Misgovernance, corruption, bribery and conflicts of interest; from the Agyapa deal, to the recent dissolution of the Inter-Ministerial Committee on Illegal Mining, Ghana’s mining sector is going through a storm.
Once put forward as a pillar of Ghana’s success story, the poor management of the country’s mining sector is starting to affect investor confidence.
With 130.5 tons of gold produced in 2018 – compared to 129.8 T in South Africa; Ghana has historically succeeded in becoming Africa’s leading gold exporters, due to its business-friendly regulatory framework, its status as one of Africa’s most stable democracies, and significant investments from major mining operators.
One of the very few countries to take bold policy decisions on the issue of illegal mining, Ghana was a role model for other African countries. In the past two years, various events suggest that the country’s policy trajectory is shifting, increasingly driven by vested interests and populists goals.
The case of the Inter-Ministerial Committee on Illegal Mining (IMCIM)
The most recent example is the dissolution of the Inter-Ministerial Committee on Illegal Mining (IMCIM), a structure launched in January 2020 to combat illegal gold mining.
This move by President Akufo Addo stems from an investigation by journalist Anas Aremeyaw Anas published on social media, that revealed cases of corruption within the commission. Amidst other things, the journalist’s investigation filmed ministry officials in charge of repressing illegal mining, receiving bribes to circumvent established procedures.
The fraudulent practices of the commission headed by Kwabena Frimpong-Boateng, former minister of Environment, Science, Technology and Innovation, and its subsequent dissolution by the Ghanaian President, opened the way for a resurgence of galamsey practices in the country.
The policy u-turn gives another strong disincentive for investors to see illegal gold panning activities flourish.
Cassius Mining vs. Ghana
Among other signals that contribute to deteriorating Ghana’s mining market reputation, several ongoing disputes with the state could dampen the confidence of international investors in the near future.
Last December, junior company Cassius Mining started legal proceedings against the Ghanaian State for non-renewal of its research permit on the Gbane site.
Beyond the 275 million dollars in compensation requested by the Australian firm, the legal action puts the spotlight on the dysfunctions and irregularities that plague the country’s mining sector.
A heavy burden for new ministers appointed
The recent reshuffle provides an opportunity to put aside some ministers who were accumulating scandals and damaging the government’s image, such as the former Minister for Lands and Natural Resources Kwaku Asomah-Cheremeh. Accused, among other things, of acquiring state land hidden in his brother’s name, and selling excavators seized from small scale miners, and alleged attempts to sabotage the last election.
Kwaku Asomah-Cheremeh finally had to hand over his ministry to Samuel Abdulai Jinapor during last week’s appointments.
A tremendous challenge given that Ghana’s mining industry accounts for about 5% of the country’s GDP: it is unlikely, however, that a simple cabinet reshuffle will be enough to solve Ghana’s structural public policy problems.
By Arnaud Liege