John Mahama’s Government to Introduce Natural Resource Revenue Management Act, Says Prof. John Gatsi
Dean of the Business School at the University of Cape Coast (UCC), Prof. John Gatsi, has disclosed plans by the incoming NDC administration to create the Natural Resource Revenue Management Act.
The creation of the Act, he however, noted, will be done in consultation with the IMF given the country’s ongoing $3bn ECF programme with the Fund.
The Act according to Prof. Gatsi, will enable the incoming government to efficiently track tax revenues generated from the exploration of the country’s natural resources.
Making the assertion during the NorvanReports X Space Discussion on the topic, “Fiscal Sustainability Amid Tax Cuts and Manifesto Promises,” Prof Gatsi further noted that the Act will ensure that revenues generated are efficiently distributed to address identified issues across the country.
“I am aware that we are going to see for the very first time the natural resource revenue management act, like the way we see particular revenue management acts in other sectors like the oil sector. This is so that we can track the natural resource revenue including the taxes and have a more efficient framework developed to ensure that these revenues are distributed quite efficiently to address some of the identified issues of the country,” he averred.
“And of course, some of these things cannot be undertaken without further discussion with the IMF,” he added.
Natural resource governance experts such as Dr Steve Manteaw have long called for the creation of laws to manage revenues generated from the country’s natural resources, particularly for the mining sector.
The call for the creation of such laws is on the back of the creation of the Public Financial Management Act, 2016 (Act 921) which monitors and accounts for the flow and use of revenues generated from the country’s oil and gas industry.
The creation of the Natural Resource Revenue Management Act by the incoming government is apt, particularly in the context of the green transition and the recent discovery of green minerals such as lithium.
Meanwhile, Ghana’s management of revenues received from the oil and gas sector has been scored 85 points out of 100 by the Natural Resource Governance Institute (NRGI) in its 2021 Resource Governance Index (RGI).
The score attained by Ghana in the NRGI’s 2021 RGI compares favorably to the 51 points scored in the NRGI’s 2017 RGI, representing a 34-point score increase in oil revenue management.
The substantial improvement in the country’s index according to the NRGI stems from the adoption of the 2018 Fiscal Responsibility Act which introduced concrete numerical fiscal rules governing public expenditure, preventing unrestrained spending in times of high resource revenues.
Why not repeal the garbage Petroleum Exploration and Production Law, Act 919 that makes FOCs the owners of our black gold ? Ghana government take is below 25%, infact 18%, because while our neighbours like Cote D’Ivoire have signed a Model Production Sharing Agreement with Tullow Oil Plc, we have a bogus Ghana Hybrid System that Act 919 supports. Our upstream oil industry had long been de-risked and therefore we don’t need to pay a pesewa upfront to have a PSA with the FOCs. PSA is giving countries that have it 40-85% revenue.
Time to have a paradigm shift with political will.
We do not only need an act to manage cum monitor natural resources. Far from that we need to rectify thr low 5%-10% revenue Peanuts we collect for the country by imposing a 30% levy on all mineral exports. This is the way to go.
How come when individuals use their lands as equity in businesses they claim around 25% of the business yet a whole country gives lands out and minerals extracted from these lands gives us only 5%-10% percent yet our leaders claims they are educated to understand business.
It makes no sense then it would rather make sense if our minerals are left underground.
We expect the new government to do a better job now as they come to power again. Anything short of this 30% levy is unacceptable to Ghana.
A word to the wise …..