A brewing debate is emerging in Ghana’s mining sector following the government’s decision to triple the Growth & Sustainability Levy (GSL) on mining companies—from 1% to 3% of gross production. While the government insists the hike is a strategic move to capitalize on soaring gold prices and boost domestic revenue, industry experts warn it could deter investment and destabilize the sector.
The levy, originally introduced in 2023 as a temporary revenue measure, will now remain in effect until 2028. With gold prices having more than doubled in the past six years, government sees an opportunity to maximize earnings from the mining industry. However, the move has sparked debate, with concerns about its long-term implications for investor confidence, economic growth, and job creation.
In exclusive interviews with The High Street Journal, industry experts weigh in on whether this policy shift is a necessary revenue boost or a risky gamble that could stifle Ghana’s mining sector.
Balancing Revenue Needs and Investment Climate
Dr. Steve Manteaw, an energy policy analyst and Co-Chair of the Civil Society Platform on Oil and Gas, has expressed concerns over the potential negative impact of the levy hike on investor confidence. He warns that frequent fiscal policy changes could destabilize the business projections of mining companies, potentially discouraging further investment.
“There are ways we can get more money from the extractive sector without scaring away investors,” Dr. Manteaw said. “If we keep altering the fiscal regime to the disadvantage of companies, it throws their projections off balance and affects their bottom line.”
He suggests that instead of relying on fiscal changes, the government should prioritize enhancing local procurement and industrial capacity. Ghana currently has a national procurement list of 52 items that mining companies must source locally. Aligning this with the country’s industrial policies, such as the One District, One Factory initiative, could generate more value by fostering local manufacturing, creating jobs, and boosting exports.
Furthermore, Dr. Manteaw believes government should consider increasing its equity in high-performing mining companies. This approach, he argues, would allow the state to earn more from dividends and production shares while also benefiting from the taxes paid by industries supporting the mining sector.
A Justified Windfall Tax Substitute?
Denis Gyeyir, Africa Senior Programme Officer at the Natural Resource Governance Institute (NRGI), presents a counterargument, asserting that the government is justified in increasing the levy due to Ghana’s limited ability to impose windfall taxes.
“Gold prices have surged from around $1,200 per ounce in 2018 to nearly $2,800 per ounce, yet Ghana has struggled to capture windfall gains,” Gyeyir noted. “Windfall or extra-profit taxes are standard mechanisms for governments to ensure they benefit from commodity price booms. However, Ghana’s mining agreements—especially stability clauses—often lack effective windfall taxation provisions.”
Gyeyir explains that while the GSL functions similarly to a royalty—since it is levied on gross revenue rather than profit—it offers the government an alternative means of securing additional revenue from the mining sector.
“Since Ghana has been unable to trigger windfall tax provisions effectively, the government is taking the easier route of increasing the levy,” he said. However, he acknowledged that this approach might not be ideal, as it does not differentiate between highly profitable and struggling mining companies.
Implications for the Mining Sector and Economy
The levy hike will effectively push total royalty-equivalent charges in Ghana’s mining sector from around 5% to 8%, raising concerns that some mining companies—particularly smaller operators—may struggle to remain viable. While large multinational mining firms may absorb the additional cost, smaller entities might face financial strain, leading to potential downsizing or closures.
Ghana’s extractive sector remains a significant contributor to the economy, with gold exports alone accounting for a large portion of foreign exchange earnings. Striking a balance between revenue generation and maintaining an attractive investment climate will be crucial in determining the long-term impact of the levy increase.
It is instructive that both experts agree that Ghana must enhance its capacity to monitor mining companies’ cost structures effectively. They both agree that the Ghana Revenue Authority (GRA) needs to develop better mechanisms for assessing mining costs to ensure that corporate income taxes and potential windfall gains are properly captured.
Additionally, fostering local value addition through industrial policies and increasing government equity in mining operations could offer more sustainable revenue-enhancing strategies than frequent fiscal changes.
The Institute for Fiscal Studies (IFS) has consistently urged the government to adopt a more assertive approach by securing controlling interests the country’s extractive sector through joint ventures or production-sharing agreements. The IFS has argued that a higher government take would generate sufficient fiscal revenue to support economic management an ensure that a greater share of export earnings in foreign currencies remains within Ghana. This, the Institute believes would strengthen the cedi and mitigate the risks associated with excessive external borrowing and debt servicing.
The Institute of Economic Affairs (IEA) has also advocated for Ghana to implement proactive measures to maximize its natural resource wealth. The IEA contends that a substantial portion of profits from the extractive industry currently flows to multinational corporations, which repatriate earnings abroad, limiting Ghana’s economic gains.
