One of the most significant policy challenges in Ghana today revolves around the question of how to address illegal small-scale mining, popularly known as galamsey.
The topic is politically sensitive in Ghana where the practice accounts for an estimated 60% of the country’s total mining labour force and supports millions of livelihoods.
Despite President Akufo-Addo’s promise in 2017 to eradicate the problem of galamsey “once and for all”, artisanal mining remains widespread and represents more than 30% of Ghana’s gold output. The combination of governance shortcomings, opportunistic electoral strategies in the Western region, and the criminalisation of the sector under President Nana Akufo-Addo’s first mandate have failed to curb galamsey. Meanwhile, the introduction of sophisticated equipment, the use of dangerous chemicals and the recent influx of foreign – predominantly Chinese – miners have significantly exacerbated its negative effects.
The incumbent is now considering launching a national dialogue on galamsey, the starting point of a new strategy announced in January 2021 during his final State of the Nation address. At this stage, the roadmap, key stakeholders and expected outcomes of the nationwide consultation remain unclear, fuelling perceptions that Addo’s administration lacks the political will to decisively tackle this issue. The topic, however, is pledged by Samuel Abu Jinapor, Ghana’s new minister for Lands and Natural Resources, as one of his top priorities. During his recent parliamentary hearing, Jinapor sought to lift growing uncertainty as to the government’s ability to put an end to illegal mining, emphasising his determination to regulate the sector and protect the environment.
Locally, the practice causes severe environmental damage and stirs tensions within communities. In the Western region, an ICG-led research found that recovering lands and waterbodies destroyed by galamsey would cost the country an estimated US$250 million. Meanwhile, large mining companies operating in Ghana face increasing scrutiny over ESG performance and their overall compliance with strict environmental standards. The contrast is particularly high when looking at the devastating consequences of illegal mining. In March 2017, the Ghana Water Company warned that water pollution caused by illegal miners could force the country to import water for consumption by 2020.
Nationally, galamsey represents huge sums in lost revenue and exports. In 2016, the Ghanaian government lost an estimated $2.3 billion in fiscal revenues through illegal mining. In comparison, the country’s top three major foreign companies collectively produce more than a third of Ghana’s gold production and contribute to above 50% of government revenues. Gold royalties alone paid to the government reached $207 million in 2019 from $42 million in 2007, led by the performance of key players in the past decade such as Kinross or the Galiano-Gold Fields joint venture.
Given its scale both in terms of output and labour force – with more than three million people living off illegal mining – formalising galamsey practices would represent a critical fiscal boost for the country, even more so now that revenue generation is low on account of the COVID-19 pandemic.
Under mounting pressure from environmental advocates and youth groups, compounded by the need to restore investor confidence following several scandals affecting the extractives sector, the stakes are high for the new minister. The political context, however, is unfavourable to the delivery of sensitive policy reforms. Akufo-Addo’s administration faces a hung parliament where the ruling National Patriotic Party (NPP) and opposition National Democratic Congress (NDC) have an equal share of seats in the house. At a time when swift policy reforms are needed, the next parliamentary session will be a litmus test on how policymakers view the issue of galamsey and if they have the requisite will to rapidly address it.
About the author – Arnaud Liege is the Head of Business Intelligence at Africa-focused consulting firm Concerto.