GHANA: UPDATE

On January 7, 2009, Ghana successfully conducted a peaceful political transition from ex-President John Agyekum Kuffour of the New Patriotic Party, who had been in power since 2000, to President JEA Mills of the National Democratic Congress. The election followed closely contested presidential and parliamentary elections on December 7 and the subsequent run-off on December 28. These results have several implications for revenue transparency initiatives in Ghana, where commercial quantities of oil were discovered in 2007. With drilling scheduled to begin in mid-2010, the country has been preparing for an oil boom which could eclipse the country's mining revenues..

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TRANSPARENCY SNAPSHOT

Ghana stands at a crossroads: Its historic 2007 oil discovery is expected to create a windfall in an extractives sector dominated for centuries by gold mining. As Ghana plans for this new oil wealth, it must also work to extend its efforts on transparency to this new and volatile arena.

Transparency in the use and distribution of mineral wealth continues to be a challenge in Ghana. Although commercial gold mining has existed for over a century, and artisanal mining dates back more than 500 years, neither has played the leading role in economic development that one might expect. There is no clear national policy to guide the effective use of mining as a catalyst for development. The country still struggles with ineffective use of local resources—especially royalty payments at the local level which could alleviate poverty in local mining communities. Legislative oversight of mining is very weak and hindered by conflicts of interest, including the seating of legislators on the boards of the mining companies they oversee and the financing of legislator mining site visits by the mining industry.

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EXTRACTIVE INDUSTRIES

The mining industry has long been an important pillar of economic activity and international trade. Prior to independence, Ghana was known as the Gold Coast because of the rich mineral deposits.  Today Ghana is the second leading gold producing country in Africa after South Africa, and ranked 10th in terms of world production of gold.¹ The mineral deposits still in the ground provide a strong endowment to build a dynamic and robust economy. About 20% of the country is under mineral concessions and up to 70% in specific regions. There are reports on the occurrence of chromite, asbestos, andalusite, barite, mica, nepheline, syenite, cassiterite, columbite, monazite, beryl, spodumene, molybdenite, on-shore alluvial ilmenite and rutile, among others. Gold is the most visible mineral mined in commercial quantities. The export earnings from gold stood at US$1,277.2m in 2006 and US$1,733.78m in 2007 (2008 Budget statement).