Ghana outperforms countries in sub-Sahara Africa in resource governance index, but many issues remain

Despite many issues plaguing Ghana’s natural resource governance regimes, revenue management and budgeting, the country has been ranked high above resource rich countries in sub-Sahara Africa, in the Revenue Governance Index, released today June 28, 2017, by the Natural Resource Governance Institute (NRGI).

The 2017 Revenue Governance Index found that Ghana performs satisfactorily in many essentials of resource governance.

“Ghana is one of eight countries in the index for which both mining and oil and gas sectors were assessed, and researchers reported significant variations in governance between the two sectors,” NRGI said in a press release.

The index measures the quality of resource governance in 81 countries that together produce 82 per cent of the world’s oil, 78 per cent of its gas and a significant proportion of minerals, including 72 per cent of all copper.

“It is the product of 89 country assessments (eight countries were assessed in two sectors), compiled by 150 researchers, using almost 10,000 supporting documents to answer 149 questions,” it said.

According to the index, Ghana’s mining sector scores 56 of 100 points and ranks 24th among 89 assessments.

“The sector performs better than most others in sub-Saharan Africa, mainly because of a satisfactory enabling environment, however, performance in revenue management is poor. This assessment focuses on gold mining; gold accounts for 14 per cent of Ghana’s mineral exports, however government revenues from mining have declined and been surpassed by income from oil and gas,” the index noted.

The authors of the index point out that, the recent discovery of and focus on hydrocarbons have resulted in governance issues in the mining sector receiving less attention, leading to an 11-point performance gap between the two sectors.

It however, observes that, Ghana’s favorable enabling environment provides a good foundation for resource governance.

“An ever-opening space for the media and civil society is reflected in Ghana’s position within the top ten countries in the voice and accountability subcomponent,” it said.

The index notes that while, the mining sector performs satisfactorily in the value realization component; however, performance within this component is varied, ranging from poor governance of state-owned enterprises (SOE) to satisfactory performance in taxation and management of local impact.

“With a score of 62 of 100 points in licensing, Ghana’s mining sector outperforms most neighboring countries in sub-Saharan Africa, ranking fifth among 31 assessments. The country’s minerals commission grants licenses on a first-come, first-served basis; the commission launched an online minerals cadaster administration system in 2016 through which companies can view and apply for licenses. The Ghanaian government could address questions over mining companies’ tax obligations and environmental responsibilities by requiring and enforcing disclosure of mining development agreements, some of which are governed by stabilization clauses,” it pointed out.

On the gold sector, the index notes that it consists of a few large companies and many artisanal and small-scale (ASM) miners.

“In an attempt to develop the sector, the Ghanaian government has introduced local content requirements on procurement and employment. Proposed amendments to the Minerals and Mining Act of 2006 include larger fines for illegal artisanal mining,” it said.

Ghana’s oil and gas sector scores a satisfactory 67 of 100 points in the index, making it the best performing extractives sector in sub-Saharan Africa.

“In oil and gas, Ghana performs consistently across all three components of resource governance—value realization, revenue management and enabling environment. However, within the revenue management subcomponent, its performance varies considerably, from good sovereign wealth fund governance to poor national budgeting,” the Institute said.

According to the index, Ghana’s fund was found to be better governed than many with much greater assets, including those of many oil-rich states in the Persian Gulf. Ghana’s good performance is a result of clearly defined rules for deposits, withdrawals and investments, audit and parliamentary oversight mechanisms and adherence to these requirements, it said.

Despite these positive findings, governance of revenue management in Ghana falls behind that of some other states with emerging hydrocarbons sectors. Uganda, for instance scores more than 10 points higher than Ghana in the national budgeting category, it said.

By Emmanuel K. Dogbevi
Copyright © 2017 by Creative Imaginations Publicity
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