Eric Okyei Baffour
Eric Okyei Baffour, a member of the New Patriotic Party's (NPP) communications team, has said the Agyapa Mineral Royalty Limited arrangement is the best deal for Ghana’s gold.
He bemoaned the situation where a country like Ghana which had mined gold since the 15th century with the Portuguese could not boast of any international listed company either in gold or cocoa.
To critics of the transaction, he wondered why it was acceptable to borrow for the future and not good to use the nation’s resources to leverage assets.
He acknowledged the need to create the enabling structures that allowed the nation to access the funding of oil, cocoa, and gas and further added that, other companies with access to capital to invest in the economy were not limited to public institutions.
Eric Okyei Baffour disclosed that the Agyapa royalty was a gold royalty company and its main purpose was to offer financing to gold mining companies that wanted to develop new mining projects in exchange for royalties or revenue once the mines started producing gold.
The rationale for the transaction, he noted was to create and launch Africa’s first gold royalty company and showcase Ghana as the premier destination for gold assets and resource mining, whilst raising non-debt funding for capital investment.
Here's a breakdown of the potential benefits of the Agyapa deal:
Economic benefits:
Access to Capital:: Listing natural resources on a listed market provides the country with access to capital markets, allowing it to raise funds by selling shares or bonds backed by the value of its resource reserves. This capital can be used to finance infrastructure projects, economic development initiatives, or to bolster reserves.
Enhanced Liquidity:
By listing natural resources, particularly gold, on a listed market, the country can enhance liquidity and facilitate easier trading of these assets. This liquidity can attract investors looking to diversify their portfolios and increase trading activity, potentially leading to price discovery and market efficiency.
Valuation transparency:
Listing natural resources on a listed market can provide greater transparency and credibility in the valuation of these assets. Publicly traded companies are subject to regulatory scrutiny and disclosure requirements, which can enhance investor confidence and reduce information asymmetry.
International visibility: Listing natural resources on a listed market can increase the international visibility of the country's resource sector, attracting foreign investment and partnerships. This can open up opportunities for joint ventures, technology transfer, and knowledge exchange with international investors and companies.
Currency hedge:
Gold, in particular, serves as a hedge against currency fluctuations and inflation. By listing gold-backed securities on a listed market, the country can provide investors with a stable store of value, diversifying their investment portfolios and reducing currency risk.
Strategic benefits:
Sovereign control:Listing natural resources on a listed market allows the country to retain sovereign control over its resource assets while leveraging private sector expertise and capital. The country can set its terms and conditions for investment, ensuring that resource exploitation aligns with national development goals and environmental sustainability.
Diversification of revenue streams:Listing natural resources on a listed market can diversify the country's revenue streams, reducing reliance on volatile commodity prices or export markets. By monetizing resource assets through financial markets, the country can generate stable income streams over the long term.
Risk mitigation:Listing natural resources on a listed market can mitigate geopolitical and operational risks associated with resource extraction. By partnering with reputable companies and investors, the country can leverage its expertise in project management, technology, and risk mitigation strategies.
Long-term planning:
Listing natural resources on a listed market encourages long-term planning and sustainable management of resource assets. Public scrutiny and regulatory oversight promote responsible stewardship of natural resources, ensuring that their benefits are realized for future generations.
Conclusion:
Listing natural resources, such as gold, on a listed market can provide significant economic and strategic benefits for a country. By accessing capital markets, enhancing liquidity, and increasing transparency, the country can maximize the value of its resource assets while maintaining sovereign control and promoting sustainable development. However, careful consideration should be given to regulatory frameworks, investor protection mechanisms, and environmental safeguards to ensure that listing natural resources on a listed market contributes to long-term prosperity and inclusive growth.
