Corporate Social Responsibility in Ghana: Lessons from the mining sector
ABSTRACT Ghana is the second largest gold producer in Africa after South Africa, and the third largest African producer of aluminium metal and manganese ore and a significant producer of bauxite and diamond. Despite the huge revenue generated from mining activities, there is a growing unease amongst the population as regards the real benefits accruing to the country, especially the mining communities. The extremely generous fiscal and other incentives provided mining companies under the mining sector reforms add to fuel the existing anxieties of the population. Mining activities are having dire socio-economic and environmental impacts on the mining communities. Pressure is mounting on the government to manage the available natural resources in an efficient and sustainable manner. This paper provides a concise account of the growth and development dynamics of the mining industry in Ghana and assesses the impact of corporate social responsibility (CSR) policies and practices of the major mining companies in the country. It proposes a range of measures to promote, broaden, deepen and encourage corporate social responsibility governance in Ghana.
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ABSTRACT: Social capital as well as natural capital must be incorporated into sustainable development. This is especially vital in mineral-driven economies because the government has a key role in substituting produced and social capital for the depleting natural capital (the ore). A typology of political states captures key facets of social capital at the national level: it shows that mineral economies, like most resource-rich countries, tend to engender political states that are prone to government failure. One consequence is that local communities (which often lack social capital) must bargain directly with multinational mining firms which, for their part, must internalize many welfare functions. Although local groups can use environmental issues to extract higher rents, this has heightened dependence on the depleting mineral asset and is not sustainable. A social audit can help promote sustainable development by creating a consensus-building transparency for deploying the mineral rents. © 1998 John Wiley & Sons, Ltd.Journal of International Development. 01/1998; 10(4):487-500.
'IAIA09 Conference Proceedings', Impact Assessment and Human Well-Being
29th Annual Conference of the International Association for Impact Assessment,
16-22 May 2009, Accra International Conference Center, Accra, Ghana (www.iaia.org)
CORPORATE SOCIAL RESPONSIBILITY IN GHANA: LESSONS
FROM THE MINING SECTOR
Emmanuel K. Boon1, Frederick Ababio2
1Professor, Human Ecology Department, Vrije Universiteit Brussel, Laarbeeklaan 103, B-1090 Brussels,
Tel.: +32 2 477 42 81; Fax: +32 2 477 49 64; email: firstname.lastname@example.org
2 Projects Manager, International Centre for Enterprise and Sustainable Development (ICED), East-Legon,
Accra, Ghana. Tel.: +233 21 50 55 72, Fax: +233 21 50 57 88, Email: email@example.com
Key Words: Corporate Social Responsibility, Mining, Sustainable Development, Dependency
Ghana is the second largest gold producer in Africa after South Africa, and the third largest African producer of
aluminium metal and manganese ore and a significant producer of bauxite and diamond. Despite the huge revenue
generated from mining activities, there is a growing unease amongst the population as regards the real benefits accruing
to the country, especially the mining communities. The extremely generous fiscal and other incentives provided mining
companies under the mining sector reforms add to fuel the existing anxieties of the population. Mining activities are
having dire socio-economic and environmental impacts on the mining communities. Pressure is mounting on the
government to manage the available natural resources in an efficient and sustainable manner. This paper provides a
concise account of the growth and development dynamics of the mining industry in Ghana and assesses the impact of
corporate social responsibility (CSR) policies and practices of the major mining companies in the country. It proposes a
range of measures to promote, broaden, deepen and encourage corporate social responsibility governance in Ghana.
1.0 Mining and Sustainable Development
Mining is one of the oldest industries in the world and its history has evolved with human history. It is an
economic activity that consists of the extraction of potentially usable and non-renewable mineral resources
(excluding petroleum, natural gas and water) from land or sea without involving agriculture, forestry or
fisheries. The sector in Ghana attracted U$2 billion of Foreign Direct Investment (FDI) in mineral exploration
and mine development during the last decade, representing over 56% of total FDI flows to the country
(Awudi, 2002). Mining also contributes about 12% of government revenue, 7% of Ghana’s total corporate
earnings and 41% of total export earnings (Aryee, Aboagye, 2008). However, the sector is yet to make a
strong impact on the country’s development process. The role of the mining industry in the economic
development of Ghana has consistently come under attack by a cross section of Ghanaians, including
incessant pressure from Non-Governmental Organizations (NGO’s) and civil society groups on the need for
mining companies to adopt an effective corporate social responsibility (CSR) policies and commit more
resources to the development of communities in which they operate and to the sustainable development of the
country as a whole.
2.0 Research Problem, Objectives and Guiding Hypothesis
The mining sector continues to be one of the biggest contributors to the Internal Revenue Service through the
payment of mineral royalties, employee income taxes, corporate taxes and ancillary levies (Ghana Chamber
of Mines, 2006). Despite the revenue that Ghana derives from mining activities, there is growing unease with
regard to the real benefits accruing to the ordinary Ghanaian in the mining communities and to the country as
a whole, especially in the light of the extremely generous fiscal and other incentives given to mining
companies under the mining sector reforms. It is also argued that mining activities have had dire
consequences on the environment and society and have negatively impacted the social and economic
character of mining communities. Mining companies have also been accused of shirking their responsibilities
towards the development of the communities in which they operate, thereby increasing the level of poverty
and vulnerability in these communities. The general objective of this paper is to examine the CSR of mining
companies in Ghana and the associated benefits enjoyed by mining communities. Specifically, the paper aims
to determine the nature and impact – present and potential – of mining companies’ CSR and sustainable
development efforts in Ghana; to assess the perception of mining communities on CSR of mining companies;
and to propose appropriate CSR policies and programme measures to promote effective CSR for mining
companies to adopt for leveraging sustainable development in the country.
3.0 The Concept of CSR and Mining in Ghana
The last twenty years have seen a radical change in the private sector’s relationship both with the state and
civil society. Globalisation, deregulation, privatisation and a redrawing of the lines between state and market
have led to the emergence of a new approach to business-society relations. Companies are increasingly
recognizing that improving their own impacts and addressing wider social and environmental challenges of
the communities they operate in will be crucial in securing their long-term success. This corporate-societal
relationship is commonly referred to as CSR. The concept can be traced back to the mid-1950s when Bowen
(1953) formally stated that CSR refers to “the obligations of businessmen to pursue those policies, to make
those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of
our society. The World Business Council for Sustainable Development (WBCSD) in its publication "Making
Good Business Sense" (Richard Holme and Phil Watts, 2000), defined CSR as the ”continuous commitment
by business to behave ethically and contribute to economic development while improving the quality of life of
the workforce and their families as well as of the local community and society at large".
All mining activities (both large and small scale) in Ghana account for an area of 31,237 km2,, representing a
share of about 13.1% of the country’s total land area (238,608km2). Reconnaissance licenses, which by
definition and practice permit concurrent economic activities such as farming, cover 12,478 km2 - about 40%
of total land covered by mining activities (Chamber of Mines, 2006). Mining accounts for 5% of the
country's GDP and minerals make up 37% of total exports, of which gold contributes over 90%. Ghana also
produces 10% of the world’s gold and ranks second in African production (Firman, 2008). Thus, the principal
focus of Ghana's mining and minerals development effort remains anchored on gold. Ghana is also a major
producer of bauxite, manganese and diamonds.
Mining Companies in Ghana
Ghana currently has nine large-scale mining companies producing gold, diamonds, bauxite and manganese.
There are also over two hundred registered small scale mining groups and 90 mine support service
companies. Ghana’s mining sector is dominated and controlled by foreign companies, with the Government
of Ghana (GoG) having not more than 10% ownership in most cases. A total of 212 mining companies have
been awarded mining leases and exploration rights as at the start of 2008 (Minerals Commission, 2008).
Sixteen percent (16%) of these mining companies have been given mining leases by the Minerals
Commission. Twenty Four (24%) percent of this number is foreign controlled mining exploration companies,
whilst the Ghanaian controlled mining companies, which constitute 60% of all mining activities, are mostly
involved in small-scale mining and are spread across the length and breadth of the country.
3.2 Impact of Mining Companies on Local Communities
There is a general belief in Ghana that poverty and lack of sustainable development in the mining
communities and the country in general have been caused by the behaviour and operations of the mining
companies. However, these companies have countered this claim by arguing that in a developing country like
Ghana, poverty is generally pervasive in many communities, including even communities where there is no
mineralization. The perception of the mining companies is that their presence and operations in local
communities do not really cause poverty and vulnerability.
The Ghana Chamber of Mines (GCM) contends that the social investments its members make in the mining
communities are their contribution towards improving the well-being of the people and facilitating
community development. The GCM also notes that most non-urban and non-mining companies do not benefit
from these private sector contributions. It argues that mining companies should never be seen as surrogate
governments; their efforts should be seen only as complementary to what government has to provide.
3.3 Recent Socio-Economic Contribution of Mining Companies
In 2005, the mining industry paid $26.76 million to the government as royalty, which increased to $38.46
million in 2006 an $53.80 in 2007. The sector also contributes 6.44 percent to Ghana’s GDP and boasts of a
labour force of 17,500. In addition producing members of the GCM voluntarily contributed about US$9.8
million to their host communities in 2006. This represents about 26% of mineral royalties paid by these
companies in that year. The GCM points to the creation of ancillary jobs, infrastructural development and
discharge of CSR as some of the significant contributions of the industry to the sustainable development of
4.0 The Reality of CSR in the Mining Sector in Ghana
CSR programmes of mining companies tend to focus on community initiatives because the economic, social
and environmental impacts of their operations are basically felt greatest at the local level. Most mining
companies have concentrated their CSR interventions in the areas of education, health, and alternative
livelihood income generating activities. The large scale mining companies, which are members of the GCM,
have set up Trust Funds to ensure adequate funding for their social investment activities. For example,
Goldfields Ghana established a foundation in 2002 and derives CSR funding from its production and
profitability situation which is based on a yearly contribution of US$ 1.00 of every ounce produced plus 0.5
percent of pre-tax profits. This represents over US$ 1 million a year for financing social investment projects.
Anglogold Ashanti has also been instrumental in the fight against malaria through its Obuasi Malaria Control
Programme (Anaman, 2008)
However, critics of the mining industry have called on the GoG to hold the mining companies accountable
instead of being an accomplice in an act that exploits the country’s mineral resources and creates death traps
for the people instead of liberating them from hunger, illiteracy, vulnerability and other social problems.
Akabzaa T. M.; Seyire J. S. and Afriyie K (2008) state that with regard to infrastructural facilities and
‘‘…the mining towns of Obuasi, Tarkwa, Prestea, Konongo, Bibiani among others, provide a classic
picture of the typical mining towns in Ghana. These towns are far from affluent, an aberration of
what communities endowed with mineral resources, are or should look like. The towns are very much
unlike other gold mining towns such as Johannesburg in South Africa, Noranda City in Ontario,
Canada, Reno in the USA or Perth in Australia, where the scars of mining are sealed by the beauty
and riches of these cities, built out of mining”.
4.1 National Development Policy and CSR in Ghana
The legislative framework for mining in Ghana is laid down in the he Minerals and Mining Law of 1986
(PNDCL 153), as amended by the Minerals and Mining (Amendment) Act of 1994 (Act 475) and the minerals
and mining bill of 2005 (Law No. 703). The law is however silent on the social responsibility of the mining
companies towards the communities in which they operate. In fact, there is no national policy framework that
guides the implementation of CSR in Ghana. Mining Companies are therefore not bound by law to implement
CSR activities in the country. In other words, CSR activities are undertaken more in response to moral
convictions rather than legal obligations.
However, as has already been indicated, mining companies in Ghana have developed their own CSR policies
for implementation in their areas of operation. The business case for investing in development that targets
accruing mutual benefits when communities become active development partners rather than passive
recipients of philanthropy, has become ever more persuasive in today’s business arena. Walker and Howard
(2002) state that public opinion of the mining sector is poor and opinion on natural resource extraction
industries as a whole is influenced more by concerns over environmental and social performance.
4.2 Is CSR a Panacea for Community Development?
Resource-dependent communities such as ‘mining towns’ are very vulnerable to fluctuations in the mining
industry’s fortunes. For example, the closure of mines and the resultant loss of economic activity can be
distressing, including the legacy of environmental damage, the loss of jobs leading to high local
unemployment and associated problems, the impact on residential property values and the effects on
infrastructure originally provided by the mining companies (Laurence, 2006). Heavy dependence on mining
links strongly with a wide range of serious social problems such as high levels of poverty, low levels of
education, and poor health care. Immediately a new mining operation starts up, local communities often view
it as an opportunity to be exploited, to be provided with resources and infrastructure that will enhance their
welfare (Auty, 1998; Frynas, 2005; Ite, 2005).
However, many of the social opportunities provided by CSR activities border on creating a culture of
dependency on a reducing asset with a finite life, which is an unsustainable process (Auty, 1998). The
environmental damage caused by mining may result in the loss of land for other economic/livelihood uses
(e.g. agriculture) which leads to greater dependency on the mine. Communities that are affected by mining
operations, either by loss of land and livelihoods or the need to relocate are dependent on mining companies
for payouts to remediate this damage. This leads to the imposition of a handout dependency. The social and
environmental impacts of mining also undermine women’s ability to sustain their livelihoods, especially that
they are unlikely to receive direct employment from the mine.
Measures to promote and encourage CSR in Ghana’s Mining Sector
5.1 Introduction of a Sound Mining Sector Policy Framework
The Government of Ghana as a matter of urgency should revise and adopt adequate policies focused on
improved industrial competitiveness with strong emphasis on technological transfer, innovation and improved
environmental management. For example, since most mining activities are increasingly located in remote and
depressed areas, their presence in these regions should be seen as a powerful avenue for transferring skills and
technologies to these localities. Effective public policies, support and monitoring of private mining
investment by well-organized government institutions are urgent policy measures for successful CSR in
5.2 Setting up of a Mining Common Fund
Setting up of Mining Common Fund to support and develop mining affected areas. This proposal was highly
spoken of at the 80th Anniversary celebrations of the Ghana Chamber of Mines in 2008.