A Senir Economist at the Institute of Economic Affairs (lEA), Dr Kwadwo Tutu, has recommended the establishment of funds from a percentage of earnings from gold for the development of regions where gold is mined.
He also suggested that mining companies be required to pay some compensation into the funds specifically for the development of mining communities such as Obuasi and Tarkwa where gold had been mined for more than 100 years without tangible development.
Delivering a lecture at a round tab1e in Accra, Dr Tutu observed that gold had imposed an enormous social and environmental burden on mining communities, including diseases such as malaria, schistosomiasis and respiratory problems, resettlement problems, deforestation, land degradation, soil erosion and water pollution.
The round table was organised by the lEA on the topic, “Trade for sustainable development: The story of cocoa, gold and timber in Ghana”.
Making a comparative analysis of Ghana’s three foremost foreign exchange commodities, Dr Tutu noted that trade should aim at the sustainable development of the country and not just how much foreign exchange the sector earned.
He, therefore, submitted that trade in cocoa, gold and timber should be examined in terms of the economic, social and environmental impact they had on the country.
On the basis of that analysis, he contended that cocoa, not gold, was the largest foreign exchange earner for Ghana, pointing out that while gold earned $2.98 billion in 2009, only 22 per cent of that amount ($668 million) was retained in the economy in terms of taxes, royalties, consumables and salaries.
On the other hand, he submitted, in the same year, cocoa earned $1.87 billion, with 90 per cent of the amount ($1.68 billion) being retained in the economy in terms of payments to cocoa farmers, farm hands, staff of COCOBOD, taxes and other expenditure.
Dr Tutu said although the mining sector was very capital intensive, its impact on the economy was negligible, explaining that from 1990 to 2009, for instance, $9.02 billion invested in minerals earned $19.6 billion from gold over the period, representing an investment earning ratio of $1: $2.
Comparatively, within the same period, total foreign exchange earnings from cocoa amounted to $13.9 billion, with an investment of $818 million, representing an investment earning ratio of $1:$16.
He underlined the need for significant investment to modernize agriculture and increase value addition in order to enhance the country’s foreign exchange earnings from agriculture.
He also stressed the need to adopt development strategies for all the regions to be consolidated with a long term national sustainable development strategy.
Dr Tutu called for a review of mining laws and contracts, as well as tax exemptions accorded mining companies, in order to increase revenue from the sector.
Contributing to the discussion, the Member of Parliament for Subin, Mr Isaac Osei, said the important consideration for the nation should be to improve the quality of its cocoa in order to earn more foreign exchange.
In that regard, he said there was the need to pay critical attention to productivity enhancement schemes, quality assurance systems along the entire value chain, the storage and processing of cocoa and the creation of a strong internal market for cocoa consumption.
Mr Osei, who is a former Chief Executive of COCOBOD and Vice Chairman of the Parliamentary Select Committee on Trade, Industry and Tourism, expressed concern over what he termed “the substitution of farms by gold”,
The Chief Executive of the Minerals Commission, Mr Ben Aryee, while admitting that the contribution of mining to the economy was small, aid given the economic significance of minerals, mining would not cease in the formal and informal sectors.
He said until issues of linkages were addressed, the nation could not derive many benefits from mining.
Other contributors to the discussion indicated that it was high time Ghana took a second look at the sale of gold and the benefits of mining to the economy.
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