Ghana scores 54 out of 100 in mining sector revenue management – Report
Ghana’s management of revenues received from the mining sector has been scored 54 points out of 100 by the Natural Resource Governance Institute (NRGI) in its 2021 Resource Governance Index (RGI) report.
The score attained by Ghana in the NRGI’s 2021 RGI compares favorably to the 37 points scored in the NRGI’s 2017 RGI, representing a 17 points score increase in mining revenue management.
The most substantial improvement across Ghana’s mining assessment stems from a 34-point increase in the national budgeting subcomponent.
The adoption of the 2018 Fiscal Responsibility Act introduced concrete numerical fiscal rules governing public expenditure, preventing unrestrained spending in times of high resource revenues.
The law states that Ghana’s fiscal balance shall not exceed a deficit of five percent of GDP, and the Fiscal Responsibility Advisory Council was appointed in 2019 as an external body charged with monitoring compliance of these rules by the government.
These steps have pushed the 2021 RGI’s national budgeting subcomponent score to 70 points, placing this subcomponent in the higher end of the satisfactory performance band.
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Performance of Ghana’s mining sector “satisfactory”
The Natural Resource Governance Institute (NRGI) in its 2021 Resource Governance Index assessment of Ghana’s mining sector, has described the performance of the sector as “satisfactory”.
The mining sector per the NRGI’s resource governance index, attained a composite score of 69 out of 100 points.
The score marks 13 points increase in the 56 points score recorded by the index in 2017.
The increase in score was due to improvements across both the index’s value realization and revenue management components, with notable increases in governance of local impacts and national budgeting.
Ghana governs oil and gas better than mining
According to the NRGI, Ghana’s oil and gas sector features a more robust legal framework than the mining sector, especially in terms of licensing, where mandatory contract disclosures are required by law, and in taxation, where the Petroleum Revenue Management Act requires the full public disclosure on all payments and receipts from oil and gas producers to the government.
The mining sector legislation, it says lacks such good governance stipulations.
Such significant differences, it adds, also exist between the management of state-owned companies across the sectors. While the mining state-owned enterprise Prestea Sankofa Gold Limited was not assessed in the 2021 RGI due to a suspension of operations in 2016, the 2017 RGI highlighted significant shortcomings in governance, with a poor assessment resulting from a lack of rules related to government transfers and commodity sales.
The GNPC, has meanwhile bolstered its governance across several law and practice categories.
“The government is considering restarting Prestea Sankofa’s gold mining operations. If this plan materializes, they can draw some key lessons from GNPC regarding best practices in SOE governance,” stated the NRGI in its report.
