The Government of Ghana’s ‘carried interest’ in mining operations, usually 10 percent, is “virtually useless” and has yielded zero dividends for government for years, depriving the people of Ghana of considerable amounts of domestic revenue, Vice President Dr Mahamudu Bawumia has disclosed.
Vice President Bawumia made the disclosure at the launch of the IMF’s Regional Economic Outlook for sub-Saharan Africa in Accra on Tuesday 8th May 2018.
Citing the issue of Ghana’s ‘carried interest’ in the mining sector, the Vice President stated that “If you look at the existing natural resource regime, Ghana in the mining sector for example, has a carried interest of about 10% and out of this carried interest the expectation is that Ghana will receive dividends.
“When we look at the data, however, we see a matrix of zeros as far as the dividends that Ghana earned from this carried interest. From 2012 it is largely populated by a matrix of zeros, so it means to a large extent, the carried interest in mining is virtually useless as far as Ghana is concerned because we are earning zero for it.”
“We need to re-look at this whole regime. The zero earnings is because many of the mining companies say they are not making profits to pay dividends but they keep mining notwithstanding the fact that they are unprofitable! What is needed is a regional strategy to mineral resource development, from gold to bauxite to manganese and iron, in order to move up the global value chain for each of these minerals.
“We therefore have to re-examine our natural resource control and governance strategy, our resource fiscal regime from exemptions to carried interest, and how to use our natural resources to build a better and prosperous economies.”
Vice President Bawumia underscored that the old model of relying on revenue from the export of unprocessed natural resources was no longer fit for purpose, and the time had come to introduce a new one, designed to meet our development challenges.
“The old paradigm of natural resource exploitation and exports of unprocessed agricultural products and raw minerals are no longer sufficient in order to grow our economies, create jobs and to meet social expectations in the provision of basic public amenities.”
The launch was attended by a number of high profile dignitaries including Mr AbebeAemro Selassie, Director, African Department of the IMF; Annalisa Fedelino, Mission Chief for Ghana; Natalia Koliandina, IMF Resident Representative for Ghana; Ghana’s Senior Minister Yaw Osafo-Maafo; Finance Minister Ken Ofori-Atta, as well as the First and Second Deputy Governors of the Bank of Ghana, Dr. Maxwell Opoku-Afari and Mrs Elsie Awadzi.