Ghana loses $6.5bn in potential mining revenue annually - IFS

The Institute for Fiscal Studies (IFS) has revealed that Ghana loses an estimated $6.56 billion in potential revenue from the mining sector every year due to the government's limited participation in mineral extraction. This significant loss is attributed to the country's inability to maximise returns from its considerable mineral resources. According to the IFS, Ghana could have generated this additional money in 2025 if its revenue generation from the sector had matched Botswana's performance.

The Executive Director of the IFS, Dr Said Boakye, made this known at a policy briefing on low government revenue mobilisation in Accra. He stated that the situation reflected Ghana's inability to maximise returns from its mineral resources and urged the authorities to use the upcoming 2027 Budget to correct the leakage. Dr Boakye identified revenue leakages, including tax evasion, underreporting, tax avoidance, and collusion involving revenue administrators, as major factors undermining domestic revenue mobilisation.

Dr Boakye cited a revelation by the Commissioner-General of the Ghana Revenue Authority, Anthony Sarpong, in April 2026 that the country had lost more than GH¢11 billion in revenue at its ports through incorrect declarations involving the country of origin, classification, and valuation of imported goods. He added that low government revenue mobilisation had constrained the country's ability to finance development. Ghana's total revenue and grants-to-GDP ratio stood at 15.7 per cent in 2022, against the average of 20.1 per cent for 25 sub-Saharan African countries examined in the IFS report.

The institute estimated that Ghana would have collected GH¢288.26 billion in total revenue and grants in 2025 if its revenue-to-GDP ratio had matched the sub-Saharan African average, compared with the actual collection of GH¢224.88 billion. This placed Ghana 18th among the 25 countries, highlighting the country's relatively poor performance compared with its regional peers. In comparison, Botswana generated $13.4 billion in value added from mining in 2025, while Ghana's revenue from the sector amounted to only $1.6 billion.

Dr Boakye attributed Botswana's stronger performance to the government's active involvement in the mining sector through partnerships with private companies. Such arrangements enabled Botswana to benefit from corporate income taxes, dividends, and royalties, while gaining better insight into the operations and profitability of mining companies. In contrast, Ghana's concession-based system leaves the government with limited access to information about the operations and profitability of private companies undertaking mineral extraction.

The revenue shortfall has serious implications for public investment and the country's debt situation. Dr Boakye stated that low government revenue mobilisation usually leads to a shortage of money to fund developmental projects, making it resort to borrowing. This has led to frequent large debt build-ups, high debt service costs, and fiscal or debt crises. Excessive tax exemptions granted to businesses are another factor contributing to Ghana's weak revenue performance.

To address the challenges, Dr Boakye recommended greater government participation in the extractive sector through direct investment and partnerships with private companies. He also proposed production-sharing agreements as an alternative to the existing concession arrangements and called for an intensified fight against corruption within tax and non-tax revenue collection agencies. Furthermore, Dr Boakye urged the government to discontinue exemptions that do not make economic sense and rely more on improvements in the macroeconomic and political environment to attract investment.

Key points

• Ghana loses $6.56 billion annually due to limited participation in mineral extraction.
• The country's revenue-to-GDP ratio is significantly lower than the sub-Saharan African average.
• The IFS recommends greater government participation in the extractive sector to address revenue leakages.