Accra, Ghana, May 29, 2020//-The share of the mining and quarrying sector in total direct domestic receipts mobilized by the Ghana Revenue Authority (GRA) has improved to GH¢ 4.02 billion in 2019 from GH¢ 2.36 billion in 2018.
According to the GRA data, this figure showed a 70 per cent in 2019. While the mining sector’s total fiscal contribution stood at 7.7 percent of domestic revenue in 2019, was the second highest after the financial and insurance sectors.
Speaking at the 92nd Annual General Meeting (AGM) of the Ghana Chamber of Mines, the President of the Chamber, Eric Asubonteng explained that the growth was occasioned by the simultaneous increase in production and price of some minerals, particularly, gold.
“Likewise, the expiration of the Stability Agreements between the Government of Ghana and some mining companies further resulted in changes that boosted revenue for the State”, he told producing members of the Chamber and some government officials in a virtual address.
Specifically, corporate tax receipts from the sector, saw an 89 per cent increase to GH¢ 2.27 billion in 2019 from the previous GH¢ 1.20 billion in 2018, Mr Asubonteng added.
Moreover, the income tax (Pay As You Earn) receipts of mining sector employees rose from GH¢ 457.16 million in 2018 to GH 736.26 in 2019, representing a growth rate of 61.1 per cent.
In a similar fashion, mineral royalty payments increased from GH¢ 705.26 million in 2018 to GH¢ 1.01 billion in 2019 representing a 42.7 per cent leap while other taxes stood at GH¢ 0.67 million in the same period.
Reviewing the 2019 performance of the country’s mining sector, he said: “In terms of total government revenue, the mining and quarrying sector’s contributions increased from 4.9 per cent in 2018 to 7.6 per cent in 2019.
Additionally, data from the Bank of Ghana showed that the increase in receipts from minerals expanded the sector’s share in gross merchandize export receipts from 39 per cent in 2018 to 43 per cent in 2019, consolidating the mining sector’s status as the leading source of foreign exchange from export earnings.
“In fact, the mining sector comes into its own, when you add the equivalent contribution of crude oil and cocoa, which stood at 29 per cent and 15 per cent respectively in the same period”.
It is equally vital to note that out of their realized mineral export revenue of US$ 4.5 billion in 2019, the producing member companies of the Chamber returned US$ 3.3 billion to the country, representing 73 per cent of export proceeds.
As has always been the case, the mineral revenue was returned through the various commercial banks; a critical factor in stabilising Ghana’s currency and fiscal outlook”.
2020 Forecast on mining and the economy
With the pouring of first gold from the redeveloped AngloGold Ashanti Obuasi mine in December 2019, there was a general optimism about growth in Ghana’s mining sector for 2020, due mainly to the anticipated increase in production at some key mines and planned organic growth in production of most producing members.
The production and shipments of Manganese by Ghana Manganese Company was, however, expected to record a year-on-year decline due to the protracted regulatory impasse that compelled the mine to suspend operations in the first quarter of 2020.
The production of Bauxite was expected to grow if the efficiencies introduced in the year under review remained in place. This optimism has since given way to a grimmer outlook for the sector globally.
The outbreak of COVID-19 Coronavirus is expected to not only disrupt local economic activities but potentially trigger a reversal of capital inflows as nonresident investors re-organize their portfolios away from treasury securities to hedge against the uncertainty induced by the pandemic, according to him.
“Ghana is not alone in this forecast as the contagion has ravaged many developed nations that are major investors in mining.
Such a negative impact may cause the local currency to depreciate. It could further result in an increase in the general price levels of inputs and increase the debt service burden for businesses”.
Moreover, the decline in oil prices on the international market is expected to worsen the plight of the economy in view of the global impact of Covid-19.
Accordingly, the country needs to begin to plan beyond the disease as the IMF projects Ghana’s GDP growth rate to drop sharply to 1.5 per cent in 2020 from the 6.5 per cent recorded in 2019.
African Eye Report
