IFS to government: Review extractives sector contracts to reverse annual loss of GHC20 billion
The policy think tank argues the country is earning less from the extractives industry because of the state of existing contracts
The Institute for Fiscal Studies (IFS) is projecting that Ghana could rake in GHC20 billion annually from the extractives industry if all existing agreements in the sector were reviewed.
A comparative study carried out by IFS shows that Nigeria is earning 51% from oil revenue and Botswana 65% from its diamond industry while Ghana is getting only 16% of the revenue from its extractives.
The policy think tank argues that Ghana is earning less because of the state of existing contracts and production arrangements in oil, gas and mining.
Speaking with Nana Yaa Mensah on The Asaase Breakfast Show on Wednesday (1 September), an economist and research fellow with the IFS, Dr Adu Owusu Sarkodie, called for a national dialogue on reviewing the existing agreements.
“… We started on a wrong note … we entered into contracts as if we were giving our natural resources, which is a national asset, freely to the private sector. That ‘our asset is in your hand – go and mine the gold and come and render accounts to us’,” Sarkodie said.
Beyond royalties
”That is where we got it wrong. We should have owned the resources.
“As we speak, we don’t own the resources. Per the contracts that we have signed, Ghana has given away the resources to the private sector.
“The private sector will do anything that they want with the minerals and then they pay royalties and income tax to us,” he said.
Dr Sarkodie, who doubles as a lecturer in the Department of Economics at the University of Ghana, Legon, said the government can start implementing the IFS recommendations going forward.
“The argument that we are having now is about existing contracts plus future discoveries … for any mineral that we discover from now onwards, it seems the government can go by our recommendations.
“But the existing contracts, if possible, we can go back and renegotiate and ask them for [an] increment in our interest if it will not cost us. But we have to be diplomatic,” he said.
Fred Dzakpata
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