$2.57bn of mining firms’ revenue retained in Ghana – Report

$2.57bn of mining firms’ revenue retained in Ghana – Report

Mining companies pumped about 70 percent of their revenue back into the country in 2017.

Producing member companies of the Chamber of Mines returned US$ 2.57 billion of their US$ 3.68 billion mineral revenue.

“The plough back of mineral export receipts and expenditure of the same in-country are critical pathways by which mining influences the growth of the non-mineral economy and national development,” the report notes.

Typically, the mineral revenue is brought back into the country through the commercial and central banks.

The Chamber’s member companies spent US$ 1.23 billion on goods and services procured from in-country suppliers and manufacturers in 2017.

This represents 34 percent of realised mineral revenue and an increment over the 31 percent from 2016.

In-country suppliers may not necessarily refer to domestic companies or inputs though.

Manufacturers or firms registered in Ghana which stock imported products fall into this bracket.

Nonetheless, the Chamber said the proportion of the producing mines’ expenditure of mineral revenue on imported consumables declined from 7 percent in 2016 to 6 percent in 2017.

The 2017 share of expenditure translates into US$ 215.6 million in nominal terms.

“In the last few years, the companies’ pattern of expenditure consistently show year-on-year increases in demand for locally sourced inputs and steady decline in spending on imported consumables,” the report noted.

The Chamber added that “this mirrors the mining industry’s efforts to substitute imported inputs used in the production process with comparable ones from the local economy.”

Can they do better?

This past week, President Nana Akufo-Addo was stressing the need for mining companies operating in Ghana to begin producing locally many of the inputs they import.

This was in addition to a lament on the poverty of most of Ghana’s mining communities.

President Nana Akufo-Addo

According to him, the massive spending by mining companies leaks from the domestic economy through the importation of several tools and equipment, which Ghana can produce.

“It is time to reverse this trend. Ghanaian entrepreneurs must be encouraged to work with the Ministry of Trade and Industry and the Chamber to identify opportunities in the value chain, where indigenous companies can manufacture these products locally”

The World Bank has noted increased local procurement by mining companies as a conduit of improved economic growth.

Its 2012 study, “Increasing Local Procurement by the Mining Industry in West Africa”, says mining companies can boost economic growth in West Africa by purchasing more equipment, supplies and services from local companies.

It showed that raising the share of local procurement by mining companies would spread the benefits of mining more evenly across a country’s economy, creating jobs and stimulating the sustainable development of local enterprises.

By: Delali Adogla-Bessa/citinewsroom.com/Ghana

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