The Ghana Extractive Industry Transparency Initiative (GHEITI) on June 30, 2024 published its 2021 – 2022 reconciliation reports for mining, oil and gas. The publication brings to 29, the total number of reports published since Ghana acceded to the initiative, made up of 18 mining and 11 oil and gas reports. It also closes the reporting gap which emerged following the sudden demise of the former GHEITI Coordinator, the late Bashiru Abdul Razak and which disrupted the GHEITI work programme in 2023.

Following the grant of a six-month extension on grounds of extenuating circumstances that faced GHEITI in 2023 and which combined to delay the production of the current reports, the MSG has worked assiduously to meet the new reporting deadline. Highlights of the 2021 -2022 GHJEITI reports:

Mining
1. The mining sector’s contribution to the country’s Gross Domestic Product (GDP) declined from GH₵11.449 billion in 2020 to GH₵10.105 billion in 2021 representing a decrease of 11.7 percent, and increased to GH₵13.025 billion in 2022, representing 28.9 percent climb.

2. In 2021, the country’s gold production shrunk by 91.7 percent, mainly due to the introduction of a 3 percent Withholding Tax on small-scale production of unprocessed precious minerals. The government’s decision to halve the rate of the impost, from 3 percent to 1.5 percent, spurred a recovery reflected in the 569-percentage increase in official records on the small-scale sector’s output in 2022.

3. Relative to the other sectors, the mining sector was the fifth largest economic activity by value in 2021 and the third in 2022.

4. Mineral export proceeds in 2021 and 2022 represent 36 percent and 39 percent of total merchandise exports respectively, which were more than the contributions of the other major forex earners, such as cocoa, and crude oil.
Oil and Gas

5. The upstream oil and gas sector in Ghana contributed 4.89 percent to the Gross Domestic Product (GDP) of Ghana, 6.91 percent of total government revenue, and 7.03 percent of domestic revenues in 2021

6. A total of 11,615,029 bbls of crude oil was exported by GNPC in respect of CAPI and royalties for an amount of US$496,286,197.87.

7. The other partners exported 55,843,177 bbls of crude in 2022. Thus, the total crude oil exports for 2022 as reported by the Bank of Ghana was 67,458,206 bbls valued at US$2,910.6 million. This translates into 31.19 percent of total merchandise exports in 2022. In 2021, the total value of crude oil export was US$3,947.73million which accounted for 26.81 percent of gross merchandise exports

Some Observations and Recommendations:
The following are some of the observations and recommendations on various issues in the reports:

1. Transparency in the operations of MIIF - As a sovereign wealth fund, MIIF has the potential to catalyse national development through investments in the mining sector, with emphasis on forward and backward linkages. Leveraging its investments in Injaro Ghana Venture Capital Fund to support small-scale mining operations has the potential to help eliminate informal pre-financing arrangements, often entered into by foreigners with local
miners, and which facilitate gold smuggling and illicit financial flows.

Similarly, MIIF’s investments in gold mining, lithium and solar salt production could lead to greater value retention for the country. However, the criteria for identifying or selecting a private sector partner is not publicly available, and the selection process is not open to public scrutiny. To avoid the risk of state capture and cronyism, GHEITI urges MIIF to open up its processes for identifying or selecting partners in whose businesses it invests its
resources. As much as possible the processes must be open and competitive, and where support for small-scale operators is concerned, the over-riding consideration should be, those whose operations are formalised, meet all statutory obligations, and upholding the highest sustainability standards. That way, the Fund will be helping to raise role models for others to emulate.

2. The continuous payment of dividends in respect of Government’s Free Carried Interest into the Consolidated Fund contravenes Section 4(b) of the Minerals Income Investment Fund Act, 2018 (Act 978), which assigns MIIF the authority to hold and manage government’s equity interest in mining on behalf of the state, and by extension entitles MIIF to receive dividends in respect of the said equity interest. GHEITI advises the Minister for Finance to
take urgent steps to ensure compliance with the MIIF Act and to direct all payments in respect of the state’s equity in mining to MIIF.

3. The report observed that bauxite royalties were being received into the Consolidated with the deduction and subsequent transfer of communities’ share to the Minerals Development Fund in line with provisions of law, for onward disbursement to beneficiary community stakeholders. This the report pointed out, amounts to unfair, and inequitable treatment of mining host communities.

4. The report calls for the adoption of more ambitious timelines for Ghana’s energy transition agenda, noting that the global shift from thermal energy resources has sparked a new race towards sustainable, and affordable supply of clean energy, and Ghana cannot afford to come to the race too late.5. The government of Ghana is entreated to consider leveraging on the Annual Budget Funding Amount (ABFA) as established by the Petroleum Revenue Management Act to help finance investments in renewable energy technology as part of its energy transition financing strategy.

The full versions of the reports are available at: www.gheiti.gov.gh