The Ghana government has for two years running recorded shortfalls in allocations to the Minerals Development Fund (MDF) meant for the development of mining communities in the country.
This was disclosed here Thursday in a report by Ghanaian research and policy advocacy group, the Centre for Extractives and Development, Africa (CEDA).
The report titled, “Mining Sector Budget of Ghana: Analysis of Allocations and Performances in 2017 and 2018” observes the government failed to allocate the stipulated 20 percent of mineral royalty to the MDF.
“Twelve and half percent (12.5%) of the mineral royalty was allocated to the Minerals Development Fund (MDF) in 2017 and 2018, a violation of Section 3(a) of the Minerals Development Fund (MDF) Act, 2016 (Act 912) which requires that 20% of the mineral royalty received by the Ghana Revenue Authority (GRA) on behalf of the Republic from holders of mining leases in respect of the mining operations of the holders’ to be allocated to the MDF,” the report said.
The policy think tank blames the application of the Earmarked Funds Capping and Realignment Act, 2017 (Act 947) for the shortfall in allocations of mineral royalty to the MDF for the development of mining communities.
The report stated, “The application of the Earmarked Funds Capping and Realignment Act, 2017 (Act 947) is viewed to be responsible for the allocation of the 12.5% instead of the prescribed 20%.
Since the Minister of Finance has a discretion to determine allocations to earmarked Funds under Act 947, the Minister should be prevailed upon to adhere to the formula prescribed under the MDF Act (Act 912) as the application of the Act 947 in this way undermines the novel object of establishing the MDF.”
For the financial year 2017, an amount of GHȼ78.4million was allocated to the MDF out of expected amount of GHȼ626.5million to be received from minerals royalties.
In 2018, an amount of GHȼ95.7million was allocated to the MDF out of expected amount of GHȼ766.4 million to be received from minerals royalties.
The report further stated, “Even though actual receivable was more than what has been budgeted for in 2017, only 8.5% was ceded to the MDF, an allocation that is less than what was programmed for the year.
The recurring violation of the Act threatens the implementation of sector programs such as alternative livelihood programs and others particularly those that are targeted at tackling illegal mining locally referred to as “galamsey” in the country.”
According to the report, the institutional framework to manage the MDF has not be completely implemented as well as the setting up of the Community Development Schemes (CDSs) have not been carried out with no disbursements since the enactment of Act 912.
The think tank urged the Ghana government to as a matter of urgency address the problem in order to realize the object for which the MDF was established.
The West African country in 2016, enacted a Minerals Development Fund Act, 2016 (Act 912) which establishes a Minerals Development Fund.
The object of the fund is to cede twenty 20% percent of the minerals royalties received from the exploitation of mineral resources to fund development programs and projects in mining communities and some mining institutions.