Ghana is missing out on the huge potential of mining procurement due to the overconcentration on the fiscal revenues the sector generates, this is the observation of Dr. Steve Manteaw, a natural resource governance expert.
In a wake-up call to policymakers and industry players, Dr. Manteaw, raised a red flag on Ghana’s approach to mining which is more fixated on fiscal revenues from mining is blinding it to the huge potential of mine procurement which carries so much value.
“The last time I checked, there was much more value to be captured in mine procurement, than in fiscal revenues which we seem so obsessed with, and yet unable to capture enough of,” Dr. Manteaw recounted in a post cited by The High Street Journal.
At the heart of the problem, the former chairman of the Public Interest and Accountability Committee (PIAC) says, is a poorly executed local procurement policy.
He recounts that Ghana’s mining law mandates that specific goods and services be sourced from Ghanaian businesses. This is an intentional policy that should have empowered local industries and created thousands of jobs.
On the contrary, he observes that the policy has inadvertently created a booming import business. He notes that businesses and individual with mining procurement contracts bypass Ghanaian businesses to import the goods from China and other countries.
He explains that, “To capture a good share of the procurement opportunities, we developed a mining procurement list and a law that mandates the procurement of specified items from Ghanaian firms. Unfortunately this was done without proper orientation of Ghanaian businesses, who mostly consider business as ‘buying and selling’.”
“They take these lucrative contracts and head to China to bring the goods. The economic effect of outsourcing to China is that we end up shipping jobs to China, and again we add to the input cost of mine operations, which lead to reduced taxes to the state, as these high input cost are tax deductible,” he added.
Higher input costs through importation mean lower taxable profits for mining companies, leading to reduced corporate taxes. The government ends up with even less than it hoped to generate in revenues.
There is a clarion call from experts advocating that this cycle could be broken by rethinking local content enforcement. Beyond mandating local procurement, there must be a deliberate national strategy to industrialize around the mining sector.
This means skills development, technology transfer, and support for Ghanaian firms to actually manufacture or assemble the items they supply.
Dr. Manteaw’s call aligns with major international frameworks like the Africa Mining Vision, the Natural Resource Charter, and the EITI principles that advocate for maximizing value across the entire mining value chain.
To him, the real opportunity in mining isn’t only beneath the ground. There is huge opportunity in the supply chains, the fabrication, the logistics, the services. He says if the country keep ignoring this, we’ll remain spectators in our own economy.
