Ghana’s MDF Law Delay Hampering Development in Mining Communities

Mining communities losing benefits as Ghana government delays operstionalizing Mineral Development Fund law

Mining Industry

As expectations rise high in mining communities for their fair share of benefits of resources extracted from their land , government’s delay in operationalizing the Minerals Development Fund (MDF) law is what may fracture the expected outcomes for these communities.

Major Stakeholders in Ghana’s mining sector have therefore urged the government to take steps to operationalize the law, Act 912 (2016) without any further delay.

This, they insist will ensure that the country derived the intended benefits from the law passed in February 2016.

The Ghanaian government established MDF by an Executive order in 1993, aimed to preinvest some financial returns from mining for the development of mining communities. However the fund did not have a legal backing since there had been no law to support it until 2016.

“The good thing is that through our advocacy we now have the Mineral Development Fund Bill passed into law,” Sulemanu Koney, Chief Executive Officer (CEO) of the Ghana Chamber of Mines said in an interview on Wednesday.

The MDFA provides the legal backing as well as the governance structure for the funds meant to accelerate the development of mining communities and the sector in general.

Koney added: “Unfortunately however, we have not been able to operationalize it. But at least this law provides the framework for the governance of the portion of royalties which is returned to the communities to support their development.”

The law requires that the government shall establish a governing board, to supervise the operations of the management of the fund. Government however went ahead to establish the fund secretariat with a management body without a governing board.

The CEO observed that there is for now a huge gap in the intended application of the law and the way government has been implementing it.

He added: “Once we operationalize the law we should be able to see some projects. Yes, there are issues with the law itself but our view is that we should allow the law to run for a number of years then we will do the benchmarking.”

The CEO was confident that , when operationalized the law will help Ghanaians see how they could use the mining industry to develop the general economy.

“We certainly have so many problems; look at Obuasi and the look at Tarkwa but for the first time we have a law that allows for a plowing back of a proportion of mineral revenue into the development of the mining communities

“ If we don’t operationalize it to ensure that we have a governance framework with the right checks and balances it will be very difficult for us to have a significant change. We are happy about the law but until we operationalize it certainly we will not have the benefits,” the CEO cautioned..

The expectation of sector players, according to him is that government will actually constitute the board as soon as possible so they can have oversight of the projects meant for the communities.

There have been agitations in mining areas for the poor state of these communities; high cost of living against dwindling livelihoods; povert; poor infrastructure and poor social amenities although companies and governments keep making billions of dollars from resources extracted from their lands.

With no board in place for the Minerals Development Fund (MDF), Steve Manteaw, Co-Chairman of the Ghana Extractive Industries Initiative (GHEITI) argued that there was the risk of misapplication of the fund, since there will be no governing board to exercises oversight over the fund manager.

Government has already set up the MDF secretariat with an Acting CEO to manage administration of the fund.

“If the law says that the fund manager will be appointed by the board in consultation with the minister, and yet you have no board in place but you have a fund manager, if even in acting capacity I think it is a violation of the Act,” Manteaw maintained.

Again the law requires that a year after coming into effect of the law the minister shall develop regulations in order to operationalize the act.

However, for the three years that the law has been in existence the regulations are yet to be developed as stipulated by the law.

“Then you ask yourself, if the board is put in place eventually then will they have to do a retroactive approval of all these expenses being done by the secretariat now?

“These are clear violations of the act, and it must stop. Government must act quickly to put all the necessary structures in place to ensure smooth implementation of MDF. Enditem

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