By Dennis YANNEY
Ghana’s mineral wealth remains one of the key sources of income that has fuelled its economic growth.
Over the past decade its contribution to Gross Domestic Product (GDP) has been remarkable amidst macroeconomic challenges, accounting for an average of approximately 12.2% per year.
Taxes and royalties from the mining sector have consistently formed a significant portion of direct tax revenues.
Data from the Minerals Commission indicates that the sector remains a vital source of government revenue, contributing an average of 13.18% of total revenues collected by the Ghana Revenue Authority over the past ten years.
Additionally, the sector plays a pivotal role in attracting foreign investment to Ghana. The Ghana Investment Promotion Centre (GIPC) highlights that the sector remains a primary driver of foreign direct investment into the country.
Since 1986, Ghana’s mining and minerals exploration sector has attracted over US$6 billion direct investment making her one of Africa’s foremost producers of gold and in 2022, the country was rated Africa’s largest and the world’s sixth highest gold producer by production volume.
Beyond these direct contributions to GDP and government revenue, mining companies design and roll-out several Corporate Social Responsibility (CSR) projects and initiatives aimed at addressing the socio-economic issues in host communities, with some large mining companies in recent times setting up dedicated foundations or trust funds purposely for community development.
As much as the operations of these mining companies have inevitable implications for their host communities, CSR has become a critical means for engaging stakeholders. Millions of dollars have been expended and continue to be allocated to the implementation of various CSR projects and initiatives.
This commitment to CSR is demonstrated through initiatives such as local employment, the outsourcing of sub-contracts to local firms, prioritized local procurement, apprenticeship and training programmes, scholarships, the provision of social infrastructure such as schools, healthcare facilities, roads, potable water, electricity, etc., as well as diverse alternative livelihood projects encompassing animal rearing, aquaculture, crop cultivation, and vocational training.
Yet, beneath the surface of royalties, taxes and corporate social responsibility (CSR) initiatives, a persistent tension simmers between host communities and mining companies.
Over the years and in recent times, there have been numerous incidents of youth demonstrations, clashes with security personnel of these mining companies, and disruptions to mining operations.
According to Magidi and Hlungwain (2023), Ghana’s mining industry, despite attracting huge capital investments overtime, has historically been criticised for not being particularly sensitive to the impact of its activities on the environment and on the livelihoods of affected locals.
Are these agitations a mere expression of discontent and unrealistic entitlement, or a genuine cry for economic empowerment? Are mining companies’ current CSR efforts insufficient for host communities’ economic needs?
Or are their efforts sufficient but misaligned with what these communities need? Or should communities simply buy into the “resource curse” thesis— communities that hold rich deposits of mineral resources are likely to be disadvantaged in terms of development, and accept whatever these mining companies do for them?
These frequent agitations and demonstrations, particularly by the youth, reveal a deep-seated feeling of being shortchanged.
The root cause? An economic disconnect that demands a shift from traditional philanthropy, charitable donations and short-term projects to sustainable investments and collaboration.
This observation is supported by existing literature which highlights implementation gaps between what mining companies are doing and what communities expect.
According to Nartey and Manu (2023) and Amos (2018), there is a noticeable disconnection between mining companies’ CSR initiatives and the expectations of their communities.
A contributing factor is the top-down approach to CSR implementation adopted by multinational mining companies.
“The direction of CSR commitments of many large mining companies is determined at the global corporate level, thereby missing the most pressing needs of their hosts”, (Amos & Boahen 2024).
In a few cases where these CSR programs seem to be aligned, many of them fail to sustainably provide the needed socio-economic impact to their beneficiaries beyond mine closure.
“Although mining companies generally engage in some direct CSR activities that may be of interest to their hosts, many of these engagements are lacking in depth and scope, and at best, seem to fulfil only regulatory and policy requirements”, (Emmanuel et al, 2024).
According to their study, the focus of most of these mining companies is on satisfying the mandatory CSR demands as required by law.
To bridge this gap, a fundamental shift towards sustainable partnerships is imperative. This requires moving beyond traditional CSR and embracing strategies that foster long-term economic development.
While current CSR projects are undoubtedly well-intentioned and critical to the livelihoods of host communities, they fail to address the core needs of a population seeking long-term economic empowerment. The people are not looking for occasional hand-outs, they are looking for sustainable opportunities.
Essah & Andrews (2016) report that while it is generally admitted that the CSR of mining companies has been focused on providing alternative livelihoods, infrastructural investments and human capital development, there seems to be an overwhelming sentiment about the sustainability and prospects of those CSR commitments, especially beyond mine closure.
The traditional CSR model, which is predominantly short-term, project-based, non-profit generating and non-self-sustaining, has a limited life span post implementation and is heavily reliant on financing from mining companies.
The question is, for how long can mining companies continue to pump money into such projects? And what happens if these mining companies cease operations?
Given the increasing demand for inclusive and sustainable socio-economic transformation, it is imperative that stakeholders—including mining companies, host communities, relevant government agencies and regulators within the mining and extractive sector, shift towards a more sustainable approach to Corporate Social Responsibility (CSR), an evolution termed “Corporate Social Investment™” (CSI)™.
CSI represents an innovative, collaborative and sustainable approach for extractive companies to shift towards forward-looking, self-sustaining investments.
Transitioning to a Corporate Social Investment (CSI) model offers a more strategic and impactful pathway for delivering measurable and long-lasting benefits that outlast the operational life of the mines.
With CSI, mining companies strategically leverage their resources to invest in the setup and management of profit-generating and self-sustaining businesses that create employment opportunities within host communities. These enterprises are designed to utilize locally available raw materials as inputs and are established through active stakeholder engagements, research, rigorous business analysis and investment planning.
Given the relatively new and strategic nature of the CSI approach, extractive companies and industry players need expert support to make a successful transition from traditional Corporate Social Responsibility (CSR).
This includes support in designing CSI-aligned strategies, as well as technical assistance for the setup, implementation, and long-term management of these initiatives.
The prerogative of determining what and where to focus development initiatives remains with mining companies. However, it is critical to adopt a more innovative, collaborative and sustainable approach – Corporate Social Investments (CSI), given the strategic importance of these communities to mining companies.
By shifting from the traditional CSR to the CSI approach, mining companies together with all relevant stakeholders can create a legacy of shared prosperity, ensuring that the wealth extracted from the land benefits those who call it home.
Dennis is a Senior Project Analyst at Injaro Investment Advisors Ltd, a firm focused on building sustainable African Businesses that create social and economic value by deploying capital and solutions for clients and partners. He works primarily within Injaro’s Corporate Social Investment (CSI) Advisory practice, which supports companies and players within the extractive industry to design and implement innovative CSI initiatives that create sustainable impact. The CSI team has over 50 years of combined experience in research, advisory, investment structuring, and project management.
References
- Emmanuel JD, Serlom AN, Gyorgy NS. “When Gold Remains in the Ground, it will not Rot”: Corporate Social Responsibility Imbalances between Mining Companies and Host Communities in Ghana. 2024
Anaafo D, Nutsugbodo RY, Adusu D. Mining and sustainable development in the Asutifi North District, Ghana. Resource Policy. 2023;80:103171.
- Magidi M, Hlungwani PM. Development or destruction? Impacts of mining on the environment and rural livelihoods at Connemara Mine, Zimbabwe. S Afr Geogr J. 2023;105(2):157-78.
- Nartey S, Manu FA. Host communities’ infrastructural development expectations of multinational mining companies in Ghana’s mining industry. Afr J Manag. 2023;9(3):259-82.
- Amos GJ. Corporate social responsibility in the mining industry: an exploration of host-communities’ perceptions and expectations in a developing country. Corp Gov Int J Bus Soc. 2018;18(6):1177-95.
- Amos GJ, Boahen S. Corporate Social Responsibility in the Mining Industry: Exploring Perspectives of Host Communities in a Developing Country. Eur J Bus Manag Res. 2024;9(2):25-34.
- Essah M, Andrews N. Linking or de-linking sustainable mining practices and corporate social responsibility? Insights from Ghana. Resource Policy. 2016;50:75-85.
- Ghana Revenue Authority Annual Report, 2022
