommendations the country should consider if it is serious about monetising mineral royalties, he said the government should consider safeguards against the risk of undervaluation of the royalties, adding that anything less than a US$1 billion valuation—as was the case in the controversial Agyapa royalties deal—may be too low for Ghana.

He also stressed that government should protect its right to adjust fiscal terms, adding that parliamentary oversight of the use of mineral income is key to ensure success.

The founder of the Songhai Group, Hene Aku Kwapong, said the time had come for Ghana to move away from rent collection and become a real player in the mineral extractive industry.

He explained that moving away from rent collection would require a look at the option of monetising mineral royalties.

He added, however, that for the country to derive the full benefits of monetisation, there must be a plan that establishes a baseline to identify the gap between where the country is now and where it desires to be.

This, he said, would help the country know exactly what funding would be required to achieve its objectives.

Gold mining has been a mainstay of the country’s economy for almost a century and contributes about 5.5 percent of GDP currently.

The forum by the Minerals Income Investment Fund provided a platform for financial experts, minerals governance experts, academics and students to explore the concept and best practices in monetising mineral royalties.