Turning gold into growth

By Prof. Samuel Lartey

[email protected]

www.pefghana.org

Gold has shaped the history, economy, and global identity of Ghana for centuries. In 2023, Ghana produced over 4 million ounces of gold, and by 2025 output was estimated at approximately 6 million ounces, consolidating its position among Africa’s top producers. Annual export earnings have ranged between 8 billion and 15 billion United States dollars in recent years, depending on global prices, which surpassed 2,000 United States dollars per ounce in 2024 and remained historically strong into 2025.

Yet gold’s true value is not measured only in ounces or export receipts. The decisive factor is how exploration and mining activities are governed, how supply chains are managed, and how communities are engaged. Without strong corporate governance and cultural alignment, mineral wealth can lead to tension, inefficiency, and lost opportunities. With discipline and accountability, it can deliver jobs, fiscal revenue, infrastructure, and long term stability.

This feature explains how governance, supply chain management, and community engagement together convert gold resources into inclusive growth.

 

Gold Exploration: High Risk, High Responsibility

Gold exploration is the most uncertain and capital-intensive phase of mining. Before a mine is built, companies may spend between 10 million and 100 million United States dollars on geological surveys, drilling programs, laboratory analysis, environmental assessments, logistics, security, and camp infrastructure.

At this stage, there is no production revenue. Every procurement decision directly affects capital preservation and investor confidence. Poor contract management or inflated procurement costs can increase budgets by 10 to 20 percent, eroding millions of dollars in shareholder value and reducing project viability.

Effective supply chain management therefore becomes a strategic tool. It ensures competitive sourcing, cost control, compliance with environmental regulations, and timely delivery of equipment and services. Exploration success is not determined by geology alone, but also by operational discipline.

 

Corporate Governance as the Foundation

Strong corporate governance anchors sustainable gold development. Ghana’s mining sector operates under the Minerals and Mining Act, with regulatory oversight from the Minerals Commission and the Environmental Protection Agency. In addition, Ghana participates in the Extractive Industries Transparency Initiative, promoting public disclosure of payments and revenues in the extractive sector.

Within companies, governance must extend beyond legal compliance. It should include

• Board oversight of procurement and contract approval thresholds
  • Independent audit committees
  • Transparent competitive tendering processes
  • Conflict of interest disclosures
  • Digital procurement and payment tracking systems

Global evidence shows that digital procurement systems can reduce processing times by up to 30 percent while strengthening audit trails. Transparent governance reduces corruption risks, enhances credibility, and lowers the cost of capital.

For investors, governance safeguards returns. For the government, it protects tax revenue. For communities, it builds trust.

 

Supply Chain Management and Local Economic Impact

Mining supply chains encompass drilling contractors, fuel suppliers, equipment leasing firms, civil works companies, transport operators, environmental consultants, security providers, and camp services.

If a 50 million United States dollar exploration budget allocates 40 percent to qualified Ghanaian suppliers, approximately 20 million United States dollars would circulate within the domestic economy. This spending supports small and medium enterprises, stimulates employment, and expands district tax bases.

In producing mines, the economic impact multiplies further. Ghana applies a 5 percent royalty on gross mineral revenue and a corporate income tax rate of 35 percent on taxable profits. A single mine generating 1 billion United States dollars in annual revenue could contribute 50 million United States dollars in royalties alone, excluding corporate taxes, payroll taxes, and indirect levies.

Efficient exploration increases the probability that such mines become operational. Inefficient governance reduces that probability. The fiscal implications for national development are therefore substantial.

 

Community and Cultural Engagement: Securing the Social Licence

Gold deposits in Ghana are often located on lands under customary ownership, managed by chiefs and traditional councils. Respect for these institutions is essential for operational continuity.

Failure to engage communities can lead to land disputes, protests, operational shutdowns, and reputational damage. Across West Africa, mining project delays linked to community conflict have cost companies millions of dollars in lost production and security expenses.

Culturally informed engagement strategies include

• Early consultation with traditional authorities and local assemblies
  • Community development agreements
  • Prioritising local employment and enterprise participation
  • Transparent compensation frameworks
  • Alignment of corporate social investment with district development priorities

When communities see tangible benefits such as improved roads, boreholes, health facilities, scholarships, and local contracts, trust strengthens. Social stability reduces operational risk and enhances long term project viability.

Community trust is therefore not a charitable outcome. It is an economic asset.

 

Human Capital and Supplier Development

Sustainable mining requires domestic capability. Structured supplier development programs help local firms meet safety, quality, and financial management standards. Over time, these firms can compete beyond a single project, expanding Ghana’s industrial base.

Training programs for engineers, geologists, procurement specialists, and environmental officers build long-term expertise. Apprenticeship schemes targeting youth in host communities reduce unemployment and strengthen local participation.

In 2024 and 2025, industry-wide efforts to localise technical roles have reduced reliance on expatriate labour in several mining operations. The long-term financial implications are clear. Retaining skilled income within Ghana strengthens domestic consumption and tax revenue.

 

Environmental and Financial Discipline

Environmental compliance is integral to governance. Exploration and mining must incorporate land rehabilitation planning, water management systems, and environmental monitoring to avoid regulatory sanctions and costly remediation.

Financial discipline in procurement prevents waste and ensures that exploration capital achieves its intended purpose. Delays in drilling due to poor logistics can cost hundreds of thousands of dollars per day in standby equipment fees. Structured framework agreements and real-time monitoring systems mitigate such losses.

Efficient supply chains protect both ecological integrity and shareholder value.

 

Benefits to Key Stakeholders

For Government
• Increased royalties, taxes, and foreign exchange earnings
• Strengthened regulatory credibility
• Expanded district economic activity

For Investors
• Reduced operational risk
• Improved cost efficiency
• Enhanced long-term asset viability

For Communities
• Employment opportunities
• Growth of local enterprises
• Infrastructure development
• Greater social stability

For the Nation
• Economic diversification
• Strengthened institutional governance
• Sustainable development anchored in accountability

 

Conclusion

Gold remains one of Ghana’s most strategic economic assets. But its true contribution to national prosperity depends on governance, disciplined supply chain management, and meaningful community engagement.

When exploration and mining operations are anchored in transparency, cultural respect, local participation, and financial discipline, gold becomes more than a mineral resource. It becomes a driver of inclusive growth, fiscal stability, enterprise development, and national transformation.

The path from ore to opportunity is not automatic. It is governed.

 

The post Turning gold into growth appeared first on The Business & Financial Times.

Read Full Story