Transparency In The Mining Sector

-Ghana’s Approach To Dealing With “Resource Curse”

Most countries that are rich in natural resources face issues like corruption, conflict and poverty-the so-called “resource curse”. Studies have shown that with strong transparency and accountability in the management of natural resources, there will be an increase and sustainable economic growth and reduction in poverty levels.

Ghana is so blessed with natural resources especially minerals like gold, diamond, manganese and bauxite. Article 257 sections (6) of the 1992 constitution of the republic of Ghana as well as Section 1 of the Mining and Minerals Act 703 (2006) describes minerals in their natural state as belonging to the state. It reads: “Every mineral in its natural state in, under or upon land in Ghana, rivers, streams, water-courses throughout the country, the exclusive economic zone and an area covered by the territorial sea or continental shelf is the property of the Republic and is vested in the President in trust for the people of Ghana”

These minerals contribute a lot to Ghana’s foreign exchange earnings and Gross Domestic Product (GDP) especially gold which recorded US$2,246.25 million in 2008 as revenue according to the Budget Statement for the 2009 Financial year. Mining companies are required by law to pay 3-6% of the value of gold they mine as royalty to government. However, do we as Ghanaians know how much the companies pay to government and how much is received by Government? The Extractive Industries Transparency Initiative (EITI) is a global initiative which is aimed at improving governance in countries rich in natural resources. This initiative does this through the full publication and verification of company payments and government revenues from mining, oil and gas. This initiative is a step in ensuring good governance and for us to hold our leaders accountable in the utilization of the revenues. It is also aimed at reducing poverty, promoting economic growth and sustainable development.

The EITI was launched in 2002 in Johannesburg, South Africa. It has been championed by the UK Department for International Development and supported by the World Bank and IMF. Some countries implementing the initiative are Azerbaijan, Kazakhstan, Kyrgyzstan, Cameroon, Congo, Cote D’Ivoire, Equatorial Guinea, Gabon, Guinea and Ghana. It is indeed great to know that Ghana has signed up to this initiative as a way of insuring transparency in the mining sector.

The Ghana version is known as the Ghana Extractive Industries Transparency Initiative (GHEITI). Ghana signed up to this initiative in 2003 and has been implementing policies geared towards ensuring transparency. Three Audited Reports on mining benefits in Ghana have been produced which have brought out some key recommendations.

The significant development is that Ghana has gone beyond the International EITI standard by extending the transparency issues to sub-nationals levels. It therefore does not only look at payments made to the Central governments but also payments made to the regions, districts or local Governments.

In 2007, Ghana through a consortium of oil exploration companies announced the discovery of oil in large quantities off the shores of Western Region. With the large expected flow of oil and gas in 2010, there is the urgent need for a transparent mechanism to be put in place as regards to the oil revenues at both national and sub-national levels to ensure accountability.

It is time Ghanaians get to know more about the EITI and also participate in the process to ensure transparency and accountability in our natural resources. Visit the website of the Ghana Extractive Industries Transparency Initiative (GHEITI) at www.gheiti.gov.gh for more information and contribute your quota to ensuring transparency and accountability in the extractive sector.

By: Eric Cab-Beyuo Accra