Under British rule, the colonial government controlled gold mining to protect profits for
European companies. They also restricted the possession of gold and mercury.
After Independence (1958), the Nkrumah regime increased Ghanaian involvement by tempering with foreign control. Production saw a large decline in the 1960s which was a major problem because gold is the main revenue earning mineral in Ghana. The sector didn't recover until it was revamped through a series of legislation in the 1980s.
Today, all minerals are owned by the state. The Ministry of Mines and Energy grants exclusive mining rights to companies. Legislation regarding mining is applied equally to Ghanaians and foreigners with the exception of provisions relating to artisanal mining and exploitation of construction minerals (which is reserved for Ghanaians).
The government is entitled to a free equity
interest of 10% in mineral ventures and can
purchase an additional 20% at a fair
market price. (1)
European companies. They also restricted the possession of gold and mercury.
After Independence (1958), the Nkrumah regime increased Ghanaian involvement by tempering with foreign control. Production saw a large decline in the 1960s which was a major problem because gold is the main revenue earning mineral in Ghana. The sector didn't recover until it was revamped through a series of legislation in the 1980s.
Today, all minerals are owned by the state. The Ministry of Mines and Energy grants exclusive mining rights to companies. Legislation regarding mining is applied equally to Ghanaians and foreigners with the exception of provisions relating to artisanal mining and exploitation of construction minerals (which is reserved for Ghanaians).
The government is entitled to a free equity
interest of 10% in mineral ventures and can
purchase an additional 20% at a fair
market price. (1)
recent history: the effects of the economy on gold (2)
- 1900-1920: "opening up' period of the colonial regime that saw rapid growth (an average of 10%/year)
- mid 1920s: rate of growth slowed substantially. for the following 25 years the economy stagnated/declined because of the breakdown of the international economy
- post WWII: boom in cocoa prices brought the country prosperity and provided capital and foreign exchange
- 1957-65: Ghana's "decade of development" under Nkrumah
- 1957: nationalization of all mining companies (shift from privatized to state-owned industry)
- 1960s: sharp decline in mining revenues
- 1980s: SAP, ERP, and World Bank loans helped revitalize the mining industry
- 1992: nationwide inflation due to massive amounts of money printed to try to reverse the 4.9% deficit
- 1996: similar problems occurred to those in '92 only this time it was because of increased government spending due to infrastructure changes
Kwame Nkrumah (leader from 1951-1966)
Kwame Nkrumah, a charismatic leader, came to power when the British decided to give Ghana the right to self-government. His party (the Convention People's Party [CPP]) was elected by a landslide in 1951 and chose Nkrumah to head it. He was elected as Ghana's first Prime Minister in 1952 and became the first president in 1957 after the country gained independence. (3)
Charisma doesn't always make a good leader however, and Nkrumah essentially took the relatively good economy that the British had left and destroyed it. In his defense, he did follow many policies that the British had initiated, however they were not beneficial in the long run and he ended up seeing them out to the less-than-fortunate results.
Throughout kinship-based societies there is the notion that leaders have the power to solve problems and bring justice to the community. The leader redistributes resources that are produced in order to ensure the survival of the society as a whole. Resources that are distributed can only come from the productive efforts of the people themselves however, and if there is no productivity there will be no resources. While this system can work very well at a small-scale, socialism essentially tries to implement it on a larger scale (and is rarely successful).
When Nkrumah became president, he created a one-party state, persecuting anyone who didn't support his system. He banned all other parties, including the regional and ethnic based ones. Essentially anytime somebody opposed him they were imprisoned. He was as generous to his friends as he was brutal to his enemies and corruption was rampant during his time leading the country.
There were large reserves of funds when the British left Ghana, mostly due to the large cacao industry. This industry was additionally generating more funds. Nkrumah industrialized the country on a massive scale with a broad front of industries. His goal was to replace imports with domestically made products as well as produce more products locally that Ghana was to poor to have imported. This ended up hurting the economy greatly because of poor planning. Specifically, the gold sector suffered because of a lack in foreign investment as well as a diversion towards the production of other resources
Military officers overthrew Nkrumah in 1966 when he was en route to visit North Vietnam. (4)
Nkrumah quotes
Charisma doesn't always make a good leader however, and Nkrumah essentially took the relatively good economy that the British had left and destroyed it. In his defense, he did follow many policies that the British had initiated, however they were not beneficial in the long run and he ended up seeing them out to the less-than-fortunate results.
Throughout kinship-based societies there is the notion that leaders have the power to solve problems and bring justice to the community. The leader redistributes resources that are produced in order to ensure the survival of the society as a whole. Resources that are distributed can only come from the productive efforts of the people themselves however, and if there is no productivity there will be no resources. While this system can work very well at a small-scale, socialism essentially tries to implement it on a larger scale (and is rarely successful).
When Nkrumah became president, he created a one-party state, persecuting anyone who didn't support his system. He banned all other parties, including the regional and ethnic based ones. Essentially anytime somebody opposed him they were imprisoned. He was as generous to his friends as he was brutal to his enemies and corruption was rampant during his time leading the country.
There were large reserves of funds when the British left Ghana, mostly due to the large cacao industry. This industry was additionally generating more funds. Nkrumah industrialized the country on a massive scale with a broad front of industries. His goal was to replace imports with domestically made products as well as produce more products locally that Ghana was to poor to have imported. This ended up hurting the economy greatly because of poor planning. Specifically, the gold sector suffered because of a lack in foreign investment as well as a diversion towards the production of other resources
Military officers overthrew Nkrumah in 1966 when he was en route to visit North Vietnam. (4)
Nkrumah quotes
restructuring the mining industry
Structural Adjustment Policy (SAP) reforms two areas: macroeconomic reform (trade liberalization and public expenditure policy) and sector specific reform (privatization)
Under SAP programs, the Ghanaian government made changes in the mining sector legislation to make it an attractive foreign investment, liberailzed fiscal policy, and privatiazed mining assets. (5) |
The Economy Recovery Program (ERP) was launched by the government to stop the economic decline of the past couple of decades by reviving its major sectors (including mining). The ERP included
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World Bank loans through the 1990s spurred major expansions throughout the mining industry. These loans encouraged foreign investment, though there were some negative side effects that went along with them. (1)
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regulation mechanisms today (7)
Key Institutions
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Legislation Surrounding Mining and Mineral Exploration
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ghana's mining portal
The ugly side of legislation
While the restructuring programs of the 1980s did help Ghana grow economically more stable, there were negative side effects to many members of the population
The 1989 Small-Scale Gold Mining Law legalized small-scale gold mining and provided a broad regulatory framework for gold processing marketing. While this rhetoric speaks of poverty reduction, the state pursues various modes of marginalization towards small-scale minors that contrasts it radically. The principal forms of marginalization are weak structures of governance and inadequate government policies to protect the small-scale miners. The government will lease large areas of land to large-scale corporations while requiring small-scale operators to go through hoops in order to gain access to the few remaining areas. (8)
Many of these small-scale operators were displaced by the Ghanaian Minerals and Mining law that was created during the times of the ERP. This law promoted large-scale gold mining and displaced landowners who stood in the way of these corporations acquiring the best places to mine. The government rarely fully reimburses these landowners.
Their has been a Fair Trade gold campaign that parallels other smallholder-dominated sectors, but so far it has been fairly unsuccessful and the large companies continue to control the gold mining industry. (9)
The 1989 Small-Scale Gold Mining Law legalized small-scale gold mining and provided a broad regulatory framework for gold processing marketing. While this rhetoric speaks of poverty reduction, the state pursues various modes of marginalization towards small-scale minors that contrasts it radically. The principal forms of marginalization are weak structures of governance and inadequate government policies to protect the small-scale miners. The government will lease large areas of land to large-scale corporations while requiring small-scale operators to go through hoops in order to gain access to the few remaining areas. (8)
Many of these small-scale operators were displaced by the Ghanaian Minerals and Mining law that was created during the times of the ERP. This law promoted large-scale gold mining and displaced landowners who stood in the way of these corporations acquiring the best places to mine. The government rarely fully reimburses these landowners.
Their has been a Fair Trade gold campaign that parallels other smallholder-dominated sectors, but so far it has been fairly unsuccessful and the large companies continue to control the gold mining industry. (9)
the EPA (ghana style) (10)
"as new environmental challenges [are] evolving, [we] need to keep abreast with contemporary issues and provide better solutions to them" - Mr Daniel Amlalo, Executive Director of EPA
In 2013, the EPA (under direction from the Ministry of Environment, Science, Technology, and Innovation) took action to help ensure that mining activities didn't adversely affect the environment. They did so by reclaiming bonds from all companies involved in any type of mining activity. Bonds generated financial resources; this therefore helped to ensure that mining activities didn't adversely affect the environment. The EPA was able to reclaim land and water bodies polluted through mining activities with this extra money. The goal of this policy is to "promote the integration and coordination of its approach to environmental management among the Ministries, Departments, and Agencies to facilitate the enforcement of people's environmental rights."