ry
ape
Q33
Keywords:
con
old
even
in
lls
s h
economy. In contrast, the research findings here demonstrate that after a period of strong investment
and growth, gold mining can no longer be viewed as an enclave activity: it is in fact more deeply linked
into the Ghanaian economy than hitherto understood, through a set of as yet under-researched but
promising economic linkages, notably backward linkages, which can potentially be strengthened by
1000 y
frica,
n prod
st qua
decli
ing’s
gold
nly a
By 2009 Ghana had become the world’s ninth largest producer
Contents lists available at SciVerse ScienceDirect
journal homepage: www.else
Resources
n Corresponding author at: Policy Research in International Services and
1 This report is based on fieldwork conducted in 2010. We received primary
Resources Policy 37 (2012) 434–442Guinea, Mauritania and Cote d’Ivoire.managers and staff, academics, development partners and NGO staff.of gold, at some 3.8% of global production, up from 2.6% five years
earlier. Ghana is simultaneously at the forefront of an up-and-
coming West African industry, as production increased signifi-
cantly in the neighbouring countries of Mali, Burkina Faso,
0301-4207/$ - see front matter & 2012 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.resourpol.2012.06.004
data in Ghana from the Ghana Minerals Commission, the Ghana Chamber of
Mines, notably its Supply Managers’ Sub-Committee, the Ghana Investment
Promotion Centre, the Ghana Statistical Services, and directly from a number of
mining companies, notably Golden Star, Gold Fields, and Newmont. Interviews
were carried out in Accra and Tarkwa with government officials, mining companypercentage point from 1990, but still higher than Ghana’s other
main export commodities, cocoa (3.9%) and forestry (3.2%).
Manufacturing (PRISM), University of Cape Town, South Africa.
E-mail address: Robin.Bloch@ghkint.com (R. Bloch).of gold price weakness at the turn of the century, the industry Gold in 2009 accounted for 43% of Ghana’s exports. Min
contribution to Gross Domestic Product (GDP), of which
still represents some 95%, was 5.8% the same year, up ocontrol in the nationalist era from the early 1960s, the industry
was restructured and modernised under the post-1983 Economic
Recovery Programme (ERP). This restructuring prominently fea-
tured a revised mining code and legislation.
Gold mining has seen sustained increases in foreign invest-
ment, output, and export volumes. From 1980 to 2000, production
increased some 700%. After a brief interruption during a period
Production volumes were over 2 million oz. through the past decade,
rising gradually to 2.62 million oz. in 2007 and to 2.84 million oz. in
2008. In 2009, there was an increase to a record 3.12 million oz., with
gold revenues some $600 million higher than in 2008, at $2.8 billion.
Investment in the industry increased to a total of $3 billion for
the four years to 2009, facilitated by a further revised mining code
that was consolidated in the Minerals and Mining Act 703, 2006,Enclave
Ghana
Gold mining
Linkages
Global value chains
Industrialisation
Introduction
Gold has been produced for over
present-day Ghana. As with South A
follows as the second-ranked Africa
trial gold mining dates back to the la
(Hilson, 2002).1 After a period ofears in the territory of
which Ghana currently
ucer, large-scale indus-
rter of the 19th century
ne under government
resumed its upward trajectory. The global rally in the gold price
began just after: gold rose from around $300/oz. in early 2002 to
over $1400/oz. in the last quarter of 2010. This level has been
maintained through 2011, with record highs of over $1900/oz.
reached in September.
The Ghanaian industry has benefitted substantially from ‘‘the 10-
year gold bull market’’ as the World Gold Council (2010) terms it.policy and support measures.
& 2012 Elsevier Ltd. All rights reserved.Linkages in Ghana’s gold mining indust
Robin Bloch a,b,n, George Owusu c
a ICF GHK, London, United Kingdom
b Policy Research in International Services and Manufacturing (PRISM), University of C
c Institute for Statistical, Social and Economic Research, University of Ghana, Ghana
a r t i c l e i n f o
Article history:
Received 16 May 2012
Accepted 16 May 2012
Available online 21 August 2012
JEL classification::
L72
O13
a b s t r a c t
By 2009, Ghana was the se
ninth largest producer of g
production volumes and r
to be perceived negatively
revenue, employment, ski
mining is often depicted a: Challenging the enclave thesis
Town, South Africa
d-ranked African producer after South Africa, and had become the world’s
, at some 3.8% of global production, up from 2.6% five years earlier. Gold
ues rose significantly over the decade from 2000. Yet gold mining tends
Ghana, and is seen as providing far less than it should in terms of public
development and spillovers, and localised economic development. Gold
aving an enclave status, disconnected and isolated from the rest of the
vier.com/locate/resourpol
Policy
view held about gold mining in academic research – and in the
national economic and social development policy discussion – is
R. Bloch, G. Owusu / Resources Policy 37 (2012) 434–442 435typically highly negative. This shapes a predominant public
perception that gold mining offers Ghana far less than it should
in terms of public revenue, employment, skills development and
spillovers, and localised economic development.
Gold mining, rather, is held to create impoverishment and
environmental hazard in mining communities, which scar rather
than benefit the country. In very general terms, there is ‘‘a sense
that, a century after commercial mining began in what was then
the Gold Coast, the country is still getting a raw deal’’ (Burgis,
2010). Another recent academic overview concurs, concluding
that ‘‘the country is still very far from obtaining optimal benefits
from its mining sector’’ (Akabzaa, 2009, p. 64). From the indus-
try’s perspective, the criticism is unremitting: as an interviewee, a
senior manager in a mining company, ruefully put it, ‘‘We just get
bashed.’’
An often unexamined and at times even reflexive analytical
construction underlies this pervasive view. The industry has been
seen as an economic enclave, disconnected and delinked from the
rest of the national economy. In contrast we argue that the
restructuring of the industry in the era of economic liberalisation
and particularly developments over the last decade now invali-
date the enclave position. Gold mining is no longer an enclave
activity characterised only by fiscal linkages. It is rather more
deeply linked into the Ghanaian economy than hitherto under-
stood through a set of as yet under-researched, imperfect, but
promising economic linkages.
These linkages take various forms: principally backward lin-
kages, and final demand or consumption linkages. Fiscal linkages,
meanwhile, have strengthened. The linkages are also manifested
spatially in the form of visible – and differentiated – clusters (i.e.,
geographic/sectoral agglomerations of enterprises) of mining
activity, which appear to benefit in different ways from external
economies of scale (agglomeration economies), notably the loca-
lisation economies variant.
Most notable here is a supplier and services agglomeration
linked to the headquarters of mining companies, which is located
in the eastern districts and neighbourhoods of Greater Accra.
These clusters are also connected to one another across the
country through labour market links, through inter-firm linkages,
and physically, via what have in the last decade become improved
transport and communications systems. This connectivity has (or
can have) real, ongoing effects on the trajectory, vitality and
integrative strength of the spatial economy.
We argue that gold mining’s economic linkages, spatial effects
and physical connections can be enhanced via industrial, infra-
structural, spatial and local economic development policy and
support measures. In doing so, we put forward an alternative and
more optimistic narrative – with strong policy implications – on
the actual and potential economic and broader developmental
impacts of the industry in Ghana in consequence of its linkages
into the economy.
The enclave thesis
As one of the cocoa–gold–timber triad that has underpinned
national economic development and the unfolding of the coun-
try’s spatial economy, gold mining in Ghana is a much studiedGold mining in Ghana appears to feature a positive picture of a
long-established industry overcoming policy failures, upgrading
its capabilities through significant investment, and moving into a
new heightened phase of development in which it leads a regional
complex in the making. Yet, it is no exaggeration to state that theindustry. A representative sample of key references includes aexported unprocessed.
A few years later, a report on the mining sector by the Bank of
Ghana Research Department was less equivocal:
Historically the mining of traditional minerals ydo not have
any forward or backward linkages in the development of the
economy other than to be exported to generate foreign
exchange. Ironically they have been the focus of the investor
community because of the short-run profit motivation and
capital repatriation as the main business focus (2003, p. 44).
Seeing the mining industry through a constant enclave per-
spective does not permit the dynamic nature – ‘‘linkage effects
need time to unfold’’ as Hirschman put it (op cit, p. 63) – of the
linkage concept to be adequately grasped. Indeed, what is strikingsom
engabostence of support service suppliers to the mines (a total of
e 60 companies at the time, including geological, drilling and
ineering services), most inputs were imported and ores werethe
exihistory of the industry (Hilson, 2002), an account of the first gold
boom in the late 19th century (Dummet, 1998), a company history
of Ashanti Goldfields (Ayensu, 1997), the macro-economic contribu-
tion (Aryee, 2001), the impacts of liberalisation and mining reform
(Hilson, 2004), mining’s environmental impacts (Botchie et al.,
2008), and its role in national economic development and poverty
reduction (Akabzaa, 2009). As is often the case with the literature on
mining in developing countries, many accounts are highly critical of
the industry and government.
An enclave economy is associated with a lack of productive,
physical backward and forward linkages. These are concepts
associated with Hirschman (1958). Some 20 years later,
Hirschman (1981) and Nelson and Behar, 2008) added two further
types for staple (or commodity) production:
 Fiscal linkages, i.e., state taxation of the income streams
associated with the commodity.
 Consumption linkages—incomes (profits and wages) emanat-
ing from commodity production spent nationally and in the
local vicinity on the outputs of domestic industries, including
those that have been stimulated (‘‘called into life,’’ in his
words) by these new incomes in a process of import
substitution.
The linkage concept for Hirschman was a dynamic rather than
static one. Linkages could either decay or become enhanced over
time. He referred to
the linkage effects of a given product line as investment-
generating forces that are set in motion, through input–output
relations, when productive facilities that supply inputs to that
line or utilise its outputs are inadequate or nonexistent. Back-
ward linkages lead to new investment in input-supplying
facilities and forward linkages to investment in output-using
facilities (1981, p. 65).
In the late 1990s and early 2000s, as a derivation of the
resource curse literature, the term ‘‘enclave economy’’ or, alter-
natively, ‘‘enclave export model’’ was applied to the energy and
mining sectors of mineral-rich developing countries (Heeks,
1998). In most accounts, the only real local linkage was of the
fiscal variant.
In a perspective on gold mining’s contribution to the Ghanaian
economy, Aryee associated the enclave condition with one in
which the mining sector had more external (foreign) linkages
than internal (domestic) linkages. He argued that ‘‘Undoubtedly,
the strongest link of Ghana’s mining sector with the rest of
economy is fiscal’’ (2001, p. 73). He added that despite theut the admittedly limited research on gold mining is how a
have ‘‘very few linkages to local suppliers of goods and services’’
(20
lar
‘‘Th
str
(20
lin
ind
Instead they observe a process of in-sourcing of previously out-
Table 1
Major mines, ownership and production in Ghana 2009
Source: GFMS, 2010.
nali
and
rati
han
USA
inr
R. Bloch, G. Owusu / Resources Policy 37 (2012) 434–442436sourced activities by mining. Moreover, ‘local’ appears to denote
ownership origin rather than economic or spatial location.
Linkages are apparently equated only with national industrial
sources, and the outputs of international companies (as inputs in
the form of goods or services to mining) located in Ghana are
excluded:
A number of basic services, such as laboratory testing, clean-
ing, security and various consultancy tasks, are still out-
sourced, but to foreign companies with subsidiaries in
Ghana, not to locally owned companies. Likewise, there are
no significant supplies of mining machinery or equipment
from local companies in Ghana: everything is imported or
purchased from international dealers with established sales
and service operations in the country (p. 266).
However, little detail is provided with which to assess these
conclusions.
There are several reasons why the enclave conception retains
such a strong grip on the academic and policy discourse on
mi
a g
wh
cur
tok
Op
voi
no
to
by
esp09, p. 259). In addition they assert the lack of linkages between
ge-scale industrial mining and small-scale artisanal mining:
ere are no linkages between the two gold mining sub-sectors,
essing the ‘enclave’ nature of the large-scale mining sector’’
09, p. 266).
These findings dismiss the existence or even possibility of
kages catalysed in consequence of the restructuring of the
ustry and its expansion on the basis of sustained investment.lack of linkages is very often assumed or asserted as part of the
enclave thesis.
For example, Larsen et al. (2009) reiterate the enclave nature
of gold mining, and argue that large-scale mining operations
Mine Mine owner/s and natio
Tarkwa Gold Fields (SA) (71.1%)
Ahafo Newmont Mining Corpo
Obuasi AngloGold Ashanti (SA/G
Wassa Golden Star Resources (
Damang Gold Fields/IAMGOLD
Iduapriem AngloGold Ashanti
Bogoso/Prestea Golden Star Resources
Chirano Red Back Mining (now K
Totalning in Ghana. Dependency theory had a formative impact on
eneration of scholars, and remains influential in a society
ich prizes the wisdom of an older generation. The ideological
rents characterising the nationalist era endure by the same
en, as does a residual suspicion about foreign influence. The
-Ed content of Ghana’s lively press features few external
ces. Critics of the industry, led by domestic activist NGOs,
tably WACAM, also tend to have real ammunition with which
make their cases, principally the environmental damage caused
what appear to be an excessive amount of industrial accidents,
ecially cyanide spillages.2
2 See http://www.wacamghana.com/.Industry structure and organisation
Ghana’s place in the global industry is shaped by demand for
gold. This is seldom considered in the accounts cited above. High
demand, significant profits and a constrained supply have trans-
lated into much greater exploration activity by the industry –
with mining going deeper and further: pushing out the mineral
resource frontier. Moreover as overall volumes in the traditional
top producing countries, such as South Africa, the US, Australia,
Canada and Indonesia, decline, the role of formerly less prominent
country producers (including China and Peru) is growing.
Ghana’s and West African production is arguably growing
faster than anywhere else. Ghana is the principal contributor to
a rapidly growing West African regional industry (including Mali,
Guinea, Burkina Faso, Mauritania and Ivory Coast). A recent
accounting of the region’s exploration and development activity
identified 55 companies involved in 123 separate projects in 10
countries. The output of which has risen 65% over the last five
years to a current total of 190 tonnes or around 8% of the global
total above. This is expected to rise another 57 tonnes or by
around 30% to 2013 (GFMS, 2010).
Gold mining’s current structure in Ghana features eight large
mines which are owned and managed by five large-scale inter-
national producers; a limited number of far smaller producers;
and a significant contribution of registered semi-formal, small-
scale producers which generate some 9–10% of national output in
the present day (triple the level of 20 years ago, but statistical
capture of their production has also improved). This by and large
excludes the contribution to production from the unregistered,
informal and technically illegal small-scale artisanal miners
known as galamsey, whose activities spread through gold mining
areas and which employ in an estimated range of 50,000–200,000
people (Hilson, 2004).
Tables 1 and 2 provide detail on the major mines and their
outputs, and on the overall structure of production. These are all
a) 381,000
) 224,000
203,000
190,000
186,000
oss) (Canada) 183,000
2,554,000IAM
on (Uloc
(As
(Pr
Go
mi
sm
Th





GOLD (Canada) (18.9%) 655,000
SA) 532,000ty oz..ated in the Western Region, with the exception of Obuasi
hanti Region), which is the only underground mine represented
estea is not operational), and Ahafo (Brong Ahafo Region). The
vernment of Ghana (GOG) holds a stake of at least 10% in each
ning property. Large-scale producers are joined by a number of
aller exploring companies (so-called ‘‘juniors’’).
Table 3 presents basic industry dynamics over nearly 20 years.
e following are key trends 2000–2009:
Production volumes have risen by close to a third.
Exports have increased three times in value.
Overall employment is up again after a period of slow decline.
Expatriate employment is at a low but increasing level.
Employment of Ghanaian nationals at senior management or
technical levels is also increasing.
Exploration and mine development levels are promising.
Policy, institutions and legislation
As Hilson (2002) argues, Ghana’s attainment of its independence
in 1957 marked the beginning of a period of rapid deterioration in
its gold mining sector. The era of reform, privatisation and invest-
ment from the mid-1980s onwards in the mining industry thus
represents a decisive repudiation of the policies of the post-
independence era, which was characterised by strong state involve-
ment in the industry. The State Mining Corporation (SMC) was
established in 1961 to take over most existing mines. The govern-
ment also passed the Minerals Act (Act 123) in 1962, which
stipulated that minerals are both de jure and de facto the property
of the country and controlled by the presidency (Hilson, 2002).
In the view of Twerefou et al. (2007), the policies pursued
under the state-led approach in the mining sector led to capital
flight in the sector. In addition, the inefficient manner in which
state-owned mining companies were operated resulted in a lack
of investment and only limited maintenance and modernisation,
which led to declining production levels (Bank of Ghana, 2003).
Faced with crisis, Ghana adopted structural adjustment from
the early 1980s to remove constraints to economic growth and to
improve exports of primary products, mainly cocoa and minerals.
Macro-economic policy reforms complemented sector-specific
policies and legislation. Key among the several laws in the mining
sector was the Minerals and Mining Law of 1986 (Akabzaa, 2009).
This law was amended with the Minerals and Mining Amendment
Act of 1994 (Act 475), which has subsequently been amended
with the Minerals and Mining Act of 2006 (Act 703).
Act 703 is a comprehensive law and covers virtually all aspects
of mining, namely, ownership of minerals and the cadastral
system; mineral rights; royalties, rentals and fees; dispute resolu-
tion; reconnaissance licenses; prospecting licenses and; mining
leases. Other areas include surrender, suspension and cancellation
of mineral rights; surface rights and compensation; industrial
minerals; small-scale mining; and administration and miscella-
neous provisions.
Very importantly, Act 703 seeks to promote a localisation
policy and facilitate the local content of the industry to maximise
the benefits of mining for the Ghanaian economy. It provides the
following measures:
 A 10% government interest in all large-scale gold mining
companies without any financial contribution.
expatriate staff by Ghanaian personnel.
its
200
per
199
Table 2
Gold production in Ghana 2008.
Source: Ghana Minerals Commission.
Company Gold oz.
AngloGold Ashanti Obuasi 357,152
AngloGold Ashanti Iduapriem 214,712
R. Bloch, G. Owusu / Resources Policy 37 (2012) 434–442 437Total AngloGold Ashanti 571,864
Gold Fields Tarkwa 628,864
Gold Fields Damang 197,027
Total Gold Fields 825,891
Golden Star Bogoso and Prestea 169,615
Golden Star Wassa 128,074
Total Golden Star 298,319
Newmont Ghana 524,671
Chirano Gold Mines 120,983
Central African Gold 28,162
Med Mining Company 2617
X’tra Gold Mining 6131
Total other mines 682,565
Total small-scale gold mines 249,444
Total gold production Ghana 2,839,802
Table 3
Ghana gold mining: key statistics.
Source: Ghana Minerals Commission.
Year 1990 1995
Production oz. 541,147 1,715,867
Contribution to GDP (%) 4.83 5.63
Export value $304 m $647 m
Exports % national 19% 44%
Employment total N/A 19,557
Employment expatriate N/A 229
Employment Ghana senior N/A 2187
Employment Ghana junior N/A 17,141
Mining leases granted 3 4
Prospecting licenses granted 37 23
Reconnaissance licenses granted 1 42
Small-scale gold licences granted 0 02000 2005 2008 2009
2,457,152 2,138,944 2,839,802 3,119,823
5.56 5.02 5.58 5.78
$702 m $946 m $2246 m N/A
36% 34% 43% N/A
15,120 13,766 17,829 17,332
219 162 393 451
1505 1706 3116 3180
13,396 11,898 14,320 13,701
2 2 5 6
4 22 41 72
1 31 35 21
9 21 114 66of all FDI in the mining industry goes into gold mining. Between
5 and 2000, total FDI flows to the mining sector were over95%loration and excavation projects (Aryee, 2001; Hilson, 2002,
4; Bank of Ghana, 2003). The mining sector has largely out-
formed the non-mining sector, as seen in Table 4. On averageexpUnderpinned by these reforms, the GOG has been successful in
attempts to promote widespread foreign investment in mineralFrom the mid-1980s, efforts were also made to strengthen
mining support institutions under the Mining Support Pro-
gramme. Its aims were to develop the capacity of mining support
institutions to enable them to promote investment in the sector
and to develop mechanisms to enhance productivity and financial
viability. The Ghana Minerals Commission (GMC) was established
as the lead institution to regulate the mining sector; amend and
modify existing legislations; develop guidelines and standards for
monitoring environmental issues; and to make recommendations
on mineral policy (Twerefou et al., 2007).
Foreign direct investment The reservation of small-scale mining only for Ghanaian
citizens.
 Gold mining companies are to give preference to ‘‘made in
Ghana’’ products, to public corporations and service agencies
located in the country, and to employment of Ghanaians.
 Gold mining companies are required to submit detailed
programmes for the recruitment and training of Ghanaian
personnel.
 ‘Localisation’ of mining staff, defined to mean a training
programme designed to lead to the eventual replacement of
exploration activities and investment in actual oil production,
e components (hoisting hooks,
l products).
mining industry, we can add
rning mining services:
h range from the basic

omo
2
R. Bloch, G. Owusu / Resources Policy 37 (2012) 434–442438which started in 2010, will reduce the dominance of the gold
sector in terms of total FDI inflows into Ghana.
Against this picture – one of strong global demand for gold,
especially over the past decade, and over 20 years of government
policy and legislative activity supporting the industry, with this
facilitating a steady flow of foreign investment which has resulted
in increased production volumes – we can now turn to explore
the pattern of linkages.
Gold mining’s linkages
In their study of the South African mining industry value chain,
Walker and Minnitt (2006) point out:
Each stage in the chain is designed to increase the grade and
economic value of the valuable components of the original ore.2.2 billion US dollars compared to about 1.6 billion US dollars for the
non-mining sector.
The post-2000 period witnessed a steady and significant rise in
FDI for both the mining and non-mining sectors, with total FDI
peaking at about $5 billion in 2008. It is expected that strong FDI
inflows into the mining sector will continue. But intensive oil
2003 325.69 198.13 21.80
2004 407.58 125.47 23.39
2005 543.12 228.50 25.90
2006 330.36 232.90 23.48
2007 410.25 235.41 24.56
2008 466.75 270.72 27.83
2009 511.00 222.96 28.3020
20inp






999 153.83 24.19 36.75
000 29.91 179.40 22.47
01 108.63 145.21 21.69
02 110.50 86.44 18.651
998 172.82 63.24 31.4819
197 218.23 322.03 52.76
19companies (US$m) companies (US$m) companies (US$m)
1995 23.97 140.99 –
96 79.77 694.99 –Yerce: Ghana Minerals Commission; Twerefou et al. (2007); Ghana Investment Pr
ar Producing mining Exploration Mine support serviceFore
Soule 4
ign direct investment in Ghana’s mining and non-mining sectors, 1995–2008.TabA variety of different capital goods, consumables and services
are required at each stage to ensure and maintain operational
efficiency and productivity. Collectively, the firms which pro-
vide these inputs are termed the ‘‘inputs cluster’’ (2006, p. 14).
They identify a two tier structure for the minerals or mining
uts cluster:
Tier 1: direct suppliers
Engineering and service providers (e.g., project engineering
companies).
Original equipment manufacturers (OEMs) (capital equipment).
Consumables input suppliers (explosives, chemicals).
Agents and distributors (pumps, bearings, vehicle parts).
Tier 2: indirect suppliers
Specialised engineering and services (electrical engineering,
ventilation).
Component manufacturers
Manufacturers of standard components (cabling, electrical motor
parts)


lin
con
lin
For
com
are
sem
fur
Ra
refi
Ma
pu
bu
to
woEnvironmental services,
Construction and landscaping,
Catering,
Civil engineering,
Transportation and logistics,to the sophisticated):
 Finance, Insurance, Real Estate,
 Legal services,Tier 4: indirect producer services (whicDrilling services.
Laboratory services.Tier 3: direct mining services
 Geological, survey, land use planning.
two more tiers specifically conce
To get a full picture for Ghana’s
Input providers (chemicals, stee
Foundries and machine shops
pinch valves)
Manufacturers of specialized nichtion Centre (GIPC); World Development Indicators (2009).
Total mining
(US$m)
Non-mining
(US$m)
Total (mining and
non-mining) (US$m)
% of Mining FDI
to total FDI
164.96 182.3 347.26 47.5
774.76 254.2 1028.96 75.3
593.02 631.6 1224.62 48.4
267.54 169.3 436.84 61.2
214.77 233.8 448.57 47.9
231.78 132.1 363.88 63.7
275.53 89.3 364.80 75.5
313.72 58.9 372.62 84.2
330.43 136.7 467.13 70.7
556.44 139.3 695.74 80.0
661.98 145.0 706.98 93.6
799.50 636.0 1435.50 55.7
670.22 970.4 1640.13 40.9
765.30 3446.83 4977.43 15.4
762.26 558.92 2083.44 36.6Cleaning,
Security.
We use this schema to orient a description of existing mining
kages. We provide only brief discussion of forward, fiscal and
sumption linkages, as our focus is on emerging backward
kages as a key to further industrial development.
ward linkages
Forward linkages arise from the processing prior to export of a
modity. In industrial-scale gold mining in Ghana, gold ores
mined and the metal extracted at the mines to the stage of
i-pure dore bars. These are then sold and transported for
ther refining, much of this to the world’s largest such plant, the
nd Refinery in Germiston, South Africa. There is little actual
ning of gold in Ghana. The government’s Precious Minerals
rketing Company (PMMC) is primarily involved in assaying,
rchasing and exporting gold for its approximately 750 gold
yer clients who operate in mining communities in the country
buy gold from licensed small-scale producers (defined as those
rking concessions of up to 25 acres in extent). Galamsey miners
are engaged in informal and highly hazardous informal refining.
A Chinese-financed refinery is apparently being built in Accra.
Similarly, there is also little evidence of jewellery or other
industrial production in Ghana. There may be some potential for
reviving goldsmith-type activities as an aspect of Ghana’s quite
active cultural and heritage tourism promotion. In principle, the
possibility exists for such downstream linkages. However, pro-
spects are now weak due to:
 The higher prices of gold on the world market (jewellery
consumption of gold is down all over the world).
 Weak technology: local jewellery making has a long tradition
account). Half of this goes to support the institutions and agencies
are
rev
tur
R. Bloch, G. Owusu / Resources Policy 37 (2012) 434–442 439Source: Ghana Minerals Commission.
Year Mining contribution to
total IRS collection (%)
2000 13.75
2005 14.58
2006 12.32
2007 15.85
2008 17.24
2009 19.79Table 5
Mining industry contribution to tax income.her than on remedial or developmental initiatives.ratr mining activities in their locations (Akabzaa, 2009). There
significant political difficulties with the allocation of this
enue at local level, with receipts used for recurrent expendi-
e by district assemblies and on private projects by chiefs,ovewhich support mining at national level, such as the GMC; the
other half is distributed amongst district assemblies (60%), stools
(20%) and traditional authorities (20%) which have jurisdictionbut is still dependent on older traditional technology.
 Low local demand for gold jewellery (there has been a
changing cultural attitude to the use of jewellery as an
investment – in effect, real estate has taken its place amongst
the middle classes).
 Increases in cheap jewellery imports from Asia and the Middle
East.
Fiscal linkages
The development and utilisation of fiscal linkages by the state,
usually in the form of tax receipts, can and does coincide
with a commodity-based enclave economy. Accordingly, there
is acknowledgement that gold mining in Ghana has contributed
over a long period to the government’s revenues in the form
of royalties (at a minimum rate of 3% of the value of production
until 2011 after which it was to rise to 5%), corporate taxes,
payroll taxes, a short-lived reconstruction levy and various
other minor instruments. The impact on the country’s fiscal
health and stability is the subject of debate (Aryee, 2001;
Akabzaa, 2009).
Table 5 demonstrates a strengthening of the mining industry’s
contribution to government revenue – and hence of the fiscal
linkage – over the past decade, from a level of close to 14% of total
tax revenue to close to 20% in 2009. This amounted to $243
million, which was some $70 million higher than the preceding
year’s figure (Kapstein and Kim, 2011). A Mineral Development
Fund has been set up by government with a proportion of 20% of
royalty revenues (the remainder goes into a consolidatedConsumption linkages
Consumption linkages are the incomes in the form of profits
and wages which arise from commodity production. These can be
spent nationally or in local areas on the products of domestic
industries, including those which have been instigated by these
new incomes. There is much anecdotal evidence of businesses in
the mining communities (Accra should be included here) being
stimulated by and depending upon this linkage, but it is difficult
to measure and quantify. Western Ghana’s mining towns feature
a range of formal and informal business activities – agriculture,
animal husbandry, food and beverages, trading and retailing,
hospitality and recreation most prominent amongst them – which
appear to have been stimulated by mining incomes.
The International Council on Mining and Metals (ICMM)
country case study on Ghana’s gold mining industry (2007)
provides some limited research findings. In a case study of
the Ashanti Region mining community of Obuasi – the site of
AngloGold Ashanti’s largest mine – the focus is on the rather
small estimated proportion of the procurement budget (5% of a
total of $110 million) which is retained in the local economy. This
is used to purchase goods and services of the type discussed in the
following section. The only attempt at analysis of the derived
effect of AngloGold Ashanti’s mining activities on the town of
Obuasi is a very broad estimate for induced employment in the
town of between 20,000 and 50,000.
In mid-2011, Newmont Ghana Gold Limited also released the
findings of an econometric study of the Ahafo mine’s impact on
social and economic development at the national level, and for
Brong-Ahafo Region in particular (Kapstein and Kim, 2011). For
Ghana as a whole, it is argued that Newmont’s direct employment
of approximately 1700 results in 48,000 jobs being created via
direct, indirect and induced effects. This analysis is not conducted
at the level of the Ahafo mine and its community.
More research is required to develop a fuller perspective.
Assessing consumption linkages through a series of case studies
represents a more promising vein of research than a dismissal of
the possibility of wider and positive impacts of mining activities
in Ghanaian localities.
Backward linkages
Backward linkages arise out of activities established to supply
inputs into the production of a commodity. Ghana’s leading
Business Directory, the Surf Yellow Pages Ghana (2010 edition),
lists some 300 companies under three categories: mining com-
panies, mining equipment, and mining services. The vast majority
are involved in gold mining. All four tiers above are well-
represented. Tier 1 includes international project engineering
companies such as Lycopodium, and a strong showing by a
number of well-known, international original equipment manu-
facturer (OEM) companies (Atlas Copco, Boart Longyear, Sandvik,
Liebherr, Mantrac/Caterpillar), input suppliers (Carmeuse Lime
Products, Castrol, Maxam, African Explosives) and agents and
distributors (Barbex Technical Services, Riepco).
As one moves through the tiers, international companies and
their agents are joined by a number of locally owned servicing
and supplier companies. The majority of the companies, at least
80%, are located either in Accra or in the adjacent port and
industrial city of Tema. The only other metropolitan area to
feature is Takoradi in the Western Region (Kumasi, the large
metropolitan commercial and political capital of Ashanti Region,
is seemingly under-represented). The mining towns spread
throughout the western half of Ghana feature direct operational
support (i.e., Tiers 3 and 4) to the mines in their vicinity, much of
this conducted by smaller local companies in the area itself.
The categorisation used by the industry and government,
notably the GMC and the Ghana Chamber of Mines (GCOM), is
also helpful. Seen previously in the FDI figures, it is also threefold:
producing mining companies, exploration companies, and mine
support service companies. Some seven gold production compa-
nies, six exploration companies out of the estimated 15–20
operating, two contract miners and some 45 mine support service
companies are members of the GCOM, as are a number of
associate member associations like the Ghana Minerals Commis-
sion, the University of Mines and Technology (UMAT) at Tarkwa,
the Geological Survey, and the College of Jewellery in Accra.
Mine support service companies are termed affiliate members
in the GCOM’s lexicon. The Ghanaian offices or registered sub-
While many goods and services are therefore supplied by
international entities, many of these have had an expanding
presence in Ghana over the last decade, and employ local (i.e.,
R. Bloch, G. Owusu / Resources Policy 37 (2012) 434–442440sidiaries of the well-known global mining suppliers and service
companies mentioned above all feature strongly. At the same
time, a small but growing number of Ghanaian national compa-
nies are also listed, which fall into Tier 2 as component manu-
facturers and input providers. These are primarily in the metals
and metalworking (Tema Steel), chemicals and plastics (Riepco,
Interplast), civil engineering (Engineers and Planners), business
services (KEK Insurance Brokers) and logistics (Allship Logistics)
fields. The Minerals Commission estimated employment of some
3500 for 2008 in the support service category.
While not presently members of GCOM, a number of other
locally owned companies also in these sub-sectors were men-
tioned as mining suppliers and service providers by interviewees.
Names such as Western Forgings, Tropical Cable and Conductor,
and Wire Weaving Industries were indicated by several purchas-
ing managers. The supply chain lists of producing mining com-
panies, Golden Star Resources (which has several hundred
suppliers, with 60 active suppliers, defined as 12 orders a year),
Gold Fields, Chirano, and Newmont indicate a large number of
suppliers and service providers.
The general picture is further backed up by GCOM data on the
distribution of mining expenditures (Table 6). This demonstrates
a large aggregate spend by producing companies making up some
20% of expenditures ($467 million) on local purchases, to which a
further 18% ($428 million) on fuel and power must be added.
Imported consumables comprise 16% of the total, and CAPEX
(capacity expansion) at 29%, the majority of which is imported
plant and equipment.
This brief account demonstrates the existence of a range of
‘‘input-supplying’’ backward linkages for gold mining. This sig-
nifies that a bald description of the industry as an enclave is not
appropriate. Localised productive activity servicing and supplying
the gold mining industry in addition to the large amount of plant
and equipment that is being imported by direct suppliers (includ-
ing their agents) in Tier 1 appears to be on the rise. Activities from
indirect suppliers in Tier 2 are visible, as well as in the Tiers 3 and
4 categories of direct mining service providers and indirect
producer servicing companies.
Table 6
Ghana chamber of mines producing members 2008: distribution of expenditures.
Source: Ghana Chamber of Mines.
Classification Amount (US$m) Percentage
Employees 175 8
CAPEX 669 29
Direct to state 146 6
Mining host communities 12 1
Local purchases (excluding fuel/power) 467 20
Local purchases (fuel/power) 428 18
Loans (interest) 52 2
Imported consumables 376 16
Total 2325 100Ghanaian) managers and staff. In any event, it must be stressed
that the mere existence of a linkage is not necessarily tied to or
dependent on its national origin (the depth or breadth of a linkage
may be affected, of course).3 This is a point which is misunder-
stood by those who disallow the presence of linkages if they are
not of Ghanaian national origin. Moreover, the linkage activity of
locally owned companies also appears to be on the rise. It is vital
to recognise and further investigate this apparent advance, with a
view towards facilitating and supporting it. As Gallagher and
Zarsky argue, ‘‘Endogenous capacities for production and innova-
tion held within domestic firms form the bedrock of sustainable
industrial development’’ (2007, p. 5).
It is useful here to understand the variation in spatial location
for servicers and suppliers to gold mining, and, at least prelimi-
narily, the way in which location affects firm operations and
potential. The large majority of the firms making up the mining
inputs cluster are located in the Greater Accra Region, notably in
the Accra Metropolitan Area itself, and in Tema.
Tier 1, direct suppliers, and Tier 3, direct mining services, as
well as the advanced part of Tier 4, indirect producer services, are
literally clustered in Accra, mainly in the eastern districts of the
city. They are in close proximity to the headquarters of the
producing mining companies. These in turn are situated adjacent
to Kotoka International Airport, specifically in the neighbourhoods
of Airport Residential, Cantonments and East Legon – and thus at
least partially at a remove from the epic, grinding congestion of
central Accra. These firms arguably make up the largest part of a
wider larger, finance and producer services cluster which has
emerged, driven by FDI – and this, again, particularly in the mining
sector – in the last 15 years (Grant and Nijman, 2002; Grant, 2009).
Tier 2 indirect suppliers also tend to be located in the
industrial estates of Accra and Tema. This tier includes a growing
group of small-scale Ghanaian-owned or Ghanaian-participating
manufacturers who supply less complex intermediate inputs,
notably within the metalworking, engineering, electrical engi-
neering, chemicals and plastics sub-sectors.
Finally, at the spatial level of the mines and their surrounding
communities, lower level Tier 4 indirect producer services such as
construction, maintenance, catering, landscaping, haulage, trans-
portation and security take place, with local–local companies in
the forefront. There are also some Tier 2 facilities like small-scale
engineering workshops. In addition, Tier 1 direct suppliers and
Tier 3 mining services have depots and maintenance facilities.
The existing policy and legislative framework, especially Act 703,
stimulates and catalyses increased localised linkage activity, as it
seeks to enhance local content in all aspects of mining operations.
Localised supplying and servicing is becoming a norm. This intensi-
fication is being formalised in producing mining company procure-
ment policies, programmes and procedures. The promotion of
linkages is now conceived as an integral ingredient of ‘‘the social
license to operate’’ for gold mining in Ghana. As one supply manager
put it, ‘‘Anything you can buy locally, you want to buy locally!’’
Newmont Ghana Gold, for example, has its own local sourcing
policy. The company’s in-country spend, with the 521 local
suppliers it lists, is currently at $150 million, with plans to
increase this to $250 million in the short-term. Other companies
appear to follow Newmont’s example, with GCOM playing a key
role in sharing good practice and methods.
3 Newmont has developed a useful categorisation for participation from five
types of localised company: Local–local (i.e., at local mining community level),
Ghanaian-owned, Ghanaian-participating (e.g., joint ventures), Ghanaian-regis-
tered (e.g., a subsidiary), and International companies.
will commit them to significant localisation of supply chains. The
GCOM’s Mines Supply Manager’s Sub-Committee has identified
R. Bloch, G. Owusu / Resources Policy 37 (2012) 434–442 44127 product categories which are either already being manufac-
tured in Ghana, or should be assessed for ‘‘import substitution
potential.’’ These range from clothing and wood products through
to chemicals and explosives, plastics, grinding media and metal
products. Annual spend on Ghanaian-owned or participating
manufactured products is said to be $120 million, and the aim is
to increase this to $200 million in the longer term. The Chamber is
pro-actively seeking to move from an initial proposal on local
sourcing policy based on percentage value of procurement spend
to one based on targeting products (services are not included) which
are being or likely can be made in Ghana. Some 35 domestic
manufacturing companies are identified for the initiative.
Such national initiatives are augmented by Corporate Social
Responsibility (CSR) initiatives, and are based on the experience
of producing mining company-designed linkage programmes at
the level of the mining communities. In 2002, the GMC mandated
all mining companies to adopt the concept of CSR to assist their
host communities (Temeng and Abew, 2009). All producing
mining companies in Ghana have thus set up departments and
units to deal with CSR, which tie mining production and revenue
to funds for CSR. Examples are Gold Fields Ghana Limited’s
Sustainable Community Empowerment and Economic Develop-
ment (SEED) programme, the Golden Star Development Founda-
tion (GSDF), and a Newmont Foundation. The CSR initiatives are
small (recall the $12 million figure above for mining host com-
munities). But they appear to have improved mining company–
host community relationships; and more importantly, they have
provided needed social and physical infrastructure which other-
wise lies within the mandate of local governments.
Linkage programmes at the level of individual mines have also
been embraced and promoted by the GCM. The Newmont Ahafo
Linkages Programme (ALP), which started in 2007 and is sup-
ported by the International Financial Corporation (IFC), has been
particularly influential. Micro-businesses and SMEs were a parti-
cular target for the award of contracts, which were accompanied
by the provision of mentoring and advisory services. Variants of
linkage programmes are now being developed by other large
mining companies in Ghana and the region (World Bank, 2012).
In addition to policy and legislation and the role of support
institutions, one other factor is also important to explain the
growth of linkages. In relative terms, gold mining areas have
continued to receive investment to develop their infrastructure.
The success of the mining sector in recent decades is partly
attributed to the investments in infrastructure made by govern-
ment with support from the World Bank/IMF and other interna-
tional donors in mining areas (Owusu, 2001; Aryeetey et al.,
2009). Enhanced infrastructure also bolsters fiscal linkages by
facilitating improved production output and hence revenue to the
central state and local government, while allowing the broad-
ening and deepening consumption linkages, and supporting the
physical connectivity that allows backward linkages to operate.
Conclusions and policy implications
The gold mining industry in Ghana is poised for further
growth, after a decade of very good performance. Moreover, in
consequence of strong global demand for gold which appearsThe role of mining support institutions, notably the GMC, but
also including universities, training and scientific and technical
bodies, complements policy and legislation. The GMC is formulat-
ing regulations to make it compulsory for all mining companies to
develop a Local Business Development Programme (LBDP) whichlikely to continue, gold mining exploration – and following that,production – in the West Africa region is increasing faster than
anywhere else in the world.
However for the industry’s potentials and benefits to be
realised it is necessary, first of all, to go beyond the negative
and self-defeating view that gold mining is an enclave economy
with few linkages into the economy. Some 20 years of investment
and growth have produced an improvement in the breadth and
depth of linkages stemming from gold mining. However imper-
fect, this is a promising development potentially worthy of
further analysis and support in a collaborative effort from
government, industry and development partners.
The fiscal linkages have been amplified as mining’s contribution
to the Ghanaian exchequer has grown significantly at both national
and at local, mining community levels. Consumption linkages,
although difficult to measure, can also be seen to be expanding, as
incomes from increased mining activities flow through mining
communities, stimulating new business activities as ‘‘one thing
leads to another,’’ in Hirschman’s phrase (1981, p. 65).
The industry is not characterised by forward linkages,
although there is perhaps some limited potential for the devel-
opment of ‘heritage’ goldsmith activities on the one hand, and
limited refining on the other.
Backward linkages, however, are increasing. Most significant
has been the emergence of a mining inputs cluster of firms
supplying and servicing both producing and exploration mining
companies across the country’s various mining communities.
The cluster comprises four tiers: Tier 1, direct suppliers; Tier 2,
indirect suppliers; Tier 3, direct mining services; and Tier 4,
indirect producer services.
These mining communities should now include Greater Accra,
where the strongest growth in backward linkages can be seen in
the form of a mining services input cluster in the east of the city.
This cluster is largely composed of Tiers 1 and 3 international
firms that supply and service a regional West African mining
complex, and the exploration, construction/development and
production activities which follow from it. The cluster appears
to be strengthened by localisation economies as knowledge and
information, labour supply and subcontracting opportunities are
shared, and a platform for lobbying government is created.
The Accra area, including Tema, also features a small but
growing set of domestic, Ghanaian-owned suppliers, largely
within Tier 2, which provide physical (manufactured) inputs to
the industry. These range from engineering and metalworking
products through chemicals, plastics, electrical, textile and wood
products. Suppliers of this type are also found, but to a far lesser
degree, in the other metropolitan areas of Sekondi-Takoradi and
Kumasi.
In the mining towns across the western half of the country
(Western, Brong-Ahafo and Ashanti regions), mining equipment
and service firms are being joined by a range of lower level Tier
4 activities which service the mines themselves, such as trans-
portation, haulage, catering, cleaning, construction and landscap-
ing. Mining company supply chain policies, practices and linkage
programmes have had a positive effect here, as do corporate
social responsibility activities directed at alternative livelihood
support for local inhabitants.
Western Ghana can now be viewed as a mining region akin to
the South African Highveld, which contains spatially distinct gold
mining zones. The connective infrastructure, notably road and air
and information and telecommunications, to the headquarters
and service complex and to suppliers in Greater Accra is of great
importance for maintaining and enhancing linkages. However, the
road infrastructure within the broad region can be problematic,
which incurs costs on producers and suppliers.
The improvement in recent years of linkages has policy implica-
tions. Pushed by the new Mining Code, the GMC and the industry are
working together through the Ghana Chamber of Mines to consoli-
date and extend existing company procurement procedures into a
national programme to support domestic manufacturers which
currently supply or could supply inputs to the industry. The Chamber
refers to this local sourcing endeavour as an Import Substitution
Strategy (ISS). The IFC, which also finances gold mining activities in
and Dave Kaplan and our fine colleagues on the MMCP project, as
well as two anonymous referees.
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