ACEP proposes new mineral revenue management framework

The Africa Centre for Energy Policy [ACEP] has had a stakeholder consultation on the proposal of a new Mineral Revenue Management Framework that seek to address the fiscal challenges in the allocation of mineral revenues in the country.

This also follows the Finance Minister Seth Terkper’s statement that “the issue with mining is about fair and transparent sharing of the benefits and windfall gains from the exploitation of the country’s precious and irreplaceable natural resources.”

The Minister added that the government has therefore taken a bold step to critically review the fiscal regimes and mining agreements, with the view to ensuring that the country benefits adequately and fairly from the gains in the mining sector.

Dr. Mohammed Amin Adam, the Executive Director of ACEP, said, Ghana has faced significant fiscal and development challenges over the years where for instance, cash fiscal deficits reached 14percent of GDP, unprecedented in Ghana’s history and only reduced to 9.5percent of GDP in 2014 which is still very high.

He added that the management of mineral revenue in Ghana is nothing to write home about because it has defied international best practices of oversight, accountability and development focus.

Dr. Amin indicated that the weakness in our current fiscal arrangement [The Petroleum Revenue Management Act] for the collection, management and utilization of mineral revenues are not far-fetched.

According to him, they are characterized by administrative, policy and governance challenges.

Speaking at the forum, Dr. Amin noted that the forum will provide a platform to reflect as citizens, to prospect into the future and to build common grounds on the best way to manage our mineral revenues.

He added that Ghana must consider the establishment of systems for assessing and collecting mineral revenues, establish stabilization mechanisms for insulating the economy from the effects of commodity price volatility.

This, Dr. Amin, noted, must develop a comprehensive formula for the distribution of mineral revenues between the central government and communities affected by mining, develop principles for applying mineral revenues to high impact on public investment projects at the national and community level.

A premiering of a video documentary at the forum exposes the challenges of mineral revenue management in Ghana and the great danger that are normally posed to the mining communities including the destruction of the environment, human rights abuses, displacement of communities and low compensations to affected communities.

Considering the assessment of the existing structure, a panelist on the forum, Hon. Joseph Cudjoe, the Member of Parliament for Effia Constituency said, the administrative fiat lacks mechanisms to check and trace how mineral revenues are spent in the country.

He noted that ACEP’S new proposal, after an overview, will bring a mechanism for targeted investment in specific key sectors of the economy with the mineral revenue.

The MP attention was drawn to the fact that there is a similar policy guide called the Mineral Development Fund Bill currently at a crucial stage before the Committee of Mines and Natural Resources in Parliament.

Hon. Joseph Cudjoe said the Mineral Development Fund Bill and what ACEP’s proposal seems to have the same composition and structure in terms of how monies should be allocated to government and the communities.

He suggested that ACEP’s proposal must find a way to fit into the Mineral Development Fund Bill since its sounds more progressive in terms of allocations of revenue to priority areas in the communities as well as the government.

The MP said the mineral revenue should be directed more towards capital investments rather than consumption.

According to him, these huge revenues from the mineral sector can be channeled into real estate development and many more viable ventures that will even create jobs for the teaming unemployed youth.

Mrs. Hannah Tenkorang, said the existing structures do not compel the political actors to recognized the rights of citizens as owners of the mineral revenue.

She calls for the full participation of the citizens at all levels in the decision making chain using the direct principle of Free Prior Inform Consent [FPIC] and their concerns should be incorporated.

Suleman Koney, Chief Executive Officer, Chamber of Mines indicated that the current structure for managing mineral revenue in the country have several defects.

He added that we must consider the utilization of these revenues as a country and identify specific sectors to invest into.

ACEP is proposing for 30percent of the mineral revenue to be allotted to the Community Development Fund and the remaining 70percent to the government’s Sovereign Mineral Fund.