Political Economy of the Mining Sector in Ghana

Rents to riches?: the political economy of natural resource-led development

“…Moreover, this legislation presents key discrepancies with the 2003 Mining Code of the West African Economic and Monetary Union (WAEMU), of which Niger is a member (Yungu, Chevallier, and Viñuela 2010). As a further example, Ghana's Mining Code confl icts with Ghanain customary law on land tenure, creating disputes over access to land, the allocation of responsibilities and benefi ts, and compensation to displaced or affected communities (Ayee et al 2011).…”

“…Such situations give the government enormous discretion in the allocation of extraction rights, but can also enable companies to negotiate overly advantageous terms for themselves. Ghana's mining code is widely considered investor-friendly, but it does not provide guidance on social and environmental issues, and these omissions have led to problems at the local level and growing tensions with local communities (Ayee et al 2011). In some cases, special laws have even been passed to satisfy specifi c investors: Niger passed its 2008 Mining Law mainly to enable the development of the Imourarem mine, giving special incentives to large investors (Yungu, Chevallier, and Viñuela 2010).…”

“…Key positions in sector agencies, including regulatory bodies, are fi lled with political appointees with little sector background, in countries including DRC, Ghana, Mongolia, Niger, Nigeria, and Timor-Leste. Sector ministries and agencies often lack independent and adequate budgets, worsening the impact of political involvement (Ayee et al 2011;Chevallier and Kaiser 2010). Often, the government agencies in charge of the contracting and licensing processes are staffed by political appointees, and contract negotiations are conducted as much through informal channels as via the designated processes.…”

“…Lack of real-time information on prices and the inability to accurately assess grades severely limits tax collectors' ability to correctly determine the revenues and fees that apply to an operation, especially in the mining sector. In many cases, such as DRC, Ghana, Niger, and Lao PDR, the government has almost no independent capacity to assess quantity or grades of extracted resources or their market prices, and it must rely almost exclusively on the information provided by extractive companies (Ayee et al 2011;Barma, Fritz, and Rex 2010;Chevallier and Kaiser 2010;Yungu, Chevallier, and Viñuela 2010).…”

“…In DRC and Lao PDR, for example, exploration and extraction rights are commonly allocated on a discretionary basis without a bidding procedure instead of by employing a fi rst-come, fi rst-served system that operates on more competitive principles. Adding to this problem, the majority of deals are secret (Ayee et al 2011;Chevallier and Kaiser 2010;Barma, Fritz, and Rex 2010). In many countries, award rules give competitive advantages, or even access to confi dential information, to preferred companies.…”