Ghana’s current mining revenue policies, have been questioned by renowned development economist and former Executive Director of ISODEC, Dr. Bishop Akologo.
He has called for a dramatic increase in mineral royalties to at least 50%, declaring it better to leave resources untouched than accept the existing “rip-off” 5% rate.
Dr. Akologo, speaking passionately on the sidelines of a Media Foundation for West Africa (MFWA) sensitization workshop in Takoradi, he argued that the current royalty regime grossly undervalues Ghana’s mineral wealth and fails to compensate the nation fairly for its non-renewable resources.
“The current rate of 5 percent is woefully inadequate,” Dr. Akologo stated.
“For me, royalty is not a tax. It is a number we put on the value of our minerals… that mineral is worth at least 50 percent of the required investment.”
Valuing Ownership and Reduced Risk
Central to Dr. Akologo’s argument is the distinction between royalties and taxes. He posits that royalties represent the inherent value of the mineral resource itself, owned by Ghana, rather than merely a government levy on profits. He further contended that the significant reduction of risks within the mining sector over the years removes any justification for maintaining low royalty rates.
“We’ve removed the risks over the year, so there is no reason royalties should remain low. It should be raised in relation to the value of our ownership of the mineral,” he emphasized.
The Ultimatum: 50% or Preservation
Dr. Akologo issued a stark ultimatum: Ghana must either drastically increase the royalty rate to reflect the true value of its resources or cease extraction entirely, preserving the minerals for future generations equipped to secure a fair deal.
“We need to raise the rate to reflect [the mineral’s] value and the risk involved in mining the resource… or leave them in the ground for generations that are ready to take ownership of these minerals,” he declared, framing the current acceptance of 5% as unacceptable.
Critique of “Lazy Rent Collection” and Failed Promises
The economist launched a scathing critique of the government’s approach to the extractive sector. He dismissed the rationale behind low tax regimes – the promise of economic transformation through linkages and other benefits – as unfulfilled.
“A low tax regime presumes that they are going to use the other benefits… which includes using it as a catalyst to transform the economy through the various linkages. But we haven’t been able to activate those levers,” Dr. Akologo asserted.
“And we are just a lazy rent collector,” he asserted.
Robust Revenue Mechanisms
Dr. Akologo charged the government with the urgent task of developing and implementing mechanisms designed to optimize revenue mobilization from mining. This call goes beyond just raising royalties, implying a need for comprehensive reform in how Ghana manages and benefits from its extractive wealth.
Dr. Akologo’s remarks were made during an MFWA workshop focused on equipping journalists with skills to report effectively on critical issues like Illicit Financial Flows (IFFs), Progressive Taxation, Resource-Based Lending, and Domestic Resource Mobilisation in Ghana.
His comments underscore the vital role of an informed media in scrutinizing resource governance and advocating for policies that ensure national benefits.
