https://orcid.org/0000-0002-8225-958X
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Abstract
Despite a large mining sector and a well-structured mineral revenue distribution system, mining communities are among the poorest in Ghana. To promote socio-economic development in the mining communities, in 2016, the Parliament of Ghana passed the Minerals Development Fund Act. This article examines the Act’s potential in addressing existing challenges in the allocation and utilisation of mineral royalties in Ghana and its potential in promoting development in Ghana’s mining communities. It shows that the Act missed the opportunity to address misuse of mineral royalties and to encourage local participation and increase transparency and accountability in mineral royalty management.
Acknowledgements
We are grateful to Kendra Dupuy and the participants of the 5th School of Social Sciences International Conference at the University of Ghana for their useful comments and suggestions on the earlier versions of this article and the Minerals Development Fund Secretariat for granting us an interview.
Notes
1 R O’Connell and others, ‘GFMS Gold Survey 2018’ (Thomson Reuters 2018) 21.
2 Offshore oil and gas production is another major revenue source for Ghana and accounted for six per cent of the total government revenues and 23 per cent of export revenues in 2017. Oil and gas revenues are distributed and spent in accordance with the Petroleum Revenue Management Act.
3 Ghana Chamber of Mines (GCM), ‘Performance of the Mining Industry in 2017’ (GCM 2018) 9–11 https://ghanachamberofmines.org/wp-content/uploads/2016/11/Performance-of-the-Industry-2017.pdf accessed 15 October 2019.
4 Ibid.
5 Ghana Chamber of Mines, ‘Factoid on the Industry’s Performance’ (GCM 2016) 26–27 https://ghanachamberofmines.org/wp-content/uploads/2016/11/Factoid-2016.pdf accessed 15 October 2019.
6 Ghana Chamber of Mines (n 3) 14; International Council on Mining and Minerals (ICMM), Mining in Ghana – What Future Can We Expect (ICMM 2015) 38.
7 Ghana Statistical Service (GSS), 2015 Labour Force Report (GSS 2016) 129.
8 EY Aboka, SJ Cobbina and DA Dzigbodi, ‘Review of Environmental and Health Impacts of Mining in Ghana’ (2018) 8(17) Journal of Health and Pollution 43, 45–49; FM Aragón and JP Rud, ‘Polluting Industries and Agricultural Productivity: Evidence from Mining in Ghana’ (2016) 126 The Economic Journal 1980, 2000; EY Tenkorang and P Osei-Kufuor, ‘The Impact of Gold Mining on Local Farming Communities in Ghana’ (2013) 8(1) Journal of Global Initiatives: Policy, Pedagogy, Perspective 25, 36.
9 KE Dupuy, ‘Corruption and Elite Capture of Mining Community Development Funds in Ghana and Sierra Leone’ in A Williams and P Le Billon (eds), Corruption, Natural Resources and Development: From Resource Curse to Political Ecology (Edward Elgar Publishing Limited 2017) 73.
10 TM Akabzaa, ‘Mining in Ghana: Implications for National Economic Development and Poverty Reduction’ in B Campbell (ed), Mining in Africa: Regulation and Development (Pluto Press/IDRC 2009) 58; DK Twerefou and others, ‘Attitudes of Local People to Mining Policies and Interventions’ (E-33107-GHA-1, International Growth Centre 2015) 24 and 49.
11 Dupuy (n 9) 72–73; International Council on Mining and Metals (ICMM), ‘Ghana Country Case Study: The Challenge of Mineral Wealth: Using Resource Endowments to Foster Sustainable Development’ (ICMM 2007) 77–78; A Standing, ‘Ghana’s Extractive Industries and Community Benefit Sharing: The Case for Cash Transfers’ (2014) 40 Resources Policy 74, 76–77.
12 Parliament of Ghana, Minerals Development Fund Act, 2016, Act 912 (Republic of Ghana 2016).
13 Act 912, ss 2(a)–(c) and 5(a), (b).
14 Act 912, ss 2(d) and 5(c)–(e).
15 I Owusu-Mensah, ‘Politics, Chieftaincy and Customary Law in Ghana’s Fourth Republic’ (2014) 6(7) The Journal of Pan African Studies 261, 273.
16 OAO Panyin, Chiefs and Traditional Authorities and Their Role in the Democratic Order and Governance (Constitutional Review Series 9, Institute of Economic Affairs 2010) 2.
17 The main tasks of the traditional councils are to settle disputes and help maintain peace in the traditional area; organise festivals and durbars; launch development projects using the donations and royalties they receive; lobby the central government for assistance with developmental projects; and, in mining areas, grant permission to mining companies to operate in the traditional area. See BB Campion and E Acheampong, ‘The Chieftaincy Institution in Ghana: Causers and Arbitrators of Conflicts in Industrial Jatropha Investments’ (2014) 6 Sustainability 6332, 6338; TD Dawda, ‘Challenges of the Collaboration between Formal Local Government Actors and the Chieftaincy Institution in Ghana: Lessons from the Sissala East District of the Upper West Region of Ghana’ (2013) 3(12) International Journal of Humanities and Social Science 238, 240.
18 Another type of customary ownership is family land, which is land that belongs to an extended family.
19 Y Agidee, ‘Forest Carbon in Ghana: Spotlight on Community Resource Management Areas’ (Forest Trends, Katoomba Group’s Legal Initiative Country Study Series 2011) 8.
20 C Mahama and O Baffour, ‘Management of Stool Land Revenue in Ghana: A Study of the Nkawie and Toase Stools of the Atwima Nwabiagya District of the Ashanti Region’ (2009) 29(1) Journal of Science and Technology (Ghana) 28.
21 The Consolidated Fund is the public purse of Ghana to which all revenues are paid. This fund is managed by the Ministry of Finance and Economic Planning. It is important to mention that before the Act, the MDF had no separate account; thus, in practice, its ten per cent share was also kept in the Consolidated Fund.
22 The OASL is a national institution mandated by the Constitution of Ghana, Article 267(2) and the Stool Lands Act 481 of 1994 to collect and distribute stool land revenues. The OASL has offices in seven of the ten administrative regions and over 90 district offices. The district offices receive revenues proportional to the revenues originating from the district.
23 Article 267 applies to all revenues generated from stool lands.
24 See the Constitution of Ghana 1992, Article 267(6).
25 An interview with an official from the OASL’s Eastern Regional Office in January 2018.
26 K Opoku, ‘Forest Governance in Ghana: An NGO Perspective’ (FERN 2006) 15; Standing (n 11) 76.
27 Standing (n 11) 75–77.
28 Auditor General’s Report, ‘Utilisation of Mining Development Fund by Metropolitan, Municipal and District Assemblies’ (Re No AG.01/109/Vol 2/66, Republic of Ghana 2013) 5; Dupuy (n 9); Standing (n 11) 75.
29 During precolonial times, paramount chiefs were entitled to one-third of the minerals mined within their traditional areas. See AG Abdulai, ‘Competitive Clientelism and the Political Economy of Mining in Ghana’ (2017) ESID Working Paper 78, 32.
30 NT Adimazoya, ‘Staying Ahead of the Curve: Meeting Ghana’s Commitment to Good Governance in the Mining Sector’ (2013) 31 Journal of Energy & Natural Resources Law 147, 158; Standing (n 11) 75–77.
31 Ibid.
32 Twerefou and others (n 10) 25 and 28.
33 Ibid, 30 and 56; G Hilson and SM Banchirigah, ‘Are Alternative Livelihood Projects Alleviating Poverty in Mining Communities? Experiences from Ghana’ (2009) 45 Journal of Development Studies 172, 186.
34 Akabzaa (n 10) 61.
35 Adimazoya (n 30) 160.
36 Ibid.
37 Ibid.
38 Ministry of Lands and Natural Resources, ‘Annual Performance Report’ (MLNR 2014) 77; Standing (n 11) 75.
39 ICMM (n 11); M Morgandi, ‘Extractive Industries Revenues Distribution at the Sub-National Level’ (Revenue Watch Institute 2008) 34.
40 Twerefou and others (n 10) 19.
41 Abdulai (n 29) 29; SA Swanzy, ‘“Pay Us All Our Royalties” – Chiefs Cry Out to Finance Ministry’ (2016) http://pulse.com.gh/business/mining-pay-us-all-our-royaltieschiefs-cry-out-to-finance-ministry-id5384719.html accessed 9 September 2019.
42 Twerefou and others (n 10) 19.
43 Abdulai (n 29) 29; ICMM (n 11); Akabzaa (n 10) 36.
44 Ghana Chamber of Mines, ‘Performance of the Mining Industry in 2016’ (GCM 2017) 21 https://ghanachamberofmines.org/wp-content/uploads/2016/11/Performance-of-the-Mining-Industry-in-2016.pdf accessed 15 October 2019.
45 Standing (n 11) 76; Twerefou and others (n 10) 19.
46 Ibid.
47 ICMM (n 11) 77–78.
48 Adimazoya (n 30) 159; Dupuy (n 9); Standing (n 11) 76.
49 N Boachie-Danquah, ‘Reducing Corruption at Local Government Level in Ghana’ in M Alam and R Koranteng (eds), Decentralisation in Ghana (Commonwealth Secretariat 2011) 118–21; Standing (n 11) 77.
50 Twerefou and others (n 10) 19.
51 Ibid.
52 F Ashiadey, ‘Improving the Impact of Mining Royalties at the Local Level in Ghana’ (EITI 2014) https://eiti.org/blog/improving-impact-of-mining-royalties-at-local-level-in-ghana accessed 4 July 2017; Auditor General’s Report (n 28) 13; R Bloch and G Owusu, ‘Linkages in Ghana’s Gold Mining Industry: Challenging the Enclave Thesis’ (2012) 37 Resources Policy 434, 439.
53 Mahama and Baffour (n 20) 32.
54 Act 912, s 6(2).
55 The Minerals Commission is a government agency that regulates and manages the utilisation of mineral resources and coordinates and implements policies related to mining.
56 The Lands Commission is a government agency that manages public lands and makes recommendations regarding land policies in Ghana.
57 Act 912, s 6(1).
58 Act 912, s 8(1).
59 Act 912, s 9(1).
60 Other sources of funds that flow to the MDF are grants, gifts, donations and money approved by Parliament. See Act 912, s 3.
61 Act 912, s 7(j).
62 Act 912, s 21(3)(a).
63 Of the total funds, two per cent is not included in as the Act does not specify whether this two per cent should be deducted from the 20 per cent royalty share it receives or from the ten per cent it retains after having distributed the OASL share. Therefore, it is not clear on what basis the MDF should calculate the share that can be spent on administrative costs (an interview with an MDF officer, June 2018).
64 Act 912, s 17.
65 Act 912, s 20(1).
66 Interview with an MDF officer, June 2018.
67 Act 912, s 19(2).
68 Act 912, s 19(3).
69 Act 912, ss 2(a)–(c), 5(a), (b) and 17.
70 Act 912, s 21(3)(a)–(f).
71 Dupuy (n 9); ICMM (n 11); Standing (n 11) 76.
72 Constitution of Ghana 1992, Article 267(6)(a).
73 G Crawford, ‘“Making Democracy a Reality”? The Politics of Decentralisation and the Limits to Local Democracy in Ghana’ (2009) 27 Journal of Contemporary African Studies 57, 58–59.
74 K Grove and J Pugh, ‘Assemblage Thinking and Participatory Development: Potentiality, Ethics, Biopolitics’ (2015) 9 Geography Compass 1; P Thomas, ‘Introduction: Challenges for Participatory Development in Contemporary Development Practice’ in P Thomas (ed), Challenges for Participatory Development in Contemporary Development Practice (The Development Studies Network 2013) 5.
75 R Chambers, ‘Poverty and Livelihoods: Whose Reality Counts?’ (1995) 7(1) Environment and Urbanization 173; Grove and Pugh (n 74) 5; MS Reed, ‘Stakeholder Participation for Environmental Management: A Literature Review’ (2008) 141 Biological Conservation 2417.
76 Act 912, s 19(2)(d)–(e).
77 Dupuy (n 9) 74–75; R Maconachie, ‘The Diamond Area Community Development Fund: Micropolitics and Community-Led Development in Post-War Sierra Leone’ in P Lujala and SA Rustad (eds), High-Value Natural Resources and Post-Conflict Peacebuilding (Earthscan 2012) 266–67.
78 Maconachie (n 77) 267.
79 Ghana Chamber of Mines (n 44) 21.
80 KE Dupuy, ‘Community Development Requirements in Mining Laws’ (2014) 1 The Extractive Industries and Society 200, 212; MC Vallejo Galárraga and WS Freslon, ‘Ecuador: Mineral Policy’ in G Tiess, T Majumder and P Cameron (eds), Encyclopedia of Mineral and Energy Policy (Springer Berlin Heidelberg 2017) 6.
81 Dupuy (n 80) 214.
82 For a more detailed account of how the EITI came into existence, how it functions and what its objectives are, see, for example, V Haufler, ‘Disclosure as Governance: The Extractive Industries Transparency Initiative and Resource Management in the Developing World’ (2010) 10(3) Global Environmental Politics 53; E Kasekende, C Abuka and M Sarr, ‘Extractive Industries and Corruption: Investigating the Effectiveness of EITI as Scrutiny Mechanism’ (2016) 48(C) Resources Policy 117; SA Rustad, P Le Billon and P Lujala, ‘Has the Extractive Industries Transparency Initiative Been a Success? Identifying and Evaluating EITI Goals’ (2017) 51 Resources Policy 151.
83 For example, the 2016 Peru conference acknowledged Ghana as a Star Performer in using EITI to influence policy reforms in the EI sector.
84 The annual EITI Report is the core EITI product and contains data on each country’s extractive industries in accordance with the EITI standards (see https://eiti.org/document/guidance-note-on-publishing-eiti-data) accessed 15 October 2019.
85 Petroleum Revenue Management Act, Act 815 see mofep.gov.gh/sites/default/files/acts/Petroleum-Revenue-Management-ACT-815.pdf.
86 Act 912, s 7(d).
87 Act 912, s 7(e).
88 Interview with an MDF official, June 2018.
89 P Lujala, C Brunnschweiler and I Edjekumhene, ‘Transparent for Whom? Dissemination of Information on Ghana’s Petroleum and Mining Revenue Management’ (2018) Munich Personal RePEc Archive (MPRA Paper 84788) 17; S Kasimba and P Lujala, ‘There Is No One Amongst Us with Them! Transparency and Participation in Local Natural Resource Revenue Management’ (2018) 6 The Extractive Industries and Society 198; JJY Ofori and P Lujala, ‘Illusionary Transparency? Oil Revenues, Information Disclosure, and Transparency’ (2015) 28 Society & Natural Resources 1194.
90 Lujala and others (n 89); Kasimba and Lujala (n 89).
91 Legislative instruments are used in Ghana to interpret and operationalise Acts and Laws.
92 CEDA, A Review of the Minerals Development Fund Act, 2016 (Act 912) (CEDA 2018) 14.
93 The GRA informs all the relevant mining institutions and the Bank of Ghana about the amount of the mineral royalty received monthly through the MoFEP.
94 Interview with an MDF official, June 2018.
95 Ibid.
96 CEDA (n 92).