OPINION: In re Agyapa Royalties Limited

Is there anything fishy about incorporating Agyapa Royalties Company Limited to manage Gold royalties, for which reason, both Mainstream and Social Media have been awashed with negative comments for some time now?

What beats my imagination is how many really appreciate how Capital Markets operate. Whilst in the West or in most developed countries, Free-trade, Market economy, buying and selling of shares and investments generally are the order of the day, ordinary and mundane matters, in our part of the world, our investments are mostly into Treasury bills or Government Bonds and Fixed Deposits with established Banks and Private Financial Institutions such as Databank.

Our Stock Exchange is not developed and only a few invest in Company Shares or equities. I don’t even know where we have reached with our commodities market. Yet each day we wake up, we are bombarded by Agyapa Royalties bashing, some calling it a scam, fraud and now added to non-existent Scandals. Am scandalized by what is happening. My understanding is that; Ghana is rich in gold resources but we find it difficult to raise money for development.

Many Gold Mining Companies pay Corporate taxes and Royalties which is according to value and constitute only 3% of what the companies declare which are obfuscated and which eventually go into the Consolidated Fund and are used to support the budget. We then wait till another round of payments and use it the same way. When we need development funds, we go to IMF/World Bank or Syndicated loans or negotiate with our development partners for multilateral and bilateral loans and pay crippling interests and continue rescheduling and even borrowing to pay interests.

But as many serious minded citizens, might have noticed, since this Government assumed the reins of Office, it has resorted to the Capital markets and made use of Eurobonds and other local bonds to raise money instead of the option of always going for loans and issuing Sovereign Guarantees. Indeed, Government of Ghana, has stopped issuing Sovereign Guarantees.

What Government is therefore saying is that, let’s have a paradigm shift with our Royalties. Let’s take part of Our Royalties and invest on the London Stock Exchange as well as the Ghana Stock Exchange in order to raise money for development projects and get more investors into Ghana Gold Industry. The investments with time, when well-managed, will appreciate in value.

This investment, we will do through Agyapa Royalties Company Ltd, a company set up pursuant to an Act of Parliament. Such a company is nothing out of the ordinary but well known to those who know how to securitize revenues. After all, Get-Fund used that strategy in the past. Further there are several such companies listed on other stock markets such as the Toronto Stock Exchange in Canada. The entire process has been considered thoroughly having started as far back as 2018 with both sides of Parliament taking active part in the deliberations.

Transaction Advisers were appointed and the lead legal firm is a UK Firm which took a local partner who happens to be connected with Government. Such local partners are common, since they are on the ground and are sensitive to local norms. Some of the issues making the rounds are that no court can enquire into the activities of Agyapa Royalties. Meanwhile I can’t see any substance in that claim happening in Ghana since by our Constitution, the final Judicial authority is vested in the Judiciary.

The other issue which has been flogged, is a potential conflict of interest situation because of the CEO who happens to be a son of the Senior Minister. But it has been explained, that he was recommended after an international competitive interview. Sometimes the issue of conflict of interest is used interchangeably with nepotism. But is it not the case, that when a Board Member envisages a conflict of interest situation, he must declare it on his honour and recuse himself? Why should it be different with this particular CEO?

Some other claim is that we have undervalued our reserves. But from the explanation only a portion of the royalties will be transferred to Agyapa Royalties for trading purposes. In any case trade in raw materials are subject to price volatilities so it all depends. We may gain or lose.

There is also the issue that the Shareholders of Agyapa Royalties are family and friends of the President. Indeed, there is no scintilla of evidence to support the claim, since the Shares are fully owned by Government of Ghana, until portion is sold to raise revenue, and even then, Government of Ghana will always continue to own 51%majority shares.

There is also the claim that the CEO has been appointed forever. I don’t see, how he will continue to hold office even if the company folds up or files for bankruptcy or insolvency. I don’t also see how Ghana loses sovereignty over Agyapa Royalties Ltd, when the Act setting up the Minerals Income Investment Fund can be amended as and when Parliament chooses.

Finally, if dividends of Agyapa Royalties are not taxable, it is because the law pursuant to which it was set up says so. In the premises, it is my considered opinion, that what is happening on the media front is due to the political season, full of fury signifying nothing. The benefits for Ghana should be welcomed by all.

My thoughts!!!

Nii Ayikoi Otoo, Ghana’s High Commissioner to Canada

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