Let’s overhaul Ghana’s natural resource contracts to get the maximum benefits — IEA

The Institute of Economic Affairs (IEA) has urged the Government to review all contracts related to Ghana’s natural resources. This review should help the country maximize its earnings from these resources.

Justice Sophia Akuffo, a former Chief Justice and IEA Fellow, spoke at a press briefing in Accra. She emphasized the need for Ghana to earn at least 60 percent from its natural resources, valued over $10 trillion. This would support economic transformation and reduce the debt burden.

Akuffo expressed concerns about how foreign firms exploit Ghana's resources. Many contracts grant exclusive rights to these companies, which take large shares while paying minimal royalties and taxes.

Ghana's natural resources include gold, diamonds, bauxite, iron ore, oil, gas, cocoa, and timber. Akuffo suggested that the Government learn from countries like the UK and Australia. These nations reviewed their mining laws to secure better returns for their citizens.

For instance, Angola applies a 50 percent tax on petroleum income under a Production Sharing Agreement. Other contracts there can incur up to 65.75 percent in taxable income.

In the UK, there is a corporation tax of 30 percent on oil and gas production. Additionally, Eritrea allows up to 40 percent equity participation by its government in mining investments.

Akuffo called for an end to outdated contracts favoring foreign companies. She advocated for modern practices that ensure fair resource sharing with Ghana.

She proposed forming a five-member committee of experienced Ghanaians to review natural resource laws and contracts. This committee would recommend amendments to optimize benefits for the country.

Dr. John Kwakye from IEA stated that Ghana is rich in resources but poor in benefits due to ineffective leadership. He noted that over $10 trillion could be gained if proper frameworks are established.

Kwakye added that if necessary expertise or capital isn't available now, it may be better to leave some resources untapped until conditions improve. He emphasized that protests might be needed for fairer contracts favoring Ghanaians.

Dr. Kwabena Nyarko Otoo from the Trades Union Congress (TUC) urged bold government action on contract reviews. He pledged TUC’s support in working with IEA and others for policy changes regarding foreign ownership of Ghana’s natural resources.