Ghana has failed to translate mineral wealth into broad economic development – Dep. Finance Minister
Mr Seth Tekper, Deputy Minister of Finance and Economic Planning (MOFEP) on Thursday said the country had failed to translate its mineral wealth into broad economic development.
“Transfers from the mining sector to the economy as a whole have been particularly disappointing because several factors, including our inability to operationalise the mineral and mining Act to our advantage by accepting their lower end of three to six per cent…,” he said.
Mr Tekper said this in a speech read for him by Mr Enoch Cobbinah, Chief Director of MOFEP at the launch of 2009 Ghana Extractive Industries Transparency Initiative (GHEITI) Audit Report on Aggregation and Reconciliation of the Mining Sector Payment and Receipts in Accra.
The audit report was to aggregate and reconcile submissions of significant payments and receipts by extractive companies to those received by the Government and also to utilise lessons learnt from the reconciliation and aggregation to enhance transparency in the payment and receipt of the extractive benefits.
He said the inability to derive maximum benefits from the mining sector was further compounded by the lack of capacity to critically monitor production figures, cost of production, profits and tax assessment and auditing of the various process.
Mr Tekper explained that the country had failed to monitor transfer pricing associated with the global operations of mining companies, which often led to increased expenditure for the local company and subsequently lowered the tax liability.
He said the fact was that the impact of Ghana’s mining sector on the country’s development had been modest at best, despite the prevailing high prices of mineral commodities as compared to other countries.
The Deputy Minister said having realised these challenges, government had initiated efforts to strengthen the institutional framework for mining, including the mining fiscal regime with the National Resources and Environmental Governance Programme (NREG) was providing support.
He noted that the Minerals Commission had also commissioned several studies over the few last years on how to better carry out its regulatory responsibility, where it also facilitated the establishment of a Multi-Agency Revenue Task Force to strengthen mining revenue management.
Mr Henry Ford Kamel, Deputy Minister of Lands and Natural Resources, said converting the mineral proceeds into positive impacts that contributed to the sustainable development for the people was more paramount.
He said one of the activities of NREG was to develop guidelines for the use of the mineral royalties by the District and Municipal Assemblies.
“The Sector Minister is working hard to finalise the draft document for the necessary approval by Parliament,” he added and assured GHEITI of the Ministry’s support in the execution of the recommendation of the report.
The report findings indicated that Goldfields Ghana limited, which paid corporate tax for over a period of five years did not pay corporate tax in 2009 due to capital allowance resulting from the acquisition of fixed assets.
On recommendation, the report said there should be information on the development plans of extractive companies in order for government to effectively plan on its revenue.
“In order to ensure regular receipt of corporate tax, the capital allowance regime should be amended to remove the 80 per cent first year allowance,” it said.
The Extractive Industries Transparency Initiative was an initiative that aimed to improve development outcomes from payments made to government by the Extractive Industries.
It is also to reduce potential for corruption and large scale embezzlement of these payments and to stimulate debate on the uses to which these revenues were put.
Source: GNA