Dr. Bawumia who expressed worry about the development disclosed that mining companies operating in the country have since 2012 refused to pay dividend to government, stating that they made no significant profit and hinted that government is taking some pragmatic steps to take a relook at the mining laws of the country.
“Ghana as in many countries in the mining sector, for example, has a carried interest of about 10 percent. Out of this carried interest, the expectation is that Ghana would receive dividend for this carried interest in our mines. When we look at the data, however, we see a matrix of zeros as far as the dividends that Ghana earns from this carried interest from 2012 is concerned,” he said.
Dr. Bawumia pointed out that mining companies in the country have consistently justified their reason not to pay dividend to government, by blaming it on lack of profits even though the opposite is the case.
A careful observation of the records show that almost all the mining companies are using the same excuse to deny government its rightful share of profits in the extractive industry.
This, he said has rendered the carried interest useless, necessitating a relook of the law.
“So it means to a large extent the carried interest in mining is virtually useless as far as Ghana is concerned because we are earning zero from it, and we need to take a relook at this whole regime because the companies say they are not making profits to pay dividend but they keep mining”.
Citing the issue of Ghana’s ‘carried interest’ in the mining sector, the Vice President stated that “If you look at the existing natural resource regime, Ghana in the mining sector for example, has a carried interest of about 10% and out of this carried interest the expectation is that Ghana will receive dividends.
“When we look at the data, however, we see a matrix of zeros as far as the dividends that Ghana earned from this carried interest. From 2012 it is largely populated by a matrix of zeros, so it means to a large extent, the carried interest in mining is virtually useless as far as Ghana is concerned because we are earning zero for it.”
“We need to re-look at this whole regime. The zero earnings is because many of the mining companies say they are not making profits to pay dividends but they keep mining notwithstanding the fact that they are unprofitable! What is needed is a regional strategy to mineral resource development, from gold to bauxite to manganese and iron, in order to move up the global value chain for each of these minerals.
“We therefore have to re-examine our natural resource control and governance strategy, our resource fiscal regime from exemptions to carried interest, and how to use our natural resources to build a better and prosperous economies.”
Vice President Bawumia underscored that the old model of relying on revenue from the export of unprocessed natural resources was no longer fit for purpose, and the time had come to introduce a new one, designed to meet our development challenges.
“The old paradigm of natural resource exploitation and exports of unprocessed agricultural products and raw minerals are no longer sufficient in order to grow our economies, create jobs and to meet social expectations in the provision of basic public amenities.”