Founder of corporate development company – Songhai Group, Hene Aku Kwapong fears Ghana may not be able to raise future revenue from gold production if steps are not taken to monetize the mineral resource as a long-term venture.
He said although Ghana has overtaken countries such as South Africa in the production of gold, the situation may not yield any positive result for the West African country since mining companies from the Southern part of Africa are the core of the mining business in Ghana with the proceeds being sent back to their home country.
The development he explains will leave Ghana with little to no gold value thereby putting the country in a rather sorry state at least in the next five decades if a special purpose vehicle is not established to monetize the natural resource.
Hene Aku Kwarpong who is also a US-based Ghanaian investor and former Vice-President of Deutchbank made the disclosure at a public forum on the Monetization of Minerals Royalties held at the Institute of Statistical Social and Economic Research (ISSER) of the University of Ghana on Monday, May 3, 2021.
“Ghana is now the leading producer of gold. We have passed South Africa and other African countries which is great. But 50 years from now my biggest concern is, if we do not take care we actually may not have the opportunity to even make money from gold, because others would have monetized it, and they would have had a lot of resources left-back in their country”, he said.
In 2018, Ghana’s gold output of 4.8 million ounces surpassed South Africa’s 4.2 million ounce total for the first time.
South Africa lost its status as the continental leader in gold production to Ghana.
But Hene Aku Kwarpong raised concerns suggesting Ghana risks benefits from lower-cost mines if mechanisms are not instituted to shape the country’s mining development and policies.
“The problem is that it is actually quite a bigger problem because the only reason why Ghana is the largest producer is that two big South African companies are doing more in Ghana. So, if you actually take the value that we get in gold as a country, it is actually way down. So all we are doing is we are digging out the gold for others to then create value along the whole value chain all the way to the jury and the central bank”, he stated.
Other speakers on the platform including Carl Odame-Gyenti, Director in charge of Banks, Investors and Intermediaries at Standard Chartered Bank also agreed to the proposals.
Agyapa is a ‘fine’ deal
Hene Aku Kwarpong further added that taking advantage of the monetization of mineral resources will serve the best interest of the country by building the capacity of the gold value chain.
“So we really should try to step away from the obsession and really understand that when it comes to it, we have almost about 1000 metric tonnes of gold in the ground. So it is almost as if somebody has left their larger resources to come to your country to take your stuff.”
He, therefore, courted support for the Agyapa Royalties Agreement stating that what needs to be done is the encouragement of citizens to have confidence in the monetization of the country’s mineral royalties.
“There are several opportunities in Agyapa. Agyapa is fine but how do we do it to generate trust in our own people so that they believe we are doing the right thing. There should be a full strategy to provide clarity It is critical that we come out with a plan, how much it will cost so when we begin the monetization we know how much we are going to get”, he advised.