Interview: Alhaji Inusah Fuseini
What changes can investors expect in existing royalty and windfall tax schemes?
ALHAJI INUSAH FUSEINI: We believe in engaging with mining companies and investors to build a consensus on matters of concern for both the investor and us in order to resolve any issue that might arise. An additional windfall tax was considered when the gold price was very high in 2011, but it will never come into effect because the price of gold has dropped and because monitoring operational costs of mining companies and ensuring the potential for a windfall tax have proven to be very difficult. An increase in actual taxes would be inappropriate. The issue of royalties has become a frequent discussion point with mining companies because of the decrease of gold prices. The royalty regime was put at 5%, but we are looking at this number to see if we can introduce a more flexible mechanism to ensure it responds to the highs and lows of world market prices.
How is Ghana ensuring it maintains a competitive investment climate?
FUSEINI: Ghana has some unique characteristics for an African country: we have had a stable democracy for 20 years; we are not interested in nationalising any investment coming into the country; and our legal framework protects incoming private investment. We believe that this competitive edge combined with our responsiveness to global market conditions will be a key driver for sustainable foreign investment.
We need to diversify our mining operations and ensure that certain base metals like copper, zinc, bauxite and iron ore receive the necessary amount of investment. Even Ghanaian salt holds tremendous potential for the petrochemical industry. Looking at what we have achieved in the gold segment I am confident we will meet investors’ expectations and reach a mutual benefit by producing more natural resources. There is still a huge infrastructure gap and more public-private partnerships (PPPs) will be key to address this deficit and enable the full potential the country has to offer. The Ministry of Finance has opened a PPP office, so any investor who is interested now has a one-stop shop.
What additional regulatory changes are needed to supervise small-scale mining activities?
FUSEINI: We have an existing framework overseeing small-scale mining operations, but the actual rate of abuse of this framework is a concern. As of today 1.5m people work in legal and illegal small-scale mining, so its employment potential is immense and it can reduce poverty rates. When properly managed and regulated it can catalyse the development of rural communities. Therefore, only Ghanaians should be allowed to engage in small-scale mining because of the government’s duty to create employment; any other person is committing an illegal act, and we are addressing this issue to finally bring sanity into the small-scale mining environment. We need a holistic solution for the challenge of financial institutional capital and the gap in technology. Another issue is providing training to increase productivity and reduce accidents, because people lack a general understanding of the geology where they work. This exercise is at its first phase and is limited to four regions in the southern sector, but we are looking to cover the entire country since gold has now appeared in the northern part of the country and people are rushing there. The ultimate goal is to integrate small-scale mining in the rest of the economy.
What potential do you see for increasing value-added production and local content?
FUSEINI: Value-added production will be the next frontier if we want to take full advantage of our natural resources, because of the opportunities it creates. If the government is not directly involved in utilisation of resources, and only gets royalties and taxes, then value addition will create more jobs, more income, resulting in more taxes for the government. We therefore need to integrate vertically and downstream. There are opportunities for gold products, like we had in the past.
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