Ghana’s minister of lands and natural resources, Inusah Fuseini, is leading a drive to update the legislation that controls the country’s all-important mining industry. He spoke to New African’s correspondent Baba Chenzira.
One of the major challenges facing African countries, if not the major challenge, is to harness a fair share of their resource revenues and invest them in the real economy – in order to spur development. What Ghana’s minister of lands and natural resources, Inusah Fuseini, has been concerned with is the legal, regulatory and social issues that surround all the industries that fall under his ministry’s remit.
Issues surrounding land and natural resources are, in the minister’s own words, “many and varied”. He described some of them to New African, while outlining the measures being taken to tackle the challenges that Ghana is facing.
“Some of the most important regulations concerning the exploitation of natural resources were put into force in the early 1990s and they needed updating after 20 years,” Fuseini explained. “We knew these needed to be reviewed to bring them into line with modern trends.”
It is estimated that 70 per cent of all the foreign direct investment that Ghana has attracted since 2007 has been directed into the capital-intensive resource sectors. This obviously includes investment in the headline-grabbing offshore oil and gas industry, but the on-shore mining sector is also attractive – both for the foreign and local investor. It is not for nothing that Ghana was once known as the Gold Coast. This yellow metal has been at the centre of Ghanaian culture for many centuries, if not millennia, and is still a crucially important natural resource and export earner. While still remaining pivotal to the economy, the gold mining sector’s production output actually declined in 2013, according to reports in the press attributed to Ben Aryee of Ghana’s regulatory body, the Minerals Commission.
Gold production, which touched 4.3m ounces in 2012, up from 3.6m ounces in 2011, fell last year, probably reflecting a lower gold price and companies scaling down production.
Falling production might also be due to the tightening of legislation that controls the small-scale mining sector by the government, whose figures indicate that no fewer than 4,000 foreigners, engaged in illegal mining in the country, have been expelled.
President John Mahama’s drive to tighten legislation was described by Minister Fuseini as a modification of some of the terms of the Minerals and Mining Act.
The old legislation exclusively reserved small-scale mining for Ghanaian nationals – and, in general, people respected that law, so there was little need for punitive measures to be enacted. But, the minister told New African, that more and more foreigners, notably the Chinese, had become involved with the informal mining sector, and his ministry believed they had to deal with them in a more robust manner.
However, the old legislation meant that, in many ways, the ministry’s hands were tied. “The Minerals and Mining Act did not allow, for example, for us to confiscate the equipment used by illegal small-scale mining operators – so even if we seized the equipment, eventually it had to be returned to the people from whom it was seized, and they went back to practising illegal mining elsewhere,” Fuseini explained.
The law has now been changed in that respect, and new penalties introduced. “If foreigners are caught mining illegally, they can be fined $100,000, and that is a deterrent enough,” the minister averred. But it is not possible to say that these reforms and new measures have significantly impacted production. Because gold is so valuable, it attracts the most attention from illegal miners – so much so that it has spawned a new phenomena in Ghana; a new mining sector called galamsey – a term that is a corruption of the phrase “gather them and sell”.
Regrettably, galamsey is creating a whole raft of social and environmental problems in Ghana with the irresponsible use of both cyanide and mercury in the processing of the precious metal, polluting rivers and water bodies as well as impacting the health of Ghanaians. But, in addition, Fuseini has many other concerns. His portfolio includes resources such as timber, which now has a new voluntary licensing system for export to the European Union that he is particularly proud of. Possessing a licence proves that lumber has been responsibly and legally harvested.
Excavators work on a small-scale gold mine at Dunkwa-on-Offin in central Ghana
In the mining sector, his mandate includes the extractive industries that now seek to exploit resources such as manganese, iron ore, bauxite and diamonds. Ghana used to be a big diamond producer in the 1960s, tempting the country’s first president, Kwame Nkrumah, to attempt to set up Ghana’s own sales market outside De Beers’.
The orderly exploitation of these solid minerals requires not just the Minister Fuseini’s vigilance, but also attending to important matters regarding both land and infrastructure, issues that fill his office in-tray. He points to a recent UN report that praises Ghana’s land reform programme very highly. “Land has always been held through traditional ownership practices in Ghana,” Fuseini points out. “It was not property; it was deemed to belong to past, present and future generations. So our ancestors did not see any compelling need to document land ownership.”
But times have changed and today land has become very much a commodity that is, in the minister’s view, needed for investment purposes; for agriculture, for residential housing, etc.
“You can’t go to the bank and access a loan if you don’t have the documentation for your land. So we need to demarcate and document the land of traditional owners, and ensure that the owners can register their property in a timely manner so that they can use their documents and leases to underwrite other transactions. Land is an instrument that can capitalise broad-based economic development.”
Fuseini says that Ghana built the legal land ownership system on the basis of traditional ownership. During colonial times, because the Gold Coast did not have a settler culture, the colonial authorities did not formalise land ownership.
“In this regard,” Fuseini says, “the British left everything to the traditional rulers, the chiefs, and ruled through them.”
The position today is that the government has in place the legislation to acquire land for “public purposes” through a compulsory purchase scheme defined by the constitution. Fair compensation for the land with valuations for crops and buildings is determined by the Survey Department of the Lands Commission, but this compensation can be challenged by the owners’ own surveyors.
“But somehow, there are people who don’t want to go through the land registration system,” the minister remarked, adding that “as a minister, I see the challenge as being to inspire confidence, to restore sanity and stability to the process of land acquisition.”
This, in turn, will allow both foreign and local investors to be certain that ownership of the land they require will not, at a later date, be challenged. This is crucial for the mining companies that come to Ghana – even if ownership of land does not extend to the resources that lie beneath it.
Mineral resources remain in the custodial possession of the state, which requires the mining companies to apply for a license to extract and export. But clearly, mining companies need land for the access to be able to exploit those resources.
Explaining the government’s thinking, Fuseini says that when the mining code was reformed, it was done so on the basis that the mining industry holds huge potential for both direct and indirect employment and economic development.
The current government is determined to flush out foreign interests that are not prepared to operate in a legal and transparent manner. The government also wishes to formalise the small-scale mining sector – and both these aspirations were outlined in the President’s first State of the Nation address after assuming power.
In 10 years’ time, the minister foresees that the gold mining sector could well be refining its own metal. The striking of coins and the manufacture of jewellery will similarly be undertaken by Ghanaian enterprise.