GHANA: THE GOLD RUSH, A CHANCE?

Boosted by its gold sector, which has propelled it to become Africa’s leading gold producer, Ghana’s economic performance has multiplied. The hardest part is to ensure that the fruits of growth driven by the precious metal benefit as many people as possible.

Historically known for its gold wealth, which earned it the name « Gold Coast » when it was discovered by Portuguese sailors in the 15th century, Ghana can now claim the title of African champion in this field. According to the Commodity Markets Outlook report, published last April by the World Bank, the small coastal state of West Africa is now the continent’s leading gold extractor. According to data made public by the international financial institution, the country produced 158 tonnes in 2018 (+15.3% compared to 2017), outperforming Sudan (No. 2 in Africa with 127 tonnes) and dethroning South Africa (119 tonnes), long the undisputed world leader (63% of global extraction in 1975, against… 4% in 2018).

Gold success

Several factors explain this new supremacy of the Ghanaian gold sector on the continental scene, starting with the significant slowdown in South African production, whose veins are gradually being depleted. Fatalist, the[South African] Council of Mining Industries estimates that the drying up of the latter will be effective as of… 2033. A structural weakness that de facto favours other African regions in the hierarchy of producing countries, with Ghana in the lead. But beyond exogenous circumstances, there are also and above all internal causes. The ramp-up of the gold sector of the former Gold Coast owes much to the accelerated development of its potential. Since 2017, Ghana has started operating two new mines in the prolific Ashanti Belt region of southwest Ghana: Wassa and Prestea, operated by Canadian Golden Star Resources.

Ghana, African growth champion (GDP growth since 2000 – in billions of dollars)
Source : World Bank

It is not surprising in these conditions that gold, a source of wealth in a still poor country, should become a major electoral argument for political leaders. During the last presidential election in 2017, the current head of state, Nana Akuffo-Addo, pledged to restart the Obuasi gold mine after four years of shutdown. Promise kept: in January, he went to the site with great fanfare to inaugurate the redeveloped site, alongside the managers of the Anglo Gold Ashanti operating company (AGA), which, in exchange for the expected job creation, was granted significant tax exemptions. A financial favor that could be quickly offset, since according to Accra, the Obuasi mine should generate $2.16 billion in revenue over a 22-year period. Not to mention the expected revitalization of the local socio-economic fabric.

Sharing wealth

This is the challenge of the sector: if the Ghanaian government is actively involved in the gold sector, it is because it knows that the fruits of the latter must be shared as best it can. However, on this point, it must be acknowledged that the results are rather mixed. In its report « African Economic Outlook 2019 », the African Development Bank points out that « years of growth based on extractive industries have not been able to address growing inequalities or create decent jobs ». This is an undeniable fact that explains the exodus of millions of rural people to urban areas and the disproportionate weight of informal services, the only way to generate a semblance of income. The gold industry itself is not immune to criticism, with its regular share of abuses denounced by several NGOs. In a recent report, Juliane Kippenberg, Deputy Director of the Children’s Rights Division at Human Rights Watch, notes that several underage gold panners have been reported at ten sites in the Ashanti region, in violation of current regulations (Ghanaian law prohibits children under 18 from working in mines). As for the « offending » operators, there are about twenty of them who have been caught by the NGO.

Faced with this reality, national and local authorities – especially chiefdoms – are now organizing themselves and requiring companies operating in the gold sector to contribute to the development of the areas where they are located. In the Akyem region, for example, where one of Ghana’s largest gold mines is located, residents have managed to force Newmont, a US company, to invest in local development. For every ounce extracted, $1 goes to them and a portion of the mine’s profits is also donated to them through a foundation. Better still, the firm is committed to recruiting 35% of its employees locally and to providing their own training. As a result, over the past four years, the region has received an annual average of nearly $30 million to finance many infrastructures (asphalt roads, schools, health centres, etc.), and the Akyem mine is now considered one of the most beneficial to the local population on the continent. This strengthens the Ghanaian government’s determination to find an alternative economic path, through an ecosystem that is favourable both to operators (in March the country adopted a series of measures designed to make its business environment more flexible) – particularly international – and to the population. An equation that is certainly complicated to solve.