The Governor of Bank of Ghana (BoG), Dr. Paul A. Acquah has said the mineral deposits of gold in the country have provided a strong endowment to build a dynamic and robust economy.
Speaking at the 79th Annual General Meeting and Exhibition of the Ghana Chamber of Mines in Accra, he said, “The mining industry has been an important pillar of economic activity and international trade in Ghana”.
He said in the 1960’s and 1970’s, the mining sector suffered weak economic conditions that lost the attraction of any new investment into the industry and left everything to small scale operators.
“The growth experience of the domestic mining industry has mirrored closely that of the Ghanaian economy against the backdrop of the weak economic conditions that prevailed during these periods”, he said.
Gold production declined by 47%, diamond by 67%, manganese by 43% and bauxite by 46% and the situation, he said led to a persistently high inflation rate and severe balance of payments difficulties in the country.
Dr. Acquah said a number of regulations were introduced to rationalize small scale gold and diamond mining, to discourage the disorderly exploitation of mineral resources and from spoiling the environment.
“These changes provided some stimulus to the industry and coincided with increased liberalization of the economy and led to rapid growth in the number of operators in the industry”, he said.
He said mineral exports account for about 37% of Ghana’s total exports, of which gold is the most important accounting for over 90% of total mineral exports.
He said, ”It is estimated that the industry employs about 15,000 Ghanaians in the formal sector; over 500,000 in the small scale gold, diamond, sand winning and quarry sectors and 6,000 in mine support services”.
He said mining companies pay 3%-6% of their revenues to government as ‘Mineral Royalties’. These payments he said amounted to ¢240 billion in 2005 and the sector’s contribution to Ghana‘s total corporate tax earnings has averaged around 12% for most of the recent years.
Dr. Paul Acquah said the contribution of mining in national development is not limited to the benefits that accrue from the operation of the mines as stand-alone companies.
He commended the mining industry for spawning local secondary industries that supply essential inputs to the companies’ production process. These secondary industries he said also offer employment and pay taxes to the government.
He said, “Despite the stability in macroeconomic conditions and high investor interest in the industry and in the economy as a whole, voluntary repatriation of foreign exchange earnings has risen above the mandatory requirements for most mining companies.
He mentioned the exportation of minerals valued at US$ 1,239.33 million by 10 major mining companies in 2006, as a clear example of the situation.
He said the current level of voluntary repatriation by the mining companies has in a significant way improved on the level of foreign exchange inflows into the economy.
“As part of corporate social responsibilities of the industry, it has introduced various alternative livelihood projects that focus on sustainable livelihood with the capability to thrive even when the mines close down”, he said. Various infrastructure projects such as schools, clinics, potable water, extension of electricity he said have also been implemented and have improved the quality of life of the host communities.
He called for opportunities to integrate the sector to the local economy through encouraging local production of activated carbon, iron ore, alum and hydrated lime.
“Investing in the productive use of these natural products would reinforce the sector as a pillar for rapid growth in the search to achieve a middle income status”, he noted.
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