Are natural resources a blessing for Ghana?

Ghana has two world famous export products: cacao and gold. Apart from that, bauxite and manganese is mined and recently, off the coast of Ghana, oil and gas has been discovered. The question is: do these resources provide sustainable development? On invitation of the Belgian NGO FOS – within the framework of their upcoming campaign about decent work – MO* went to Ghana to find it out.
‘Ghana is the good news of Africa.’  At the end of the nineties this was the observation within the UN-development program UNDP, after the comparison of figures by country representatives of six African countries.  Solid and persistent economic growth, remarkably stable democratic institutions, lack of serious ethnic tensions, in short: an example for the continent.  In 2008 this evaluation is still valid. 
In March this year, the World Bank predicted an economic growth of 6.7 percent for Ghana, which was immediately translated as ’ Ghana is on its way to obtain Millennium Development goal 1 -  to halve the amount of people living in poverty - by 2015.’
According to the World Bank rapport, in 1912 52 percent of the Ghanese population still lived under the poverty line; today that is 28.5 percent. 

Afro barometer

A recent country diagnosis of the EU points out that ‘the most impressive achievement of the past decade is probably the progress of democracy’  Dr. Gyimah-Boadi, director of the Ghana Center for Democratic Development (CDD), is willing to confirm this proposition.  Gyimah-Boadi: ‘One can really say that democracy has rooted deeply in Ghana. Twenty years ago, freedom of press was still actively suppressed.  Today there are  more than 140 commercial radio stations and about five private television stations active around the country.  The number of newspapers and magazines has become too many to count.  Every morning it is possible to find one or another minister who has to justify himself of herself during a radio program for his or her policy.  This used to be unthinkable.’ 
With this Gyimah-Boadi doesn’t want to state that Ghana lives in a spotless democratic regime.  A government consisting of more than eighty ministers, easily calls for the suspicion that the political class is busy serving their own needs before considering the needs of the nation.  On top of that, all those ministers need to be elected according to the constitution and need to be actively involved in the parliament, which doesn’t promote the division of powers. 
The afro barometer – a large scale opinion research over twenty African countries – determines in its latest edition of 2008 that 86 percent of the Ghanese population considers the poll as the best way to elect leaders.  Eighty percent of the respondents claim to be satisfied with the way democracy functions within Ghana.  On top of that, research shows that an atmosphere of economic optimism and social progress is alive and established in Ghana.  ‘The big problem occupying the ghanese people, is the growing gap between rich and poor’  says Gyimah-Boadi, whose CDD conducts the Ghanese part of the Afro barometer.  ‘The political parties who want to gain favour for the vote of the population next December, will have to formulate a sufficient answer on this issue.’

Impressive figures

Ahmed Nantogmah knows how this answer has to look; less government involvement, more freedom for entrepreneurship.  Nantogmah works in a large, sultry and half darkened office.  The oppressive heat of Accra is obviously not a burden for European visitors alone.  As director Public Affairs and environment of the Ghana Chamber of Mines, this young engineer is convinced that it is more specifically the mining sector who can make a middle income country of Ghana by 2020 – a goal formulated by current president John Kufuor. 
Nantogmah’s organisation represents large and very large companies, especially in the gold sector: AngloGold Ashanti, Newmont, Goldfields and others.  He is able to present impressive figures:  in 2007 the mining sector grew by thirty percent, compared with an overall economic growth of 7.4 percent.  Last year Ghana produced 2475 tons of gold, good for 39 percent of Ghana’s income from exports.  In one year, the total turnover of the mining sector in the country increased by more than a quarter up to almost 1.8 billion dollars. 
According to Nantogmah, all of this is the result of the reform of the legislation started in the eighties under influence of the World Bank and the International monetary fund.  In 1986 an investment friendly mining code was adopted which lead to a massive stream of more than five billion dollars foreign capital into Ghanese underground resources.  ‘The government still has to do more for businesses.’ says Nantogmah.  ‘The exploration of new mining sites should be exempted from VAT and the prices of electricity should come down.’

Favourable Tax regime

Nevertheless, today the contribution by the flourishing mining sector to the Ghanese treasury can’t really be called  impressive.  Indeed the sector is responsible for 17 percent of the tax income, this is mainly related to the very low general levying of taxes in the country.  Part of these taxes come from a royalty paid by the mining companies to the Ghanese State.  Those royalties are three percent of the nett profit and is good for only 35 million dollars.  Even the World Bank thinks this is not much. 
During a conference at the beginning of 2007, the Ghanese vice-president Alhaji Aliu Mahama asked the mining industry, in the light of the strong increase of the gold prices in the world market, to increase this contribution of three percent.  The Ghana Chamber of Mines didn’t agree and answered that it is not only gold that is becoming more expensive, but also energy and other inputs.     The problem for the Ghanese government is that it, by following the advice of the World Bank, has agreed on long term contracts that are not renegotiable. 
The favourable fixed tax regime goes even further than the royalty regulation.  A certain amount of companies got a tax exemption for five or ten years.  Companies are allowed to park abroad up to eighty percent of their export turnover in order to buy goods and services abroad – amongst other things the Caterpillars as high as buildings used to work above the ground.
‘Every mining company connected to the Chamber of Mines obeys the Ghanese laws’, declares Ahmed Nantogmah proudly.  Despite the objections about the low tariffs, that pride is not completely undeserved.  Compared to other African countries the mining sector in Ghana behaves as an exemplary corporate citizen.  The sector subscribes the international Publish what you pay – campaign, aimed at stopping corruption. 
Nantogmah immediately provides a copy of page 56 out of the Daily Graphic of the 7th of February 2008 wherein his organisation lists its social expenditure.  All large companies are member of the Global Compact, an initiative of the United Nations under the Ghanese secretary-general Kofi Annan, aimed at making multinationals contribute more towards development and stimulating more just social and ecological behaviour.  The mining companies are enthusiastic participants of the Extractive Industry Transparency Initiative (EITI), an international set-up to increase the transparency and justification of the money stream in the mining sector.   

Rural chef versus CEO

Yao Graham is not impressed.  ‘What is the purpose of transparency if the laws that need to be followed disadvantage the state and the people?’, asked by the coordinator of the Third World Network Africa.  ‘The fundamental question is whether the government gets sufficient income out of the natural resources and accordingly to that whether they spend this income correctly.’  Those are rhetorical questions, that in the eyes of Graham should be answered negatively. 
According to Graham the impressive figures of the mining sector are a smoke screen behind which all kinds of social – and eventually economical – dramas take place, especially now the gold mines massively switched over towards above ground mining and consequently have a much more heavy impact on the communities living in the areas of the mines.  The land in the rural areas of Ghana is mainly governed by traditional community structures, however the underground is the property of the state.   This means that the government in Accra is able to grant  mining concessions without negotiation with the local inhabitants who are mostly badly informed about their rights and the consequences of the coming of a mine. 
‘On top of that’  says Yao Graham, ‘is the fact that the state grants concessions and the local community has to negotiate the compensation.  One can easily imagine the power relation between a rural chef and a CEO of multinationals as AngloGold Ashanti and Newmont.’  For example, in the Wakka-region, Newmont recently promised 500 Ghana cedi’s – about 500 dollars – as compensation for the people who gave up their land for a mine that would come.  500 GC is a fortune for people who barely participate in the money economy and live more under than on the poverty line. 
Graham: ‘Because the communities themselves were not able to pay for legal assistance nor to raising conciousness in a convincing way, we rented a couple of buses with which we brought the involved people to an established mining region in Tarkwa.  There they could see with their own eyes what above ground mining causes and in which conditions the previous habitants lived.  Some of them cried when they saw the impoverishment and misery.  Suddenly the 500GC was much less money.’

220 dollars a month

This story was confirmed by Anthony Yaw Baah, head of the research department of the Trade Union Congress, the Ghanese union central.  ‘I come from the region where cacao is produced. This is indeed one of the pillars of the Ghanese economy, nevertheless we always looked up towards the gold mines because that was where the really large profits were made.  But when I visited for the first time mining sites in the Tarkwa-region of the old mining city Obuasi, I was shocked.  I realised than that the farmers with their little cacao plantations had a much better life than the people in the mining region.’ 
Yaw Baah even doubts whether the mining sector altogether has a positive impact  on the Ghanese economy.  ‘The mining sector provides hardly any employment in the transport or building sectors and the effect on the agricultural sector is negative – while agriculture still represents 40 percent of the GDP and 50 percent of the current employment.  An Australian company even outsourced the catering to an Australian firm.  Eventually is are only the handful of about 15 000 employees in the mining sector itself that benefit from the national wealth.’
At first sight, those employees have indeed less reason to complain.  The minimum wage is 220 dollars a month compared to a national agreed minimum wage of 61 dollars.  In the course of the years, the unions have managed to obtain a long list of additional advantages such as decent pensions and pregnancy leave.  Nevertheless, the power of the unions was strongly restricted by the new labour law of 2003, as a result of which the Trade Union Congress can only defend registered members while in the past they were allowed to take up the case of others.  During the past years, the amount of employees has decreased severely:  before the reforms 50 000 people were employed in the mining sector. 
Maybe that is an explanation why the mining unions are so little concerned by the lot of the rest of the population, even though Anthony Yaw Baah himself thinks this is a pity.  ‘An union cannot restrict itself by defending only the interests of its members. Especially a strong sector such as the mining sector has to contribute towards the improvement of the living conditions of the whole population.  Therefore we look forward to more cooperation with NGOs, who have a lot of experience with the social responsibility and impact of the mining sector.’

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