The Institute of Economic Affairs (IEA) is calling on government to abolish tax incentives and review royalty rates under Ghana’s mining and minerals laws to ensure the country derives optimal benefits from its natural resources.

According to the policy think tank, Ghana’s current fiscal and legal framework governing the extractive industry remains outdated and overly generous to multinational mining firms — a situation that has perpetuated limited national gains from resource exploitation.

Presenting findings at the Institute’s seminar series on reviewing Ghana’s natural resource management framework, Senior Research Fellow, Dr. Eric Oduro Osae, stressed that the country’s mining laws, particularly the Minerals and Mining Act, 2006 (Act 703), require urgent reforms to reflect current realities and technical capacity.

The IEA notes that despite over a century of mining activity and significant mineral endowment, the country continues to experience low returns relative to the scale of resource extraction.

It argues that existing incentives including tax holidays, royalty caps and stability agreements have skewed the benefit structure in favor of foreign firms, resulting in revenue losses and weak local participation.

Data from the Institute’s review showed that out of the 2024 total minerals revenues of $7.1 billion, total fiscal payments were GH¢17.68 billion in taxes, royalties, and dividends — far below potential earnings considering extensive fiscal concessions and capital flight.

The IEA further observed that many of these incentives are embedded in legislation designed under outdated assumptions of limited local technical expertise, which no longer reflect current national capabilities.

“All these benefits if quantified will tell you that we are giving out a lot to the mining sector,” Dr. Eric Oduro Osae stated.

To reverse the trend, the Senior Research Fellow with IEA recommended a comprehensive overhaul of the fiscal regime for the extractive sector. This includes abolishing tax waivers for mining firms, adjusting royalty rates to better reflect resource value, enforcing stricter local ownership and participation frameworks and ensuring all dispute resolution mechanisms are anchored in Ghanaian courts.

“If you match these benefits against what we give to the mining firms, you realize that it creates a huge gap. How do we close this gap? I propose that we review the ownership structures to encourage local participation. I also propose that we abolish tax incentives and review royalty rate. The capping at 5% may not be helping but if you don’t cap it at 5% what is the alternative? The alternative is to work hand in hand with the mining companies to make sure that we are able to increase production so that the royalties can increase. Let us improve transparency and accountability in mobilization and utilization of what we even get from the mining sector,” Dr. Eric Oduro Osae said.

Former Chief Justice Sophia Akuffo, who also addressed the event, backed calls for a national conference on natural resources to develop strategies for maximizing the country’s returns from its natural wealth.

“Natural resources continue to anchor the economy. It benefits remains skewed and it will remain skewed if we don’t change the regime. Outdated legal frameworks, excessively generous fiscal incentive and weak local participation have limited the nation’s share of its own wealth,” she remarked.