Mining minerals

Timely payment of Minerals Development Fund royalties is vital

Kwaku Sakyi-Addo Chairs Minerals Development Fund Board

The Minerals Development Fund (MDF), now fully in place, is to provide a steady stream of funds for the accelerated development of mining communities.

The MDF, is a public fund created by Act 912 of Parliament in 2016.

During the period, even though the mining companies exploited the resources of the communities, the mining areas did not see much development.

It is to avoid this that the government created the MDF and the Minerals Income Investment Fund (MIIF) to contribute to the development of mining communities.

Unfortunately, there appears to be no steady flow of funds to the Fund. A development that has compelled the Director General (CEO) of the Ghana Chamber of Mines, Sulemanu Koney, to appeal to the Ghana Revenue Authority (GRA) and other relevant institutions to ensure that royalties and other funds intended for the direct benefit and development of mining communities are regularly paid to the MDF.

For us, this call from the CEO of the chamber raises pertinent questions, which must be addressed urgently if we are to achieve the objectives for which the fund was created.

For a mining economy like ours, the contradictions are sometimes all too obvious – contradiction of a state seeking to get more from the mining industry, but seemingly difficult to meet the challenges facing the industry; the intriguing contradiction of mining communities seeing wealth leaving their soil, yet shrouded in thick veils of poverty; the contradiction of a heavily taxed mining industry still considered a fat cow and a tax evader.

Indeed, mining continues to be a major contributor to the GRA’s direct domestic tax contributions, which is why we cannot play games with the sector.

Two years ago, gold, the flagship mineral, accounted for 96% of mineral export revenues (excluding oil and gas). In total, the mining sector contributed 43% of export earnings in 2017.

But mining communities in Ghana are generally poor because mining imposes socio-economic costs on host communities through land acquisition, environmental degradation, pollution and high cost of living. .

Although host communities are entitled to different types of compensation and mining royalty transfers, they are still among the poorest communities in the country.

To address these issues and establish a mining community development agenda, a new law, the MDF Act, was passed in 2016.

The regime is to receive 20 percent of the fund’s share, which is equivalent to 4 percent of total royalties paid by mining companies to the state or 0.2 percent of total mining company revenues.

This is to facilitate development in communities affected by mining. In each mining community, a local management committee should administer the program.

Despite its potential, the law has been unable to address the multiple challenges faced by mining communities, largely due to delays in the release of funds to the MDF by the GRA.

To overcome these challenges and ensure the rapid development of host communities, we believe that the law should be amended to provide a timetable for the release of funds to the MDF by the GRA.

For us at the Daily Graphic, the law should contain provisions requiring the government to transfer mining royalties to the fund in a timely manner. Unsurprisingly, there are still delays in the payment of mining royalties.

We further believe that information on how much the fund, stool land office and local authorities receive in mining royalties and how they spend them should be made public.

Again, local people should be mandated to elect local committee members and be clear about what committees can spend from mining royalties.

We are confident that when these suggestions are taken into account, they will foster participatory development and accountability in mining communities, as local people will influence how mining royalty transfers are spent in their areas.

Additionally, there will be more funds to promote alternative livelihoods and sustainable development, address environmental degradation, and provide social amenities to mining communities.