Engineers and Planners (E&P), a company owned by Ibrahim Mahama, has taken over the Damang Gold Mine.
This acquisition has sparked a discussion about Ghana's economic direction. Many citizens are concerned that foreign companies control too much of the nation's valuable resources. This takeover by a Ghanaian entity, E&P, represents a significant shift.
Since the 1980s, Ghana has followed economic policies that favour free markets. This approach led to many important assets, like mines, being sold to foreign investors. A recent report showed that between 2015 and 2018, Ghana earned only 6.5% of the US$22.72 billion generated from its minerals. The vast majority went to foreign corporations. This situation has contributed to economic problems like poverty and unemployment.
Abdul Hakim Ahmed, PhD, noted that while state ownership of Damang Mine would be ideal, the current economic system makes private acquisition like E&P's a rare alternative. He expressed this viewpoint in his analysis. He previously wrote about the potential and challenges of President Mahama's approach to Ghana's economy before the most recent election. Ahmed's earlier article detailed how foreign interests have benefited disproportionately from Ghana's natural wealth.
The decision by E&P to acquire the mine could signal a new approach to resource management. It raises questions about whether Ghana can gain a fairer share of its mineral wealth going forward. Decision-makers in Ghana and investors watching the country will be closely observing future resource deals.
The debate centres on whether state ownership or private Ghanaian companies are better positioned to ensure national benefit from valuable resources. The government's next steps on resource policy will be critical. Investors will likely assess any potential shift in risk or reward associated with Ghana's mining sector.
Ahmed previously argued that from 2015 to 2018, Ghana's mineral output was valued at US$22.72 billion. However, the nation's revenue from this was only US$1.48 billion. This amounts to a mere 6.5% for Ghana. The remaining US$21.24 billion went to foreign entities. Furthermore, regarding profits beyond normal returns, known as economic rents, Ghana received only 10.5% of the US$14.14 billion generated. Foreign multinational corporations captured a massive 89.5% of these super-profits. This data highlights a persistent issue of Ghana yielding most of its resource wealth to outside interests.
Ahmed's analysis suggests that historically, Ghanaian leaders have prioritised political power over ensuring fair returns from national resources for the state and its citizens. This pattern has allowed foreign powers to bolster their corporations' global reach. He points to an unofficial system where politicians who align with foreign economic interests are rewarded. Conversely, those who resist face repercussions. He acknowledges that E&P's takeover of Damang Mine is not the perfect solution for resource ownership problems. However, within the current economic framework, other options are scarce.
Ahmed's preferred path would have been for the state, through a body like the Ghana Gold Board (Goldbod) or the Bank of Ghana, to take over Damang Mine. This would ensure all its profits directly benefited the nation. However, he recognises historical arguments against state control. These include fears of inefficiency and corruption, as seen during the Economic Recovery Programme (ERP) in the 1980s. He believes the Mahama administration could have managed these risks. This would have given the state a chance to benefit directly.
He also considers the possibility that the Mahama government avoided direct state ownership to avoid alarming international financial markets. This concern about sending a negative signal globally is a key aspect of his hypothesis. He noted that past governments often saw foreign powers provide support to their corporations expanding abroad. This is particularly true in the competitive field of mining. Local elites who cooperate often get political rewards, while those who are defiant face punishment.