Ghana Is Just A Rent Collector
The Founding and Managing Partner of the Songhai Group, Dr Ohene Aku Kwapong, has likened Ghana’s status in the gold mining industry to a ‘rent collector’ who would soon be out of business if it does not take steps to monetise its gold.
He indicated that gold is a non-renewable resource, which can get exhausted at any point in time, hence the need to invest the proceeds we derive from it to create more wealth for the country.
Dr Kwapong was speaking at the Public Forum on Monetisation of Mineral Royalties organised in Accra yesterday on Zoom.
The Forum, which was spearheaded by the Minerals Income Investment Fund (MIIF), sought to explore how Ghana can leverage on its gold resources to create extra income for the development of the country.
Explaining the ‘rent collector’ concept, Dr Kwapong, who is also a member of the Center for Democratic Governance (CDD-Ghana), based in New York, said “Just imagine we are a family and we are given a house and we decide to rent it. Whoever rents it says I will pay you GH¢1000.00 for the next 30 years. So you also just collect the money and spend. Your house can collapse or when other people come to town and start building new houses to rent, people will stop renting yours.
“What you need to do is to go to a bank and say I have 1000 cedis coming in for me every 30 years. Can I get some more money and build better homes?”
Relating this to the mining industry, Dr Kwapong explained that Ghana started mining gold more than 500 years ago and the system it operates is that, because it’s not able to mine the gold itself, it allowed foreigners to mine it and give it a certain percentage share. This percentage is then used to fund parts of Ghana’s budget
But by this concept, Ghana risk not making money from Gold in some 50 years to come, should our gold resources get depleted, Dr Kwapong said, and continued that it will bring hardship on the economy, since the little percentage share for funding the budget won’t even be there.
“This is why we need to monetise our mineral resources.”
Dr Kwapong said monetisation will give the country upfront money that it can use to build local industries and value chain industries.
“Currently, Ghana does not refine its gold and does not have the gold value chain companies due to its capital intensiveness. But if we are able to monetise and get upfront cash payment, we can use those monies to develop and invest in local private companies to get involved in the mining industry and make money for the country.”
Responding to the comments on why the Agyapa deal was not accepted by Ghanaians, Dr Kwapong said that the involvement of the government in the Agyapa deal was what made Ghanaians reject it.
“Government is not supposed to get involved. What government is supposed to do is to create the enabling environment for private companies to invest.”
Dr Carl Odame-Gyenti, Director, Banks, Investors and Intermediaries, Standard Charted Bank Ghana, a speaker at the forum indicated that monetisation is not a new thing in the world.
Countries such as Norway and Canada have all monetised their gold royalties and are enjoying the dividends, he said.
He stated that Ghana produces the largest amount of Gold in the world, yet the royalties that it generate is less than one percent of the total revenue and grant in the country, so monetisation would be the best solution to the industry.
However, the reason why attempts to monetise our royalties, including that of the Agyapa deal doesn’t seem to work in Ghana is because the agreements surrounding it have not been open and transparent and that must change.
“The onus lies on us to be transparent on what we want to do. If there are any agreements surrounding mineral royalties, it should be open and transparent for everybody. Everybody must know what it is. We must not try to hide anything.”