Adnan Adams Mohammed
ISODEC, a policy think-tank and community development centered organisation, has launched a new report that puts the spotlight on the vulnerabilities in the gold mining supply chain.
The report titled “Mapping of Illicit Financial Flows Risks Along the Supply Chain of Gold Mining in Ghana” provides critical analysis and actionable recommendations that help to address the risks in the industry. ISODEC in collaboration with Global Financial Integrity and with funding from NORAD, facilitated the research.
The findings in the report underscore the widespread prevalence of illicit financial flows at key stages in the gold mining process chain: mining, processing, transportation and marketing.
“These risks not only drain our nation of vital revenues but also weaken governance structures and hinder equitable resource management”, Charlotte Kpogli-Dzadey, the lead researcher noted at the launch event last week.
Mr Ben Aryee, a director at the Ministry of Lands and Natural Resources, commended the efforts by the parties for coming out with the report that serves as a guide to help streamline the gold industry and safeguard it from illegalities.
He admitted to governance weaknesses affecting the industry and therefore called for the industry regulators to enforce the necessary laws and recommendations to stop gold smuggling and underreporting among others vices.
Governance of Ghana’s mining sector involves many institutions. However, the Ministry of Lands and Natural Resources and Minerals Commission are two core state agencies that oversee the industry based on their direct relevance as espoused in law. While the ministry provides the sector with a strategic policy direction, the Minerals Commissions statutory role is already stated above. Other vital agencies include the Environmental Protection Agency (EPA), Forestry Commission, Water Resources Commission, Ghana Geological Survey Authority, Lands Commission, and the Land Use and Spatial Planning Authority which provide quasi-regulatory functions in managing the mining sector.
These agencies are responsible for granting various licenses, enforcing regulations and monitoring compliance standards. Also the Bank of Ghana (BOG) , the Ghana Revenue Authority (GRA) and the Precious Minerals Marketing Company (PMMC) all play significant financial and economic roles. However coordination and collaboration among these agencies can be Improved to enhance the effectiveness of regulatory oversight and ensure the sector’s sustainable development.
On the issues of corruption and smuggling; responders in the study believe, money for buying gold comes from sources largely unknown following government failure through the Precious Mental Marketing Company to mobilize enough money to buy gold produced, excess gold is bought by foreigners and their local collaborators, smuggled outside Ghana and re-exported in the name of a third country, relations between mining company and their subcontractors and communities are strained, some attempt at smuggling gold in one instance.
These undermine the local economy leading to less revenue for the government, contributing significantly to illicit financial flows and thus undermining domestic resource mobilization for national development.
Also, supply chain complexity and regulatory compliance are key issues identified which are bordered on by the faceless people who funded small-scale mining and also bought the excess gold in the system and where the gold was going. Gold from ASM and galamsey, which are often informal and poorly regulated in the form of the absence of customer due diligence and porous borders facilitate the gold smuggling out of the country.
The study reveals that corruption among government officials is widely perceived as a major driver of IFFs in the mining sector. A substantial 66.25% of respondents believe that corruption contributes to these licit activities “to a very large Thee underscores the systemic nature of corruption and its role in facilitating the
Consequently, the influence of multinational mining companies in driving IFFs is another significant concern. A majority of respondents (76.03%) view the role of these companies as “very significant” highlighting the need for greater scrutiny and accountability in their operations. The practices of these corporations often explore weak regulatory frameworks exacerbating the problem of IFFs.
Looking at the policy implications, the report captured that; the pervasive nature of IFF’s in Ghana’s mining sector has far-reaching implications for the country’s economy, governance, and social development. These flows not only deplete the nation’s financial resources but also perpetuate inequality, weaken institutions, and hinder efforts to improve public services such as healthcare. The widespread perception of corruption and the significant role of multinational corporations in driving IFFs suggest that addressing this issue requires both national and international efforts. Companies that handle the movement of gold either as raw ore or refined products, might also hide the tree ownership of companies. These entities evade scrutiny and accountability by obscuring their real ownership, making enforcing legal and regulatory measures Harder Lack of transparency about gold mining activities, financial transactions, and beneficial ownership can facilitate various forms of illicit financial activities that prevent domestic resource mobilisation.
The report further recommended some policy actions, which included: at the mining or extraction stage, the government should adopt stringent monitoring and enforcement of royalty and tax payments, including regular auditing of mining operations. The integration of digital topics and automated systems for tracking me extraction and production will improve accountability;
With the processing stage, strengthening customs and trade verification procedures, including independent assay reports for precious metals, car mitigate risks Implementing traceability systems for mineral processing such as blockchain technology, will ensure transparency from the mines to markets Governments shoüld work with regional bodles to establish cross-border cooperation to address smuggling and underreporting;
For the transportation stage, strengthening customs enforcement and using digital technologies such as GPS tracking for shipments of minerals can mitigate risks. Regional cooperation is necessary to harmonize border controls and customs protocols. Patities should encourage the use of formal transportation channels and incentivize compliance with tax and customs laws; and
At the marketing and sales stage, the government must require full transparency in marketing and sales transactions There should be effective Implementation of the law that mandate public disclosure of beneficial ownership of companies Involved in marketing The introduction of automated transaction monitoring systems for pricing and sales agreements could reduce undervaluation and mis-invoicing Strengthening anti-corruption measures and enforcing penalties for buyers and brokers involved in illicit activities is crucial.
