UNIVERSITY OF GHANA 
 
MINING AND DEVELOPMENT IN GHANA: A CASE STUDY OF THE     
MINERAL DEVELOPMENT FUND IN THE OBUASI MUNICIPAL ASSEMBLY 
  
 
BY 
 
QUARSHIE ABIGAIL NANA K 
(10284651) 
 
 
 
 
 
 
THIS THESIS IS SUBMITTED TO THE UNIVERSITY OF GHANA, LEGON 
IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD 
OF MPHIL PUBLIC ADMINISTRATION DEGREE 
 
 
 
 
 
JULY, 2015
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DECLARATION 
I hereby declare that this work is based on my own research and not a reproduction of 
anybody’s work either in part or in full and all documents used for this research have all 
been properly referenced. 
 
 
 
…………………………………..     ………………………….. 
QUARSHIE ABIGAIL NANA. K       DATE                   
               (10284651)      
 
 
 
 
 
 
 
 
 
 
 
 
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CERTIFICATION 
I hereby certify that this work has been supervised according to the laid down procedures 
of the University of Ghana. 
 
 
………………………………………….                          ………………………………    
             
     DR. ABDUL-GAFARU ABDULAI                              DATE  
                  (SUPERVISOR)      
 
 
 
 
 
 
 
 
 
 
 
 
 
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DEDICATION 
This work is dedicated to my parents, Mr. Charles Quarshie and Mrs. Mercy Quarshie, my 
siblings, Rev. King David Lawrence Abazeri and Dr Abdul Gafaru Abdulai my supervisor 
for his guidance in my research work. I appreciate your efforts and God bless you. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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ACKNOWLEDGEMENTS 
My sincerest gratitude goes to the Almighty God for his goodness, kindness and love. I am 
indebted to Dr. Abdul-Gafaru for his guidance and support. I would like to thank my 
parents and siblings for their encouragement.  
I thank Rev. King David Lawrence Abazeri, Honourable Emelia Sossa (MCE, Upper 
Denkiyra East) and Mr Sandys Boakye Yiadom for their help in my field work. I 
appreciate the efforts of the Municipal Chief Executive of Obuasi, all the officers, 
Assembly Members and chiefs in Obuasi Municipal Assembly who gave me the necessary 
information I needed for this work. 
To all Public Administration course mates especially Sandra, Mabel, Zachariah and Dinah, 
God bless you all for your contribution to this work. 
 
 
 
 
 
 
 
 
 
 
 
 
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TABLE OF CONTENTS 
 
DECLARATION ................................................................................................................... i 
CERTIFICATION ................................................................................................................ ii 
DEDICATION .................................................................................................................... iii 
ACKNOWLEDGEMENTS ................................................................................................. iv 
LIST OF TABLES ................................................................................................................ x 
LIST OF FIGURES ............................................................................................................. xi 
LIST OF ABBREVIATIONS ............................................................................................. xii 
ABSTRACT ....................................................................................................................... xiv 
CHAPTER ONE ................................................................................................................... 1 
INTRODUCTION ................................................................................................................ 1 
1.0 Background ................................................................................................................. 1 
1.1 Research Problem ........................................................................................................ 3 
1.2 Research Aim and Objectives ..................................................................................... 5 
1.3 Research Questions ..................................................................................................... 6 
1.4 Research Significance ................................................................................................. 6 
1.5 Organization of the Study ............................................................................................ 6 
1.6 Limitation of the Study ................................................................................................ 7 
CHAPTER TWO .................................................................................................................. 8 
LITERATURE REVIEW...................................................................................................... 8 
2.0 Introduction ................................................................................................................. 8 
2.1The Resource Curse Thesis .......................................................................................... 8 
2.1.1 Explanations for poor development outcomes...................................................... 9 
2.1.2 Type of resource ................................................................................................... 9 
2.1.3 Economic perspective ........................................................................................... 9 
2.1.4 Political explanations of the resource curse ........................................................ 10 
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2.1.5 Rent seeking argument........................................................................................ 10 
2.2 Institutional argument ................................................................................................ 11 
2.2.1 Policies ................................................................................................................ 12 
2.2.2 Governance ......................................................................................................... 13 
2.2.3 Type of state........................................................................................................ 14 
2.3 Dealing with the resource curse ................................................................................ 14 
2.3.1 Natural Resource funds ....................................................................................... 14 
2.3.2 Savings and stabilization funds .......................................................................... 15 
2.3.3 Distributing Funds Directly To Citizens ............................................................. 16 
2.3.4 Good Governance ............................................................................................... 16 
2.3.5 Strengthening of institutions ............................................................................... 17 
2.3.6 Privatization ........................................................................................................ 17 
2.3.7 Good financial management system ................................................................... 17 
2.3.8 Transparency ....................................................................................................... 18 
2.3.9 History of mining in Ghana .................................................................................... 19 
2.4  Adoption of the Structural Adjustment Programme (SAP) and mining in Ghana 23 
2.4.1 Minerals and Mining Act, Act 703, 2006 ........................................................... 26 
2.4.2 Distributing mineral revenues at the local level ................................................. 28 
2.4.3 History of the Mineral Development Fund (MDF) ............................................ 29 
2.4.4 The Chieftaincy institution in Ghana .................................................................. 30 
2.4.5 Chiefs and Mining .............................................................................................. 33 
2.4.6 Chiefs and the use of the Mineral Development Fund ....................................... 34 
2.5 District Assemblies .................................................................................................... 35 
2.5.1 The Local Government Structure ....................................................................... 36 
2.5.2 Finances of local government ............................................................................. 36 
2.5.3 MMDAS and the Use of the MDF ..................................................................... 37 
2.5.4 Challenges Associated With the use of the MDF in Ghana ............................... 39 
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2.6 Theoretical Review .................................................................................................... 42 
2.6.1 Resource Scarcity Argument .............................................................................. 43 
2.6.2 Theory of Political Ecology ................................................................................ 43 
2.6.3 Neopatrimonialism.............................................................................................. 44 
2.6.4 Conceptual Framework ....................................................................................... 47 
CHAPTER THREE ............................................................................................................. 50 
METHODOLOGY .............................................................................................................. 50 
3.0 Introduction ............................................................................................................... 50 
3.1 Research design ......................................................................................................... 50 
3.2 Study Area ................................................................................................................. 51 
3.3 Target population ...................................................................................................... 52 
3.4 Sample Size ............................................................................................................... 53 
3.4.1 Sampling Technique ........................................................................................... 54 
3.5 Sources of data .......................................................................................................... 54 
3.6 Data Collection Instrument ....................................................................................... 55 
3.6.1 Face to face interviews ....................................................................................... 56 
3.6.2 Focus Group Discussions ................................................................................... 56 
3.7 Ethical considerations ................................................................................................ 57 
3.8 Data analysis .............................................................................................................. 57 
3.9 Challenges of the study ............................................................................................. 58 
CHAPTER FOUR ............................................................................................................... 59 
DATA ANALYSIS AND DISCUSSIONS ........................................................................ 59 
4.0 Introduction ............................................................................................................... 59 
4.1 Factors that led to the establishment of the MDF ..................................................... 59 
4.2 Economic Factors ...................................................................................................... 59 
4.2.1 Expansion of Mining Activities .......................................................................... 59 
4.2.2 Inflow of Mineral Revenues ............................................................................... 61 
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4.2.3 The Need to Sustain the Sector ........................................................................... 62 
4.3 Environmental Factors .............................................................................................. 63 
4.3.1 Compensation of Those Who Bear the Negatives of Mining ............................. 63 
4.3.2 Need to Compensate Land Owners (Stools) ....................................................... 64 
4.3.3 Shift to Surface Mining....................................................................................... 65 
4.4 Summary ................................................................................................................... 66 
4.5 UTILIZATION OF THE MDF AT THE LOCAL LEVEL ...................................... 67 
4.5.1 Process on How the Fund Is Utilized At the Municipal Assembly .................... 68 
4.5.2 Utilization of the MDF at the Obuasi Municipal Assembly from 2006-2012 .... 71 
4.5.3 Beneficiaries of mineral royalties in the Obuasi Municipal Assembly .............. 77 
4.6 Traditional Authorities and the Utilization of Mineral Royalties ............................. 83 
4.6.1 Receipt of mineral royalties ................................................................................ 83 
4.6.2 Involvement of the people in the utilization of mineral royalties ....................... 85 
4.6.3 Utilization of Mineral Royalties ......................................................................... 85 
4.6.4 Perception of residents on who are the beneficiaries of mineral royalties ......... 87 
4.6.5 Perception of residents on whether chiefs should use their share of mineral 
royalties for development ............................................................................................ 89 
4.6.6 Summary ................................................................................................................ 91 
CHAPTER FIVE ................................................................................................................. 92 
THE MDF AND LOCAL DEVELOPMENT: SOME KEY CHALLENGES ................... 92 
5.0 Introduction ............................................................................................................... 92 
5.1 Challenges in the utilization of mineral royalties by OMA ...................................... 92 
5.1.2 Delays in the Receipt of Funds ........................................................................... 93 
5.1.3 Absence of Guidelines ........................................................................................ 95 
5.1.4 Inadequate mineral royalties ............................................................................... 97 
5.1.5 Weak Enforcement Mechanisms ........................................................................ 97 
5.2 Challenges Faced By the Traditional Authorities in the Utilization of the MDF ..... 98 
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5.2.1 Sharing of money according to ranks ................................................................. 99 
5.2.2 Insufficient Money ............................................................................................ 100 
5.2.3 Delays in the release of funds ........................................................................... 101 
5.3 Accountability and MDF Utilization ....................................................................... 101 
5.3.1 Poor legal framework........................................................................................ 101 
5.3.2 Unawareness of the fund and non-involvement of residents in decision making
 ................................................................................................................................... 103 
5.3.3 No guidelines for the use of the of the fund ..................................................... 103 
5.3.4 Ghana’s Extractive Industry Transparency Initiative (GHEITI) ...................... 104 
5.3.5 Chiefs ................................................................................................................ 105 
Summary .................................................................................................................... 105 
CHAPTER SIX ................................................................................................................. 106 
SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSIONS ........... 106 
6.0 Introduction ............................................................................................................. 106 
6.1 Summary ................................................................................................................. 106 
6.2 Theoretical contribution .......................................................................................... 107 
6.3 Recommendations ................................................................................................... 109 
6.4 Conclusion ............................................................................................................... 112 
REFERENCES .............................................................................................................. 113 
Appendices A -Interview Guide ................................................................................ 125 
 
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LIST OF TABLES 
Table                 Page 
Table 4.1: Royalties Received From the MDF year 2000 to 2012 ..................................... 67 
Table 4.2: Received and Expenditure of Mineral Royalties in the Obuasi Municipal 
Assembly from 2006-2012 ................................................................................. 72 
Table 4.3: Expenditure of Mineral Royalties for the Year 2006- 2012 .............................. 73 
 
 
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LIST OF FIGURES 
Figure                            Page 
Figure 2.1: The Local Government Structure ..................................................................... 36 
Figure  2.2: Conceptual Framework.................................................................................... 48 
Figure 4.1: Expenditure of Mineral Royalties Expressed as Percentage in a pie chart ...... 73 
Figure 4.2: Expenditure of Mineral Royalties Expressed In a Bar Chart ........................... 74 
Figure 5.1: Fluctuations in the Amount Received from the MDF ...................................... 92 
 
 
 
 
 
 
 
 
 
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LIST OF ABBREVIATIONS 
EITI –  EXTRACTIVE INDUSTRY TRANSPARENCY INITIATIVE 
ERP-   ECONOMIC RECOVERY PROGRAMME 
FDI -  FOREIGN DIRECT INVESTMENT 
GHEITI –  GHANA’s EXTRACTIVE INDUSTRY TRANSPARENCY INITIATIVE 
ICMM-  INTERNATIONAL COUNCIL FOR MINERALS AND METALS 
ILGS-   INSTITUTE OF LOCAL GOVERNMENT STUDIES 
ISODEC-  INTEGRATED SOCIAL DEVELOPMENT CENTRE 
MC-  MINERAL COMMISSION  
MDF -  MINERAL DEVELOPMENT FUND 
MMDAS - METROPOLITAN, MUNICIPAL AND DISTRICT ASSEMBLIES 
OASL-  OFFICE OF THE ADMINISTRATOR OF STOOL LANDS 
OMA-  OBUASI MUNICIPAL ASSEMBLY 
SAP-   STRUCTURAL ADJUSTMENT PROGRAMME 
PNDC-            PROVISIONAL NATIONAL DEFENCE COUNCIL  
DAS-               DISTRICT ASSEMBLIES 
GOG-              GOVERNMENT OF GHANA 
DACF-            DISTRICT ASSEMBLY COMMON FUND 
TNMA -          TARKWA NSUAEM MUNICIPAL ASSEMBLY  
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PHDA-            PRESTEA HUNI VALLEY DISTRICT ASSEMBLY  
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ABSTRACT 
Mining in Ghana is an important economic activity that can be traced back to the colonial 
times. Although it has contributed substantially to the national income purse, its benefits 
to the local populace have been of contestation because of the negative impact on the 
livelihoods of people who live close to mining areas.  In order to mitigate the negative 
impacts of mining, an administrative fiat in 1992 created the Mineral Development Fund 
(MDF) as a way of redistributing part of mineral revenues to communities in close 
proximity with mining activities through the District Assemblies and Traditional 
Authorities. The aim of this study is to look at the factors that led to the establishment of 
the MDF, how the fund has been utilized by the Obuasi Municipal Assembly (OMA) and 
the chiefs, the challenges faced in the utilization of the fund and the extent to which chiefs 
and OMA can be held accountable in the utilization of mineral revenues. A qualitative 
approach was used for the study in which thirty (30) key actors were interviewed. The 
findings showed that OMA used its share of mineral revenues for general development 
purposes rather than focusing on mining affected communities while the chiefs used their 
share of mineral revenues for their personal activities. This has been fostered by unequal 
power relations in terms of access to information and influence in the decision making as 
well as institutional weakness in our governance system. The principal challenges that 
inhibit the effective use of the fund are fluctuations in mineral royalties, delays, absence of 
guidelines as to how to utilize mineral royalties and poor accountability mechanisms in the 
use of the fund.  
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CHAPTER ONE 
INTRODUCTION 
1.0 Background 
Mining in Ghana can be traced back to colonial and pre-colonial times. Some of the 
minerals mined include gold, bauxite, manganese, diamond, salt and lime stone with gold 
being the major mineral mined in commercial quantities (Akabzaa, 2009). These minerals 
are mined by large organizations, small scale miners and on artisanal basis.  The mining 
industry has been characterized with the active involvement of the private sector and the 
expansion of the sector after the adoption of the Structural Adjustment Programme (SAP) 
(Hilson, 2004). Apart from the surge in foreign direct investment, output in the sector has 
improved as well. A study by Hilson (2004) on the impact of the mining sector reforms at 
the micro and macro-economic levels revealed that, there was five times increase in 
annual gold output and big rises in bauxite, diamond, and manganese production. 
The mining sector has served as a major economic driver in the generation of revenues, 
foreign exchange earnings and the Gross Domestic Product (GDP) of the country (Aryee, 
2001). A report by the Chamber of Mines (2013) revealed that, the mining sector’s 
contribution to the GDP increased from 9.5 % in 2012 to 9.8% in 2013. Furthermore, the 
mining and quarrying sub-sector sustained its position as the leading contributor to 
domestic revenue in 2013. According to the Ghana Revenue Authority (GRA), total 
contribution from the sector to the nation’s purse was approximately GH¢1.1 billion in 
2013 (Chamber of Mines, 2013).  
Although some scholars have agreed that there is the possibility of the mining sector to 
have a positive impact on national development, there have been different opinions about 
the actual benefits of the sector towards national economic development (Akabzaa, 2009). 
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One school of thought opines that, the sector contributes generally to development 
(Minerals Commission, 2005; Aryee, 2001; Amankwah & Anim-Sackey, 2003) while 
others are of the opinion that the impact of the sector to economic development is 
insignificant (Akabzaa & Dramani, 2001; Kumah 2006). Mining in general has come with 
a cost that has affected communities in mining areas. Many studies show that mining 
activities have affected the environment, social and economic lives of host communities. 
Water bodies have been polluted which has led to the killing of aquatic organisms and 
deprived residents of their sources of water; air have been polluted, which has led to some 
airborne diseases and lands have been degraded among others (GOG, 2013).  
The mining industry’s impact on livelihood has been analysed in economic, social and 
environmental terms. Findings showed that the impacts are positive and negative to 
mining communities. The positive impacts include the creation of employment, improved 
infrastructure and businesses in host communities, revenues to government in the form of 
taxes, royalties, dividends and excise taxes. The negative impacts of mining on livelihood 
include child labour, decreased access to social services, displacement of people, water 
and air borne disease, land degradation, unemployment and pollution of water bodies 
(Aryee, 2001; Hilson, 2002; Amankwah, & Anim-Sackey, 2003; Kumah, 2006; Kitula, 
2006 & Hilson, 2012).  The negative impact of mining in host communities has been 
attributed to the fact that, mining sector reforms have rather focused on attracting foreign 
direct investment with few of these reforms focusing on how to mitigate the negative 
effects of mining in communities (Koranteng, 2005). 
The non-renewable nature of minerals mined and negative effects of mining on host 
communities have raised issues about the sustainability of the sector in the development 
process. Sustainable mining can be seen as an oxymoron from a glance because of the 
non-renewable nature of minerals that are mined (Horowitz, 2006 & Rajam et al, 2005). 
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The concept of sustainability in the mining sector has been used differently by many 
authorities. James (1999) opines that, the concept of sustainable development calls for the 
need to integrate economic, social and environmental elements in policy guidelines in the 
activities of mining companies. Laurence (2011) is also of the view that, a sustainable 
mining operation is one that takes into consideration the economy, efficiency, community, 
safety and environment. In attempt to make the sector sustainable, the government of 
Ghana has put measures in place in the form of Mining Acts and Laws, education and 
technical support through the Minerals Commission and the setting up a Minerals Fund 
among others (Amankwah, & Anim-Sackey, 2003; Aryee, 2001).  
In order to enhance the sustainability of the mining operations, the Mineral Development 
Fund (MDF) was set up by an executive fiat committee in 1992 in order to mitigate the 
negative effects of mining in the host communities of mining operations and to support 
mining sector institutions. The MDF constitutes 20% of royalties paid by mining 
companies to the government. Even though huge sums of money have been distributed to 
mining affected communities through the MDF, there are still complaints from residents of 
mining affected communities about the deplorable state mining operations have left them 
(CHRAJ, 2008; Garvin et al, 2009; Kumah, 2006). Their lands have been degraded; some 
residents have been displaced with health impacts associated with air, water and land 
pollution among others.  
1.1 Research Problem 
Mining is an important and integral part of the economy of Ghana. Its benefits to the 
national economy cannot be overemphasised (Hilson, 2002; Aryee, 2001; Akabzaa 2009). 
In order to enhance the development of the industry, the government has put in place 
measures in the form of Mining Acts and Laws. Despite its various contributions to the 
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national economy in the form of taxes, royalties and employment it has come with 
environmental, economic and social cost (Hilson, 2004; Awudi, 2002; Akabzaa, Seyire & 
Afriyie, 2007; Taabazuing et al, 2012).  
Citizens in mining communities continue to complain about how mining activities have 
affected their lives negatively (CHRAJ, 2008; Gavin et al, 2009; Oxfam, 2011). For 
instance, in a human rights report by CHRAJ in 2008, there was substantial evidence to 
confirm the reports of the negative impact of mining. The report recognised pollution of 
water bodies, forced eviction of people from their land, negative impact of mining 
activities on health, poor compensation mechanisms, and conflicts between mining 
companies and resident. Oxfam (2011) also confirmed that, human rights abuses still 
continued in mining areas through an article published on how a 23 year old man died 
from a gunshot from one of the security service personnel hired by Anglo Gold Ashanti.  
These reports tend to raise the question about how mineral royalties distributed to 
Traditional Authorities and District Assemblies through the MDF are utilised at the local 
level to mitigate the negative effect of mining and for development purposes. 
Although this mechanism is in place, some residents in mining communities tend to see no 
benefits of mining in their communities due to the negative impact associated with mining 
activities. In situations where community members claim to know the existence of the 
fund, they claim it is been utilised by the chiefs and District Assemblies for their private 
activities (Taabazuing et al, 2012, Standing & Hilson, 2013). The ICMM report of 2007 
revealed that traditional authorities use their share of mineral royalties for expenditures 
that benefit themselves rather than the community. This is because the use of royalties for 
the maintenance of stools has been understood to mean “that it is legitimate to pay for 
regalia and the trappings of royalty – limousines, jewellery and ceremony” (ICMM, 2007, 
pp 77). Additionally, some chiefs are of the view that they are unable to embark on 
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community projects because of the unfair share of mineral royalties received (Akabzaa, 
2009). For instance in the Wassa West District, Assembly Members claim mineral 
royalties are used for administrative processes and for financing development projects but 
the residents have the general perception that  local authorities “are corrupt and tend to use 
the royalties for their personal gain” (Taabazuing et al, 2012, p.44). These have sometimes 
fuelled conflicts especially between residents and their local leaders in close proximity 
with mines. The ICMM report of 2007 has also revealed that stakeholders have questioned 
why little goes back to mining communities although the MDF is in place. These issues 
raise the question of the effectiveness of the MDF as an instrument for returning benefits 
to mining communities. The purpose of this research is to find out how the MDF evolved 
and how it has been utilised in the Obuasi Municipal Assembly area. 
The study assumes that if the challenges associated with the MDF are addressed, this 
would enhance the effective use of mineral royalties to promote development and limit the 
negative effects associated with mining in communities that host mining operations. 
1.2 Research Aim and Objectives 
The main aim of this research is to find out how the MDF evolved, how it has been 
utilised in the Obuasi Municipal Assembly, challenges associated with its utilization and 
the extent to which accountability is enforced in the use of the fund. The study explores 
the following specific objectives. 
1. To explore the factors that led to the establishment of the MDF 
2. To know how the MDF has been utilised by the chiefs and the Obuasi Municipal 
Assembly in promoting development from 2006 to 2012. 
3. To know the challenges that District Assembly officials and chiefs face in the 
utilization of the MDF for development purposes. 
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4. To know the extent to which the District Assemblies and chiefs are held 
accountable in the use of the fund. 
1.3 Research Questions 
1. What are the factors that led to the establishment of the MDF? 
2. How has the MDF been utilised by the chiefs and the Obuasi Municipal Assembly 
from 2006 to 2012? 
3. What are the challenges District Assembly Officials and chiefs face in the 
utilization of the MDF for developmental purposes? 
4. To what extent are District Assembly Officials and chiefs held accountable in the 
utilization of the fund? 
1.4 Research Significance 
The findings from this research will be beneficial in three ways. 
First and foremost, this research would contribute tremendously in giving an in-depth 
understanding on how the Mineral Development Fund has been utilised to improve the 
living standards of residents in mining communities. 
Secondly, it would inform the Ministry of Lands and Natural Resources and its relevant 
stakeholders about the challenges District Assemblies and chiefs face in the utilisation of 
the fund in mitigating the negative effect of mining in host communities. 
Thirdly, the findings would also inform the Ministry of Lands and Natural Resources on 
how to ensure that sustainable development is implemented successfully in the sector. 
1.5 Organization of the Study 
This study is organized into six chapters. Chapter one incorporates the background of the 
study, the research problem, the research objectives and questions, the research 
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significance and the limitation of the study. Chapter two of the study focuses on the 
literature review. Chapter three is centred on the methodology used in data collection and 
analysis of the data. Chapter four and chapter five, presents the results and analysis of the 
study. Chapter six on the other hand, consists of the summary, theoretical contribution, 
recommendations and conclusion of the study. 
1.6 Limitation of the Study 
Due to time constraint, only three mining affected communities were selected from the 
Obuasi Municipal Assembly for the study.  
Although the study wanted to investigate how the fund has been utilized since it was 
established, data got from the Obuasi Municipal Assembly covered the utilization of the 
MDF from the year 2006 to 2012. 
Chiefs that were interviewed for the study were only the Odikros (care taker chiefs) of the 
mining affected communities because the main chiefs for the areas had travelled around 
the period of data collection. 
 
 
 
 
 
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CHAPTER TWO 
LITERATURE REVIEW 
2.0 Introduction 
This chapter is the literature review section and it is divided into four main parts. The first 
part gives a global outlook on why resource rich countries are characterized by poor 
development outcomes and the measures that have been proposed to avoid the resource 
curse. The second part narrows down to the Ghanaian context. This focuses on how 
Ghana’s resource extraction economy started and the various reforms that have been 
undertaken to make the natural resource sector more vibrant.  The third part encompasses 
the history of the mineral development fund, how district assemblies and chiefs have 
utilized the fund, the challenges associated with the fund. Part four looks at the theoretical 
review and the conceptual framework. 
 
2.1The Resource Curse Thesis 
Contrary, to the argument made in the past that natural resources can help economies grow 
faster, some studies have shown that most resource endowed countries have been 
characterized with poverty with the exception of a few. Resource endowed countries 
especially African countries have been characterized with poor economic outcomes such 
as low GDP and high debts which have been termed the resource curse (Sala-i-Martin & 
Subramanian, 2003; Sachs & Warner 2001). Among the countries are Nigeria, Angola, 
Sierra Leone and Zaire. On the contrary, countries like Botswana and Norway have been 
characterized good economic outcomes. This suggests that the resource curse can be 
avoidable and is not a universal phenomenon (Rhode & Deacon, 2012). 
 
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2.1.1 Explanations for poor development outcomes 
Several reasons have been outlined by scholars as contributing to the poor development 
outcomes of resource endowed countries. These explanations for the resource curse have 
been attributed to the type of natural resource endowment, economic factors and the 
political factors. 
 
2.1.2 Type of resource 
Some scholars are of the view that it is not just the acquisitions of natural resource that 
lead to the curse but it is the type of resource that leads to the resource curse. Point 
resources like minerals oil, gas are likely to be characterized with poor economic 
outcomes (Murshed, 2004; Boschini, Pettersson, & Roine, 2007). Murshed (2004) opined 
that point natural resource impedes democratic and institutional development, thereby 
having a negative impact on growth. Boschini, Pettersson & Roine, (2007) note that, the 
positive and negative effects are larger in countries with precious minerals. 
2.1.3 Economic perspective 
The economic explanation of the resource curse links poor developmental outcomes to 
economic factors. From that perspective, the reasons for the poor economic outcome is 
due to a low degree of trade openness, long term trends in world prices, price instability, 
permanent crowding out of manufacturing, Dutch disease, limited economic 
diversification, revenue volatility, poor investment and savings habit (Arezki & Van der 
Ploeg, 2007; Sandbu, 2006; Sachs & Warner, 2001; Li, 2013).  
 
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2.1.4 Political explanations of the resource curse 
The political explanations of the resource curse have specifically focused on rent seeking 
activities, institutional factors, policies and the type of governance found in resource 
endowed countries.  
 
2.1.5 Rent seeking argument 
Those who put forward the rent seeking argument are of the view that, the presence of 
natural resource wealth creates irrational behavior on the path of political elites. In the bid 
to capture resource rents during the extraction of minerals, powerful coalitions are formed 
in society which makes it possible to extract resource rents from the private sector to these 
powerful groups at the expense of society. During resource booms, these transfers become 
intense thereby shifting attention from productive activities. This is done possibly through 
corruption, bribes, nationalization and usurpations (Lane &Tornell 1996; Tornell & Lane 
1999). Other scholars are of the view that, the presence of resource rents provides the 
opportunity to political elites to line their pockets through rent seeking. Ross (2001a) notes 
that, the during windfall gain political elites take the opportunity to capture rent and have a 
control to distribute them. In the same vein, Ascher (1999) for instance noticed that 
political elites generally waste rents. They tend to use it to pursue development programs 
that are controversial in nature, create opportunity for rent seeking activity to promote 
their interest, provide economic benefits to particular interests group, capture rents and 
avoid accountability.  Another explanation is that during resource booms entrepreneurial 
minds are channelled into rent seeking activities rather than productive activities, this 
tends to reduce the extent to which investment is made into productive activities hence 
causing poor economic outcomes (Torvik 2002; Mehlum, Moene & Torvik, 2006). 
 
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2.2 Institutional argument 
Institutions have been found to play an intervening role in determining economic 
outcomes in resource rich countries (Murshed, 2004; Mehlum, Moene & Torvik, 2006; 
Boschini, Pettersson, & Roine, 2007; Deacon & Rode, 2015; Van der Ploeg, 2011; 
Robinson, Torvik, & Verdier, 2014). Boschini, Pettersson, & Roine (2007) found out that, 
the quality of institutions and the type of resources are the key determinants of economic 
outcomes. Low quality of institutions will transform resources into a curse while 
institutions that are high in quality will be able to fight the resource curse. They note that, 
“sufficient improvement in institutional quality turns resource abundance into an asset 
rather than a curse” (p.27–28). Murshed (2004) adds that, institutions and their functioning 
are a crucial factor determining resource endowments, geography and policies, on the one 
hand and economic outcomes on the other hand.  
Lane & Tornell (1999) note that the presence of effective institutions can help curb these 
rent seeking activities associated with the discoveries of natural resource wealth. Countries 
that are able to put institutional restraint on these rent seeking activities will be 
characterized by higher growth rates as compared to countries which do not have effective 
institutional restraint. Resource rents encourage rent seizing and civil conflicts if 
institutions are bad. The curse is evident in countries with low institutional quality (When 
the institutional barriers for rent seeking activities are unavailable) while it’s non-evident 
in countries with high institutional quality (Mehlum, Moene & Torvik, 2006). In countries 
where institutions are unable to limit the extent to which politicians engage in clientelism 
incomes are lower and when able to limit their activities this lead to higher incomes 
(Robinson, Torvik & Verdier, 2006). They add that, countries with institutions that 
enhance accountability and state competence will tend to enjoy from resource booms since 
these institutions ameliorate the perverse political incentives that such booms create. The 
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curse is very evident in countries which have already weak institutions at the time of 
resource booms (Sala-i-Martin & Subramanian, 2003). In a similar vein, when institutions 
allow political elites to grab rents it leads to low incomes but higher incomes when 
institutions enhance the productive utilization of rents (Mehlum, Moene and Torvik, 
2006). 
Some scholars have found out that institutions in countries do not affect economic 
outcome in a similar way, that is, the effect of some institutions on growth are more 
evident done others. In a study by El Anshasy & Katsaiti (2013, p.291), they found 
“Corruption control, sound rule of law, and better bureaucratic qualities positively impact 
growth by raising productivity and improving fiscal performance and windfall 
management. On the other hand, budgetary and political institutions seem to work through 
the fiscal transmission channel”. In china, it was found out that the quality of institutions 
(law courts) plays an important role in economic outcomes (Ji, Magnus & Wang, 2014). 
In looking at the impact resource extraction institutions on economic outcome, Amundsen 
(2014) distinguished between institutions of extraction (institutions enabling and 
protecting rents extraction) and institutions of redistribution (institutions of power and 
revenue sharing) in a study in Angola. The results showed that sidelining of institutions 
responsible for revenue sharing and the support for institutions that enable the extraction 
of rents are the cause of elite capture of rents, monopolization and usurpation found in 
Angola. This shows that political commitment on the part of our leaders is necessary for 
the efficient functioning of institutions. 
 
2.2.1 Policies 
Some scholars have also attributed negative economic outcomes to poor policies that are 
found in resource endowed countries. Policies in resource abundant countries do not 
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enhance the use of mineral rents for productive purposes and tend to reflect the interest of 
minority of the populace (Barbier, 2003). Durnev & Guriev (2007) pointed out that, the 
presence of mineral wealth tends to induce an irrational behaviour in political elites 
especially if institutions are immature. Political elites therefore engage in rent seeking 
activities in order to enjoy benefits from the wealth. Therefore, policies pursued tend to be 
bad and hinder the effective use of mineral wealth.  
 2.2.2 Governance 
The impact of natural resource on development has been traced to the type of governance 
system in place. In the study of oil rich countries, Bjorvatn, Farzanegan & Schneider 
(2012) found out that, strong government can provide the foundation for positive 
economic impacts even in the presence of poorly developed institutions while weak 
governments will cause damaging effects on economic outcomes. Another study looked at 
the role of political institutions on the resource curse by looking at institutions that reflect 
the degree of inclusiveness (Polity) and credibility of intertemporal commitments 
(Political Check and Balances).  Their findings indicate that countries that had high scores 
on both indicators are likely to transform their resource wealth into growth while countries 
with low scores are likely to experience the curse (Elbadawi & Soto, 2012). This puts 
emphasis on the role of guidelines and participation of the people in resource 
management. Autocratic /oligarchic institutions and anarchic institutions are associated 
with poor economic outcomes (Sandbu, 2006). Simialry, the curse exists in countries with 
weak democratic and governance institutions (El Anshasy & Katsaiti, 2013). 
 
 
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2.2.3 Type of state 
The type of state has been found to play a role in determining the extent to which natural 
resources would enhance economic growth. Auty & Gelb (2001) note that developmental 
states tend to foster economic growth, due to competitive industrialization and sustained 
policies. On the contrary, in resource abundant countries, competition for rents leads to 
factional and predatory states that allocate rents through indirect means that distort the 
economy. In a similar vein, natural resource endowment is likely to lead to lower incomes 
in countries that are ethnically diverse as compared to homogenous state. This is because 
this increases the tendency in fractionalized state to fight for windfall gains and engage in 
rent seeking activities. This would also reduce property rights hence income (Hodler, 
2006). Unstable countries with bad institutions and lack of rule of law, corruption, 
presidential democracies, and underdeveloped financial systems experience severe 
economic outcomes (Van der Ploeg, 2011) 
 
2.3 Dealing with the resource curse 
Several approaches have been described as ways of dealing with the resource curse. Most 
of these approaches have come from resource endowed countries that have been able to 
transform their wealth into positive economic outcomes. Some of these measures have 
focused on the establishment of natural resource funds, privatization, good governance and 
enhancing transparency and accountability in the utilization of revenues from natural 
resources. 
 
2.3.1 Natural Resource funds 
The setting up of natural resource funds has been suggested as one of the ways in dealing 
with the resource curse. Transparent commodity funds, such as the Botswana’s Pula Fund 
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has been suggested as a model that can be followed by other countries because of its non-
political interference (Sandbu, 2006). The Norway petroleum fund is also an example of a 
natural resource fund that should be followed as a way of managing mineral wealth in 
resource rich countries (Stevens & Dietsche, 2008). Resource funds have the ability to 
improve governance and institutional quality improvements and may be useful tools in 
addressing improved governance and institutional quality deterioration associated natural 
resource abundance (Tsani, 2013). 
 
2.3.2 Savings and stabilization funds 
Some scholars have specifically recommended the use of stabilization funds as a way of 
protecting countries against price instabilities, as this has been proved to be useful in 
Norway (Seymour 2000; Skancke, 2003).  This takes the form of the establishment of a 
separate fund in which revenues are put into. Stabilization funds aim to reduce price 
volatility on revenues and the economy while the savings fund is aimed at storing money 
for future generations (Davis et al 2003).  Palley (2003) notes that savings fund would 
help to save some of the revenues for future generations, and named Azerbaijan and 
Kazakhstan as examples to follow. Additionally stabilization fund would help to fight 
against the Dutch diseases by making sure some of the revenues are used in investing into 
foreign assets. With the stabilization funds, money is paid out when the price of the 
commodity reduces and money is saved when the price of the commodity goes high 
(Davis et al 2003). However, Davis, Ossowski, & Fedelino (2003) have questioned the 
usefulness of these funds in the absence of the culture of accountable and the transparent 
government while Humphreys, Sachs & Stiglitz (2007) have argued that, the fund would 
not work in countries with weak institutional framework and is not needed in countries 
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whose institutions are strong. This suggests that a strong governance systems are 
necessary for the operation of these funds. 
 
2.3.3 Distributing Funds Directly To Citizens 
Direct cash transfer to citizens such as the Alaska permanent fund has been suggested as 
one of the ways in dealing with the resource curse. This takes the form of distribution of 
revenues directly to the citizens. Direct cash transfer to citizens breeds the following 
advantages. First and foremost this would help to reduce corruption associated with the 
management of natural resource revenues and the tendency of political officials in society 
to capture resource rents. Secondly, it would serve as a redistribution mechanism for 
reducing inequality and serve as a starting capital for poor entrepreneurs and reduce 
structural imbalances found in society (Palley, 2003; Sala-i-Martin & Subramanian, 2013). 
Weinthal & Luong (2006) opined that, the fund would amount to nothing if the institutions 
regulating the use of the fund are unavailable and must be strong, that is, enhance 
“oversight, transparency, and accountability”.   
 
2.3.4 Good Governance 
Some scholars have proposed good governance as an important measure of the ways of 
overcoming the resource curse (Humphreys, Sachs & Stilgliz, 2007; Iimi, 2007). Good 
governance according to Iimi (2007, p. 692-693) should consist of “specifically a strong 
public voice with accountability, high government effectiveness, good regulation, 
powerful anti-corruption policies-tend to link natural resources with high economic 
growth. Good regulations and powerful anti-corruption policies are the most important for 
natural resource management”  
 
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2.3.5 Strengthening of institutions 
Some of the measures in addressing the resource curse have focused on the strengthening 
of institutions related to governance (Karl, 1997; Robinson, Torvik & Verdier, 2006; Li, 
2013) “sufficient improvement in institutional quality turns resource abundance into an 
asset rather than a curse” (Botchini, Peterson & Roine, 2007, p.27–28). 
Li (2013), calls for strong democratic institutions that emphasize transparency and 
ensuring inter-generational justice. Karl (1997) in addition to democracy, emphasizes the 
need to strengthen our civil service by making it professional and reduction of corruption 
as the way forward to enhance development. Robinson, Torvik & Verdier (2006) on the 
other hand, propose that institutions that promote accountability and are strong as way to 
overcome the resource curse. 
 
2.3.6 Privatization 
Privatization of the extractive sector has been suggested as one of the ways in dealing with 
the resource curse (Ross, 2001; Palley, 2003). The privatization of the extractive industry 
would reduce the likelihood of rent seeking activities. However, Ross (2001) argues, that 
this method would not be appropriate for forest revenues. Palley (2003) notes that, 
although privatization is being encouraged as a way of dealing with the resource curse, its 
operations have been characterized with failures and in some cases; the industry has been 
captured by multi-nationals and can only be effective in countries with strong governance 
systems. 
 
2.3.7 Good financial management system 
Good financial management practices are one of the ways in which mineral wealth can be 
used to enhance development. Botswana’s fiscal and public financial management system 
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has been suggested as one model of best practice to follow in the management of mineral 
wealth (Sarraf & Jiwanji, 2001). Stevens & Dietsche (2008) adds that, the key to achieving 
this is through the development of a multi -year development plan. Spending should be 
based on development plans after it has been approved by parliament. Also, there should 
be an informal rule that spending should be used for investment. 
 
2.3.8 Transparency 
Making information on the amount derived from natural resource wealth known to the 
public has been proposed as an effective mechanism of dealing with the resource.  This 
has taken the form of Publish what you pay and Extractive Industry Transparency 
Initiative (EITI).  
 
Publish What You Pay 
Publishing what you pay helps to reduce corruption, promote growth and enhances 
transparency and accountability in the utilization of revenues (Li, 2013, Palley, 2003). 
However, the flaw is that, it focuses on publicly traded natural resource companies to the 
neglect of the non-traded or state owned natural resource companies (Palley, 2003).  
 
Extractive Industry Transparency Initiative (EITI) 
EITI has been initiated as one of the mediums to enhance transparency in natural resource 
wealth. This initiative was introduced in 2002 and unlike the publish what you pay, it 
covers all companies, central and local governments receipts of revenue generated from 
natural resource and how it has been utilized. However, this mechanism is a voluntary act 
and therefore joining EITI is at the discretion of countries. 
 
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2.3.9 History of mining in Ghana  
Ghana’s history of mining predates the fifteen century and even before the Europeans 
arrived in Ghana (Akabzaa & Daramani, 2001).  The minerals mined include gold, 
bauxite, diamonds, manganese, lime and salt but gold, bauxite, diamonds and manganese 
constitute the principal minerals extracted on large scale in Ghana (Akabzaa, 2009; Addy, 
1998). Gold has been mined several years ago but bauxite, diamond, and manganese were 
discovered in the 19th century (Addy, 1998). The discovery of bauxite and manganese in 
Ghana was due to British interest in the rich mineral resources of Ghana (Akabzaa & 
Daramani, 2001).  
 
When the Portuguese arrived in the gold coast, mining was basically undertaken in 
rudimentary forms. Gold was being extracted from beach and streams; it was in the 18th 
century that the strategy for extraction changed to alluvial mining and auriferous lodes 
(Allen, 1958). During this era, chiefs exhibited strong influence on the mineral rich 
resources because of the mandate they had in the control of land. Although the colonialist 
expressed their interest in mining activities, production was difficult because of poor 
infrastructure (Allen, 1958).  
Mineral production between 1480 and 1954 was made up of two major booms in 
production output called the “Jungle Booms” and three periods of very low output of 
minerals, as a result of various reasons amongst these was influence of world war two 
(Akabzaa & Daramani, 2001). In 1901 and 1902, there was a major boom in gold 
production in the gold coast. According to Allen (1958), during this period there was a 
discovery that the reef in Tarkwa was the same as that of South Africa. This discovery led 
to three key events, that is, the establishment of the railway, the ending of the Ashanti war 
in 1901 and the ending of the Boer War in South Africa leading to a diversion of capital 
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from that country. The Europeans invested significantly in the region as hundreds of 
buyers applied for land concessions and gold production soared by 400% (Hilson, 2002). 
The period also witnessed the formation of about 400 companies. However, only few of 
these companies began serious exploration and production (Allen 1958). After declining 
gold production to 167,115 Oz in 1928–1929, the period of 1933-34 was characterised by 
a gold boom as gold production increased by (100%), that is, 336,065 Oz (Hilson, 2002). 
However, reduced gold production was as a result of scarcity of labour which was caused 
by booming cocoa industries, the sprouting of bauxite and manganese mines and the desire 
for most Ghanaians to work on their own mines (Akabzaa & Daramani, 2001). In 1932, 
the mercury ordinance law was enacted due to British mining interest. This was because of 
the unwillingness of Ghanaian’s to work for the Europeans around the late 1920s and early 
1930s (Hilson, 2002). The ordinance did not only lead to the ban of Small Scale mining 
but, affected the production of gold and the authorities of chiefs. Production output of 
large scale mines increased from 1933-1942 as labour supply for large scale mining 
increased due to free labour from small scale mining as a result of the mercury ordinance 
(Akabzaa & Daramani, 2001). 
 
The period of between 1943 through to the 1980s was marked by decline in the production 
of minerals. By 1950-51, gold output was two thirds of the production output ten years 
earlier and out of the 50 gold mining companies in operation only 11 of them were in 
operation (Hilson, 2002). The general decline from 1943 to 1954 was attributed to the 
expansion of gold production in other countries and the fight for independence which 
created an investor unfriendly environment (Akabzaa & Daramani, 2001). However, the 
decline worsened as Ghana obtained independence in 1957 (Hilson, 2002). After just one 
year of independence a commission of enquiry was setup to enquire of the following: 
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(a) "The terms under which [mineral and timber rights] are at present held with a view to 
determining the consistency of... [the] agreements with equity and with the present 
profitability of these industries; and 
(b)... the existence of all unexploited concessions and ascertain when the concessionaires 
propose to begin working therein." (Boateng et al, 1961 as cited by Tsikata, 1997). The 
recommendations made by the commission informed the mineral policy that was 
formulated in 1962. In the Minerals Act of 1962, the state became owner of minerals in 
the ground of minerals as the act (l) put the ownership of minerals in "the President on 
behalf of the Republic and in trust for the People of Ghana" (Section 1); (2) the 
Commission's recommendations were applied in terms of strengthening the area and 
duration limitation as pertained to mineral rights; and (3) it gave power to the President to 
sell to any state agency minerals produced in Ghana at an agreed price under the auspices 
of the High Court. The Concessions Act 1962 (Act 124) led to the establishment of a 
tribunal and gave power to the Minister assigned responsibility by the President to apply 
to it to determine a concession in respect of which: (1) the holder mineral rights 
irrationally decides not to change a term which has "become oppressive by reason of a 
change in economic conditions" (Section 3(1)(c)); (2) the holder "has lost the financial 
ability to develop" [it] (Section 3(1)(d)) or (3) "the land specified.., has not been 
developed or used in accordance with the object for which the concession was granted 
during the eight years preceding the.., application of the Minister" (Section 3(1)(e)). 
After independence, Ghana under the leadership of Nkrumah developed a centrally 
planned economy (Addy, 1998). This period was characterised by the nationalization of 
enterprises including the mineral industry. The state was made the major shareholder 
(55%) in mines, in which it had little or no shares at all and this led to the registration of 
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Ashanti Gold Fields Corporation, Ghana Consolidated Diamonds, Ghana Bauxite 
Company and the Ghana Manganese Company under the Companies Code of Act 179. 
This was geared towards the “protection of employment and the access to foreign 
currency” (Tsikata, 1997, p.10). However, in the 1980’s the Ghanaian economy was 
experiencing a serious economic decline that affected all areas of the economy including 
the mining sector (Tsikata, 1997; Addy, 1998). Addy (1998, p.230) was of the view that 
this was due to implementing bad policies as decline was envisaged in “gross capital 
formation, public savings, trade, inflation, gross domestic product and government 
revenue and expenditure”. Hilson (2004) considered the decline in economy as result of 
inefficient management of the economy and corruption. Addy (1998), however looks at 
the causes of the economic decline from two dimensions, that is, internally and externally. 
Internally, development policies were marked by large budget deficits which were 
financed by money creation, the devaluation of and revaluation of the currency, deficit 
financing and overvalued currency. Externally it was caused by rising oil prices and 
falling prices of gold, cocoa manganese and droughts in the 1970’s and 1980’s and the 
deportation of millions of Ghanaians from other countries in 1983. The sector was 
characterised with general decline of output, after independence which became severe in 
the mid 1970’s. In view of this, after major production booms in the 1960s, gold output 
fell to 5.97 million Oz and 3 million Oz in the 1970s and 1980s respectively (Akabzaa & 
Daramani, 2001). In the Structural Adjustment report from the Bretton woods institution 
the reasons for the decline in the mining sector output were  “lack of foreign exchange to 
maintain and rehabilitate the mines; lack of capital investment for mining skills; 
infrastructure deterioration, particularly shortages of rail capacity for manganese and 
bauxite; mining company financial problems due to the greatly over-valued currency and 
spiralling inflation; a declining grade of gold ore; the exhaustion of high grade manganese 
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ore; the depletion of the more lucrative diamond mines in many areas; high absenteeism 
and low worker discipline; and pilfering, illegal panning and smuggling of gold and 
diamonds” (World Bank, 1992, pp 34).  
Additionally, state-owned mining enterprises were undercapitalised and became 
progressively outdated. “Lack of investment, maintenance and modernisation left these 
state-run mines uncompetitive”. Apart from AGC and GNMC, which made profits, the 
SGMC and BAC made losses, this led to the closure of Bibiani and Konongo mines by 
SGMC because they also made losses (Akabzaa & Daramani, 2001, p.11). 
 
2.4  Adoption of the Structural Adjustment Programme (SAP) and mining in Ghana 
In view of the decline, the government of Ghana adopted the SAP from the Bretton woods 
institution in exchange for help of the dying economy in April 1983 (Tsikata, 1997; 
Awudi, 2002). The objective of the SAP was to give incentives to the producers, 
rehabilitate infrastructure, reduce inflation and promote constant economic growth while 
promoting export and private investments were envisaged as the key drivers to economic 
growth and employment opportunities (Awudi, 2002).  
As part of the general economic reforms under the SAP, the mining sector was given 
particular attention as specific policies were crafted to make the sector more vibrant. The 
mining sector reforms under the SAP led to a birth of a New Mineral and Mining Laws 
under the PNDC LAW 153 in 1986 which still vested the minerals in the ground to the 
state, income taxes and the rate of mining operations was significantly reduced, the royalty 
rate was revised, shareholders in the mining companies were not allowed to pay tax on 
their dividends, no charges for imported capital equipment’s for mining activities and 
importantly companies were allowed to keep a portion of their foreign exchange offshore 
for transactions that were relevant to the mineral sector (Awudi, 2002; Tsikata, 1997 ).  
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The mining laws and policies during the Economic Recovery Programme were generally 
aimed at making the sector liberal in order to attract foreign investors for the exploration 
and the extraction of minerals in the mineral sector (Hilson, 2004; Tawiah, 2011). In order 
to make the sector attractive, the PNDC government adopted a privatization policy of state 
owned enterprises through the use of a divestiture implementation committee as private 
investment was viewed, as one of the key drivers that could boost the economy and 
enhance job creation (Awudi, 2002). For instance, corporate income tax, which stood at 50 
– 55% in 1975, was cut to 45% in 1986 and further reduced to 35% in 1994. The Mineral 
duty, import duty and Foreign Exchange Tax at 5%, (5 – 35%) and (33 – 75%) 
respectively were all scrapped off although they contributed significantly to the revenue of 
government. In order to recover their capital expenditure, initial capital allowance  which 
stood at 20% in the first year of production and 15% for subsequent annual allowances in 
1975  was increased to 75%  and 50% in first year of operation and for subsequent annual 
allowances respectively in 1986 (Akabzaa & Daramani, 2001). In addition, mining 
companies enjoyed exemptions from the payment of customs import duties on plant, 
machinery equipment and accessories imported for use in mining. The staff of mining 
companies also enjoyed tax exemptions in the form of the payment of income tax related 
to furnished accommodation at the mine site. Generally, those consumable items that are 
produced domestically are intended to attract full import duties if bought from another 
country (Tsikata, 1997). This policy in particular had the objective of reducing the 
preliminary capital cost of mining projects and thus enhance investments into the sector 
while with consumable items, the concern was to secure the market of domestic 
producers’ influenced this policy. Most significantly, companies were allowed by the 
Bank of Ghana to keep a minimum of 25% of their foreign exchange earnings off shore 
for the purpose of “buying equipment, spare parts, and raw materials” and for dividend 
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payment and fee in respect of goods for expatriate personnel, among others. “The Bank of 
Ghana also guarantees the holder of a mining lease the ability to convert cedis to US 
dollars for the purposes of sharing of either dividends or net profit resulting from 
investment made in Ghana with a convertible currency” in addition to the law (Awudi, 
2002; Tsikata, 1997; Akabzaa & Daramani, 2001).  
Mining companies were sold with a government share of between 10%-20%, however the 
Ghana consolidated diamond company was not sold (Tsikata, 1997). In 1989, the Small 
Scale Mining law (PNDCL 218), the Mercury Law (PNDCL 217), and the Precious 
Marketing Mineral Corporation law (PNDCL 219) were passed in order to regularize 
small scale mining. The legalization of small scale mining in 1989 embodied the 
following: 
1. The registration of persons into small scale mining in the districts in which they are 
located.  
2. Granting gold mining licenses to individuals or groups within a period of three to 
five years, based on the size of the group. 
3. Giving permit to customers to buy extracted gold.  
4. Establishment of districts centres to supervise and monitor mining activities in the 
districts by people who are technically equipped. 
The mercury law legalised the use of mercury in small scale mining while the precious 
mineral and marketing company was established to buy and sell gold (Tsikata, 1997). This 
means that the ordinance of 1933 which banned the use of mercury in small scale mining 
was repealed in 1989. 
Policies relating to the environment were not of  major concern during the 1980’s and 
1990’s, but the conditions for borrowing of major mining companies and the 
environmental effects of mining activities necessitated that the environment should be 
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given attention (Addy, 1998; Tsikata, 1997). This led to an on-going environmental action 
plan in 1990 which was shortly followed with setting up of the Environmental Protection 
Agency in 1994 but before that, the Minerals Development Fund was set up in 1992 as a 
way of recycling mineral royalties to mining communities and mining sector institutions. 
Looking at the time in which the mineral fund was set up, environmental effects of mining 
and the general reform in the industry as a result of SAP could partly explain the 
establishment of the fund. 
 
2.4.1 Minerals and Mining Act, Act 703, 2006 
After several years of the enforcement of the Minerals and Mining Law PNDCL 153 of 
1986 concerns began to emerge about its effectiveness and its standing in relation to 
international standards particularly by the World Bank Group (Akabzaa, 2009). The 
mineral policy of 1986 was criticised by several stakeholders on its impact on the 
economy, on the environment and its benefits to the local people especially for mining 
communities. 
Koranteng (2005) noted that, the main aim of the mining and mineral policy was skewed 
towards the protection of the interest of investors, while the protection of the environment 
and community rights has been fluid as the policies of 1986 enhanced investor interest.  
For instance there were continuous complains by local communities near mining projects 
about how mining had negative environmental and social impacts on their lives (Gavin et 
al, 2009; Garg, Huang & Cicero, 2010). The attraction of FDI was accompanied with new 
forms of technology. Underground mining which was previously practiced by large scale 
state owned mines was replaced by surface mining (Tsuma, 2010). This technology 
required that large tracts of land be acquired for mining activities which meant that, 
indigenous communities have to give their lands out to mining companies. For instance in 
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tarkwa, 70% of the land has been taken over by mining activities (Akabzaa & Daramani, 
2001). Some of the effects of the introduction of these new technologies are: conflicts 
between mining communities and mining companies in relation to community 
resettlement, relocation schemes and compensation for damages caused including land and 
houses, intense clashes between mining companies and small scale miners over land space 
as they were unhappy with the three to five years of the duration of their mining leases and 
the pollution of water bodies, the air and land degradation (Akabzaa & Daramani, 2001; 
Awudi, 2002;  Akabzaa, 2009). After several consultations with various stakeholders, the 
Minerals and Mining Act of 703 of 2006 was formulated to replace the Minerals and 
Mining Law, 1986 (PNDCL 153). 
Even after the adoption of the Minerals and Mining Act of 703 of 2006, compensating 
those whose lands have taken over by mining companies is still a major issue. According 
to the Garg, Huang & Cicero (2010), those who need to be compensated are compensated 
in part or not compensated at all. Although the mineral codes require that compensation be 
given to land acquired for concession in addition to crops on farm lands, compensation is 
only given for crops and buildings on the land. In addition to this, compensation given for 
crops on the land tend to very low compared to the required amount of compensation. In a 
study in the Wassa west district, the Land Valuation Board valued a mature cocoa tree at 
12 Ghana Cedis (about US$8.40) and an oil palm for 8 GHC a tree (about US$5.60). 
However, one of the farmer was of the view that ‘the calculation of compensation usually 
does not take into account the investment cost as well as the lost returns from tree crops 
over several years’ (Tabazuing et al, 2012).  While Tabazuing et al (2012) was of the view 
that poor compensation was due to the lack of knowledge of the mining codes related to 
compensation, Garg, Huang & Cicero (2010) intimated that, this was due to “uneven 
bargaining power between farmers and the mining companies, lack of information, and the 
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inability to seek remedies through the judicial system”. Poor compensation has not only 
led to conflicts in mining areas but has also deepened poverty trap, led to mistrust of their 
local leaders in these areas as most of the residents in the areas feel that their leaders tend 
to act as adjunct of the mining companies and hence an embodiment of corruption (HRC, 
2010; Standing & Hilson, 2013). These issues tend to enforce the claim that knowledge 
and power relations are a strong factor in determining the extent to which stakeholders 
interests are met in social relationships. Additionally, the problem associated with non-
compliance with compensation requirements under the mining codes exhibit the problem 
of weak capacity at the local government level in Ghana. 
 
Under the Minerals and Mining Act, 2006 (Act 703) “Mineral resources belong to the 
Ghanaian people in common, and their stewardship is entrusted to the President in 
accordance with the governing provisions of the Constitution” Under that legislation, “the 
Minister responsible for mining retains responsibility for the overall management of 
Ghana’s mineral resources and policy-making, including the grant of mineral rights” 
(Draft national mining policy, 2010, p.12). Additionally, the fiscal regime defined by the 
new mining law still kept the provisions for corporate income taxes, dividend withholding 
taxes, capital gain taxes and royalties as in the previous law, but removed the additional 
profit tax provided for in the previous legislation. 
 
2.4.2 Distributing mineral revenues at the local level 
In order to lay the foundation for assessing how mineral revenues are used at the local 
level, this segment provides a brief description of the MDF and the main local institutions 
(chieftaincy institution and the local government structure) involved in the distribution of 
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mineral revenues, how they have utilized mineral revenues and the challenges that hinder 
the effective utilization of the fund.  
 
2.4.3 History of the Mineral Development Fund (MDF) 
The MDF was set up in 1992 by an executive fiat committee as a result of the negative 
impact of mining activities on the environment. The committee realized that mining led to 
the pollution of air as a result of blasting in the mining process and contamination of water 
and streams resulting in destruction of aquatic life and source of drinking water, land 
degradation, loss of farm lands and the creation of pits in mining areas among others. The 
MDF was therefore put in place to mitigate the harmful effects of mining activities in 
mining areas. 
The MDF is sponsored from mineral royalties collected from mining companies. Mineral 
royalty is one of the sources of income to the government from the mineral sector. Its 
percentage of calculation has evolved overtime. The mineral royalty payments have been 
pegged at 5%. 
Under the current system of the administration of mineral royalties, 80% of royalties is 
transferred to the consolidated fund and the 20% is transferred to The Mineral 
Development Fund (MDF). 10% of the MDF is used to support government agencies in 
the mining sector and the other 10% is disbursed to the administrator of the office of stool 
lands. The administrator of stool lands keeps 10% of the 10% received for administrative 
purposes and distributes the rest of the money in the following proportion: 55% to District 
Assemblies, 25% to stools and 20% to Traditional Authorities. The proportion given to the 
district assemblies is supposed to be used in mitigating the negative effects of mining in 
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their communities (Akabzaa, 2009).  In order to mitigate the effects of mining on mining 
areas, District Assemblies are supposed to: 
•  Identify the harmful effects of mining through the conduction of needs assessment 
with the residents of the area. 
• Develop specific strategies in the form action plans. 
• The implementation of strategies by using the fund to implement the specific plans 
or activities that have been targeted (GOG, 2013). 
 
2.4.4 The Chieftaincy institution in Ghana 
The chieftaincy institution is one of the traditional institutions found in Ghana and it is an 
important agent associated with local political and economic decision-making in Ghana 
(Higazi, 2004). The chieftaincy institution is not a uniform one. There are broad 
differences in terms of their matrilineal and patrilineal chiefly lineages, their chiefly 
functions and the social organizations of stools and their power (Higazi, 2004; Fox et al, 
2011). For instance, the Asantehene (Ashanti King) is very powerful and sits on top of a 
rigid chieftaincy hierarchy while in other parts of the country, chiefs wield lesser power 
associated with weak hierarchies (Fox et al, 2011). Crook (2005) notes that while control 
of land in some southern part of the country is controlled by chiefs in the northern region. 
This is controlled by the land priest (tidaana). 
Since independence, the role of traditional authorities in the state has been characterised 
by several transformations as a result of constitutional changes, however, these changes 
have led to the reduction of the authority of chiefs (Higazi, 2004). According to Garg, 
Huang & Cicero (2010), the changes in their functions have been motivated by two main 
factors. The first factor is western colonization and the second factor is the attainment of 
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independence and politicization. Prior to western colonization, the chiefs were responsible 
for all arms of government including the military which was removed by the colonial 
government. While the 1957 Constitution kept one-third membership of local 
governments for chiefs, consecutive changes of the Constitution (such as the 1988 and 
presently in force 1992 Constitutions) never did. The CPP under the leadership of Dr 
Kwame Nkrumah in particular sought to reduce the power of chiefs, especially in the 
Ashanti region. This became successful through several constitutional changes which 
ended up giving the government control over areas which were formally under the control 
of traditional authority. (Higazi, 2004). The chieftaincy institution was seen as a major 
barrier to the advancement of the political agenda of the CPP government. Currently, the 
chief’s role is centred on the control of land, development and the settlement of disputes 
within their jurisdiction. Crook (2005) notes that these changes have reduced the formal 
governmental, judicial and land-revenue management responsibilities they had during the 
colonial times. Although their power has been reduced, the chieftaincy institution is very 
important in our societies today due to economic, political and social factors. Crook (2005, 
p. 2) intimated. This can be seen in their 
1. “Control over land. Most land holders in Ghana hold their land through forms 
of customary tenure.; access to, and use of, land is still controlled or managed 
in practice (even if not legally) by chiefs, family heads or in the northern 
regions ‘tindaana'. In the big cities of the south, such as Kumasi and Accra, this 
has become an especially important source of chiefly power, and it is also 
highly significant in peri-urban and commercial farming areas (e.g. cocoa 
land). 
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2. Family wealth. The most prominent chiefs of the larger pre-colonial states 
amassed a lot of wealth. This led to the creation new traditional elite during the 
colonial period, creating empires of wealth and influence 
3. Cultural leadership. Chiefs and other traditional leaders personify deep cultural 
values and practices. For example the cult of ancestors, fertility of the land, 
taboos and festivals among others.  
4. Political representation of the community and community identity. This role 
has led to the frequent participation of chiefs in party politics either as agents 
who mobilise support, or as influential actors in their own right. 
5. Duty to work for the progress of the community. The material progress of a 
community, and the maintenance of its peace and unity, is seen as the major 
duties of a chief. This is embodied, where a community is united, in the chief’s 
role as symbolic leader and patron of development/youth/ hometown 
associations”. 
Similarly, Fox et al (2011, p.9) states in the Ghana Democracy and Governance 
Assessment that “while the constitution clearly limits the powers of the chief to control 
over land and settling civil disputes within their community, their powers extend far 
beyond these realms for two main reasons. First, because the Constitution recognizes the 
institution of the Chieftaincy, it legitimates colonial and pre-colonial forms of governance 
that placed the chiefs as the ruler of his (and occasionally her) subjects. Second, because 
state capacity is weak in many parts of the country, by recognizing the importance of the 
chief, the government, in effect, has created a substitute for governance by the state in 
these parts of the country.” These arguments strongly depict the resilience of the 
chieftaincy institution in our modern societies.  
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2.4.5 Chiefs and Mining 
Chiefs played an important role in mining during its early stages. They acted as custodians 
of resources and care takers of the rich gold because of the mandate they had to rule and 
control labour at the time (Tsuma, 2010). According to Anin (1990), chiefs were entitled 
to one third of the gold won if mining was undertaken on their lands. In addition to that, 
due to the use of gold in the dressing and the customary traditions of the chieftaincy 
institution, chiefs exercised control of mining activities especially if it took place within 
their land (Mackay & Schnellmann, 1987). Chiefs did not only regulate the activities of 
mining in their land, they were also involved in the production of minerals during the pre-
colonial times. With the arrival of the British in Ghana, their interest in the mineral 
resources in the Gold Coast meant that they had to acquire lands, weaken the chieftaincy 
institution and take control of labour (Terray, 1974, cited in Tsuma, 2010). The key 
strategy used was the enactments of the mercury ordinance of 1933 which did not only 
make small scale mining illegal but also brought some hindrances in the trading activities 
of gold. However, there have been debates about the implication of the ordinance on the 
power of the chiefs. Terray (1974), argued that the ordinance curtailed the power of chiefs 
as the British were able to get access to mineral rich resource land as it was around the 
same period that the divide and rule approach was introduced. Berry (2001) on the other 
hand argues that, the ordinance of 1933 did not in particular weaken the chieftaincy 
institution as those who were co-opted by the British enjoyed tremendous power.  
 
After independence, the mining legislation made the President the owner and custodian of 
all mineral wealth. This meant that, the power which chiefs enjoyed during the pre-
colonial period as custodians of land and care takers of the mineral rich resources were 
scrapped off. The SAPs reforms which led to the influx of multinational companies in 
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mining regions also further reduced the role of the chiefs. This was because the influx of 
multinational companies was associated with new technologies. Multinationals mining 
companies moved from underground mining which, was practiced by the State Mining 
Institutions to surface mining which involved the acquisition of wide tracts of land. Due to 
this, communities had to be relocated and this was undertaken by multinational mining 
companies and the Government to the neglect of community members and chiefs (Tsuma, 
2010). 
 
2.4.6 Chiefs and the use of the Mineral Development Fund 
In accordance with the current distribution of mineral royalties, traditional authorities are 
entitled to 45% of the mineral royalties sent to the local communities of mining areas for 
development purposes.  Complaints have shown that chiefs use mineral royalties for 
private purposes other than those that benefit the entire community.  For instance in 2008 
a study on human rights and mining showed that communities that are directly affected by 
mining activities were not the beneficiaries’ of mineral royalties and where the residents 
have knowledge about the existence of the facility, they claimed its being utilised by only 
the chief. This situation has been traced to a number of issues in our traditional set up and 
the way the fund has been created. In a report by the ICMM (2007, p.77), this has been 
attributed partly to the genuine uncertainty about the appropriate purpose of the use of the 
fund. In addition to this, Hilson & Standing (2013) also made the point that this problem 
has been as result of the inability of the Ghanaian Constitution to state clearly the role of 
chiefs in political processes at the local level. The precise definition of the word stool has 
been one of contestation. While the ‘status’ of the stool should mean for the entire welfare 
of the residents they stand for and not the personal use of the chief, some chiefs are in 
objection to this assertion (ICMM, 2007). According to Opoku (2006), the personal use of 
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mineral royalties by chiefs has been understood as the maintenance of stools. For instance 
in the ICMM report (2007, p77-8) ‘the wording – “Stool Land revenues are to be used to 
maintain the stool in keeping with its status has been interpreted as meaning that it is 
legitimate to pay for regalia and the trappings of royalty – limousines, jewellery and 
ceremony. This interpretation is in contrast to the expectations of the subjects of the stools, 
who presume that these funds are to be applied primarily to development projects” 
Additionally, traditional rulers, particularly chiefs who are entitled to a share of mineral 
royalties claim that they are not given a fair share and have been the reason why they have 
not been able to commit their share or royalty payment to development projects (Akabzaa, 
2009). 
These notwithstanding, there has been some challenges associated with the use of the 
fund. It was found that there are no accountability mechanisms for the use of the MDF for 
traditional councils and stools. According to the ICMM report 2007 they are not required 
to publicly give financial statements, nor do they have oversight bodies like the “Internal 
Audit Department, the Ministry of Local Government or even the Office of the Auditor 
General”. The flow of funds to traditional authorities seems not to be consistent between 
the traditional councils and between the stools. For instance, although the traditional 
councils’ had 19 per cent of the total share in 2000, in 2004 this changed to 36 % of the 
total share (ICMM, 2007). There have also been reports by residents that some chiefs 
connive with companies to even act against the interest of the people they are supposed to 
stand in for (Garg, Huang & Cicero, 2010; Standing & Hilson, 2013) 
2.5 District Assemblies 
Apart from the traditional authority at local level, District Assemblies (DA’S) have been 
created at the local level as formal institutions responsible for development. As part of our 
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decentralization process, DA’S were created in 1988 by the Provisional National Defence 
Council (PNDC) government. The main aim of the decentralization policy in Ghana was 
to enhance the development prospects of the nation and to provide a more participatory 
framework for decision making, hence development.  
 
2.5.1 The Local Government Structure 
The local government structure of Ghana is made of the Metropolitan Assembly, 
Municipal Assembly and District Assemblies (MMDAS). They oversee town councils, 
zonal council and unit committees. The MMDAS are headed by the regional coordinating 
council.  
 
 
  
  
  
 
 
 
 
Figure 2.1: The Local Government Structure 
Source: Ahwoi, K. (2010) 
 
 
Regional Co-coordinating Councils  
Metropolitan Assemblies  
 
Sub-Metropolitan District 
Councils Zonal Councils  
 
 
Town councils 
Unit Committees 
 
Municipal Assemblies  
 
District Assemblies  
 
Urban/Town/Area 
Councils  
 
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2.5.2 Finances of local government  
Financial resources are very important in the management and effective implementation of 
programs in any organization. In view of this, the government of Ghana has provided the 
legal framework through which finances at the District level would be managed. The 
source of funding for MMDAS is both from central government transfers and internally 
generated funds from the MMDAS themselves. However, their major funding comes from 
central government transfers through the District Assemblies Common Fund (DACF), 
administered by the Ministry of Local Government and Rural Development in Accra. The 
finances from DACF are disbursed to the MMDAs through a pre-determined formula that 
takes into consideration factors as “service pressure and relative deprivation, and the 
ability to generate local revenue” (Higazi, 2004, p.14). 
 
2.5.3 MMDAS and the Use of the MDF 
There have been debates concerning the use of mineral royalties and funds at the district 
level. While district assemblies’ claim that royalties are used to finance administrative and 
development purposes, residents in mining communities claim that government officials 
‘are corrupt and tend to use the royalties for their personal gain’ (Taabazuing et al, 
2012:44; Standing & Hilson, 2013). Meaning local authorities are seen by residents as 
being corrupt generally. Corruption of Districts Assemblies and government institutions is 
a general perception among Ghanaians. However, there is some evidence to back this 
perception. According to Standing & Hilson (2013) the challenge of administrative 
corruption in district assemblies has been recorded for some time from 2001- 2004 
through the Ghana Anti-Corruption Coalition. The audits of District Assemblies brought 
to bear  many financial discrepancies such as: “misappropriation of revenue; a lack of 
proper audits of accounts of revenue collectors; an absence of receipts, invoices and 
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expenditure documents; contract irregularities, inadequate tendering processes; payments 
being made for no work, and unearned salaries; and a failure to ensure the timely deletion 
of names of former staff from the payroll which led to payments of unearned salaries” 
(Boachie-Danquah, 2011 as cited by Standing & Hilson, 2013,p.9). Additionally, the EITI 
reports of (2010) claim that only two Districts had a mechanism for accounting for the 
MDF while that of 2013 revealed that a significant portion of the funds are used for waste 
management especially for OMA. 30% and 40% of the funds were used for waste 
management in 2010 and 2011 respectively. In an audit of the Obuasi Municipal 
Assembly (OMA), Tarkwa Nsuaem Municipal Assembly (TNMA) and Prestea Huni 
Valley District Assembly (PHDA) for the period of 2004-2009, it was found that out of 
6.74 million Ghana cedis received only 0.96 million (14.24%) of the expenditure focused 
on health, water, sanitation, waste management, land degradation and alternative sources 
of livelihoods were areas directly related to mining effects (GOG, 2013). In areas where 
development projects have been undertaken, residents claim that these projects have been 
undertaken in the urban areas to the neglect of the periphery where mining activities took 
place. Residents’ claim that projects that are undertaken are not publicised (Taabazuing et 
al, 2012). This is similar to findings by Hansen & Treue (2009) (as cited in Marfo et al, 
2012) that projects undertaken by District Assemblies with forest revenues did not give 
communities where the revenues came from priority. This presupposes that there is little 
or no involvement of the residents in the decisions relating to the use of the mineral 
royalties at the District level, hence, their general perception of the misuse of funds by 
their leaders.  
According to Standing & Hilson (2013) the poor management of this fund has led to poor 
economic and social development in mining areas as well as factions and mistrust between 
communities and their leaders (traditional authorities and local government). In addition to 
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this, residents in mining communities tend to place more demand on mining companies. 
On the contrary, mining companies also expect that the royalties paid to the government 
would be used for the development of the community. For instance, a representative from 
one mining company argued that ‘we are doing our best to help the communities and we 
pay royalties to the Ghana government and we hope this is used to develop these 
communities’ (Taabazuing et al, 2012, p.44). 
There are some challenges associated with the use of the fund at the local government 
level. There seems to be year to year fluctuations in the amount received from the fund 
and delays in the disbursement process to Districts which tend to affect the ability of 
district assemblies to be able to plan effectively. The ICMM (2007) report outlined the key 
challenges associated with the fund. First and foremost the unpredictable nature of the 
fund tend to make it difficult for districts to plan for a long term. Secondly, in some areas 
such as Bibiani and Akim North the MDF distributed to the districts are very small and 
this tend to affect the ability of the assemblies to use the MDF for any meaningful purpose 
as envisaged. Thirdly, there tend to be a disjoint about the capacity (human and financial) 
and the needs of the community. 
 
2.5.4 Challenges Associated With the use of the MDF in Ghana  
Establishment of mineral funds has been used by some mineral rich developing countries 
as one of the ways of dealing with the resource curse in their countries (Weinthal & 
Luong, 2006). Mineral Development Funds have been used by countries as a way of 
compensation, risk reduction and as form of payment of the owner of the minerals (Otto & 
Cordes, 2002). However, the operationalization of these funds is associated with some 
challenges that has led to its misapplication. 
 
 
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No legal backing  
One of the main challenges in the utilization of the MDF is that there is no legal 
framework in place that guides how the MDF should be administered. It is therefore vague 
on what the objectives of the fund are and how decisions on funding are to be made. Due 
to its non-legal backing, revenues accrued to the fund have been sometimes lesser than the 
10% that is distributed to the mining communities and it is very difficult to enforce 
payments of the MDF (Hilson & Standing, 2013, Morghandi, 2008). According to a study 
done by the International Council on Mining and Metals (2007), in 2001 there was no 
disbursement of the fund because the fund had no legal backing. It was after further 
consideration that disbursement was made to the fund.    
 
Poor accountability 
Another challenge has to do with poor accountability mechanisms. No procedures of 
accountability have been put in place to make sure that the funds are utilised properly 
especially for local traditional leaders. There is no mechanism to make sure traditional 
authorities report their expenditure to an oversight body (Morghandi, 2008).  In some 
instances, there have been collusion between the chiefs and companies which tend to 
negatively affect community interest (Standing, 2014). According to the EITI Reports in 
2007, there is poor record keeping of payment made by the office of the administrator of 
stool lands to District Assemblies, traditional rulers and stools and there is no separate 
account for the management of the funds and no significant attention given to the 
developments of projects. This may be partly due to the poor financial management 
practices found in the public sector institutions in Ghana. Marfo et al (2012) attribute the 
problem of poor accountability in the use of the fund to our constitutional provisions. In a 
study of the benefit sharing of forest revenue he notes that, although there is a 
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constitutional provision for the sharing of benefits among the District Assemblies and the 
chiefs, there is no provision made by the constitution as to the distribution and 
accountability of the revenues among stakeholders. This therefore leaves the decisions of 
the utilization of the forest revenues in the hands of the elites. The Auditor General’s 
report also noted that the administrative fiat that created the MDF did not establish an 
oversight body that would make sure that funds are utilized properly (GOG, 2013). 
Although GHEITI is working to ensure that there is transparency in the receipts and 
utilization of mineral revenues, its activities are only limited to the MMDAs while chiefs 
still exercise discretion in the use of the funds. Hilson & Standing (2013, p.13) noted that, 
EITI has limited its activities to ‘administrative dishonesty’ and overlooked the conflicts 
of interest that arise between chiefs and mining companies. They have argued that making 
information available is not the key to issue to address. Rather ‘the problem is one of 
agency and the inability of people to have influence through exit, voice or voting 
mechanisms’. 
 
Delays, erratic release of funds and year to year fluctuations 
Moreover, delays and inconsistency in the release of funds are other challenges in the 
implementation of the MDF. It appears that the disbursement of funds tend to be more 
consistent for Districts as compared to that of the stools and traditional councils. However 
the year to year fluctuation in the allocation of the funds is very large. The delays and the 
fluctuation in the funds received tend to have a negative effect on planning, expenditure 
and budgeting programs of District Assemblies (Morghandi, 2008). 
 
 
 
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Elite capture  
In addition to the above, mineral revenues are used by chiefs for their private use other 
than for the development of their communities. This has been attributed to the improper 
definition of the constitution about the meaning of the “stool” (Opoku, 2006; ICMM, 
2007, pp77). Due to the improper definition, the stool revenues have been understood by 
chiefs as means of keeping up with themselves while the subjects also have a different 
perception about the use of these revenue, that is, for development purposes in their 
communities (Standing & Hilson, 2013). For instance, in a study by Hansen & Treue, 
(2009) on forest revenue utilization, chiefs used their share for recurrent expenditure, land 
litigation and festivals and where projects were mentioned it focused mainly on the 
construction and rehabilitation of the chief s palace (as cited in Marfo et al, 2012). A study 
in Tarkwa, revealed that compensation, community development funds, corporate social 
responsibility tend to serve the interests of a minority group who act with an aim of 
controlling and gaining access of these resources at the expense of local communities 
(Tsuma, 2010). He adds that, this is because the framework to enhance the equitable 
sharing of benefits has rather fostered minority interest and have not dealt with the power 
dynamics found in mining areas. 
 
2.6 Theoretical Review 
This section examines some of the theories that try to explain why benefits from resource 
extraction are distributed unequally in the environment. Some of the theories that would 
be discussed in this section are the resource scarcity argument and the theory of political 
ecology. 
 
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2.6.1 Resource Scarcity Argument   
According to Homer-Dixon (1994), the reason for the unequal distribution of benefits is 
environmental scarcity which is as a result of environmental change, population increases 
and the unequal distribution of benefits. He defines environmental change as the depletion 
in the quantity or quality of resources (renewable and non- renewable). Population growth 
reduces the resources per capita by dividing the resources among a lot of people. Unequal 
distribution of benefits concentrates resources in the hands of few people at the expense of 
the majority. It further states depletion of resources can combine with population growth 
to cause unequal access to resources. This he termed resource capture. 
 
2.6.2 Theory of Political Ecology 
The theory of political ecology looks at how the relationships of power among political 
actors in a society impact on the distribution of common resources in the environment. 
Scholars argue that unequal levels of power among actors in society affect access, use and 
distribution of commonly owned resources in the natural environment (such as land, 
water, and minerals). 
However, common assumptions across the field give it relevance. Bryant & Bailey (1997, 
p.28) have developed three fundamental assumptions in practicing political ecology: 
“First, costs and benefits associated with environmental change are distributed unequally. 
Changes in the environment do not affect society in a homogenous way: political, social, 
and economic differences account for uneven distribution of costs and benefits. Political 
power plays an important role in such inequalities. 
Second, this unequal environmental distribution inevitably reinforces or reduces existing 
social and economic inequalities. In this assumption, political ecology runs into political 
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economies as any change in environmental conditions must affect the political and 
economic status quo. 
Third, the unequal distribution of costs and benefits and the reinforcing or reducing of pre-
existing inequalities holds political implications in terms of the altered power relationships 
that are produced” 
Political ecology proposes that mining activities creates a lot of actors with different 
interests sometimes conflicting and competing in the environment. The unequal 
distribution of benefits/ costs among actors is based on their relevant power. The 
distribution of benefits or exchange of costs within a given local context is as a result of 
unequal power relations between individual actors and not a product of the structures 
(norms, rules, laws) of resource exchange (Bryant, 1998; Walker, 1991). The unequal 
distribution of benefits is due to one’s social position, material wealth, family size, 
economic wealth, level of education among others 
According to Walker (1991), the interest of the actors involved, depends on the context in 
which they find themselves in. secondly, the cultural context (daily routines) would also 
determine an actor’s interest. The ability of an actor to break through the barriers posed by 
either competing interests or structures depends on the power they hold in relation to other 
actors within that context 
Definition 
Actors in my work would be defined to mean residents in mining affected communities, 
chiefs and the Obuasi Municipal Assembly 
2.6.3 Neopatrimonialism 
The term neopatrimonialism have been used by scholars to mean different things at a 
particular point in time. The concept of neopatrimonialism was used by Eisenstadt (1966) 
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to show the distinction between patrimonialism in the traditional and modern context. It 
was used by Roth (1968) as a synonym for personal rule. While in the 1970s 
“patrimonialism” was employed in terms of social capital as a way of explaining political  
cohesion in African societies (Theobald 1982: 55 5), today “neopatrimonialism” is 
regarded as dangerous to both the peaceful political development of African societies and 
the general society (Erdmann & Engel, 2007). “The terms patrimonialism and 
neopatrimonialism are commonly understood (with reference to Weber) to denote systems 
in which political relationships are mediated through, and maintained by, personal 
connections between leaders and subjects, or patrons and clients” (Pitcher, Moran & 
Johnston 2009, p.129). Many social scientists use the term to give a distinction between 
Weber’s legal rational authority which was imposed by colonialism to the personalistic 
authority characterized by corruption, patronage and clientelism as it existed in the past. 
The term patrimonialism has been used in different ways  
“(1) A set of social relations at either the community or nation-state level, mediated by 
personal loyalty and governed by bonds of dependence and subordination; 
(2) The rent-seeking behavior and personalist patterns of authority practiced by African 
leaders in selected country settings;  
(3) an economic logic distinguished by the continual blurring of public service and private 
gain, with serious implications for economic development; 
 (4) A characteristic regime type associated with most African countries not only during 
the period of one-party rule, but also in the present period of democratization” ( Pitcher, 
Moran, M. & Johnston, 2009, p. 131).  
Neopatrimonialism is one of the characteristics of African regimes. In such regimes 
instead of the chief executive to maintain power through law or ideology this is done 
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through patronage (Bratton & Van De Walle, 1994). The right to rule is based on the 
person rather than the office (Weber, 1968 as cited in Bratton & Van De Walle, 1994). In 
such societies, legal rational rules coexist side by side with personalistic forms of 
authority. Clapham (1985) definition of neopatrimonialism attests to this fact. He notes 
that neopatrimonialism is “a form of organization in which relationships of a broadly 
patrimonial type pervade a political and administrative system which is formally 
constructed on rational-legal lines. Officials hold positions in bureaucratic organizations 
with powers which are formally defined, but exercise those powers as a form of private 
property”. 
In a similar vein, Van De Walle, (1994: 131) neopatrimonialism “patrimonial logic 
coexists with the development of bureaucratic administration and at least the pretense of 
legal-rational forms of state legitimacy”   
Lemarchand & Keith Legg (1972) also conceptualize the term neopatrimonialism as 
clientelism which could take the form of feudal, patrimonial and industrial clientage. They 
view political clientelism as a personalized system which is made up of actors having 
unequal resources and mutually beneficial transactions that have political implications 
beyond their present relationship. These definitions suggest that personalism is a key 
feature of neopatrimonialism. Le Vine (1980:p. 666) notes that what is new about “neo-
patrimonial” regimes is the extent to which personalism plays an important role, which he 
attributes to imported “political structures, ideologies, and behaviors, as anything else”. 
“The essence of neopatrimonialism is the award by public officials of personal favors, 
both within the state (notably public sector jobs) and in society (for instance, licenses, 
contracts and projects)” (Bratton & Van De Walle, 1994,  p.458). The clients also in 
exchange for material wealth mobilize support for their patrons (Jeffries, 1989). Although 
neopatrimonialism is practiced in all states it is the bed rock of the African politics 
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(Bratton & Van De Walle, 1994). There are four types of political regime. These are 
personal dictatorship, military oligarchy, and plebiscitary and competitive one-party 
systems. This categorization is based on the support for the strong man and the extent of 
competition from political opponents (Bratton & Van De Walle, 1994). Neo patrimonial 
societies have been characterized by low saving due to the distributive pressures inherent 
in the system it does not encourage savings and investments, it rather promotes 
consumption (Lewis 1996). 
Bach (2011) notes that, there are two type of neopatrimonialism in Africa, that is, 
regulated neopatrimonialism and non-regulated neopatrimonialism. Regulated forms of 
neopatrimonialism have been usually associated with the introduction of a policy of ethno 
regional balance. Resources and prebends by the ruler are sometimes formalized and can 
take place on an inclusive base. Method for distribution focuses on redistribution and 
cooptation rather than on coercion. The unregulated, is a system where the personal rule 
and control of resources is characterized by an outburst of conflicts and consequent 
‘failure of institutionalization . . . and thus of the state’ (Me´dard, 1991: 339). 
From the above concepts, I define neopatrimonialism as a system of leadership in which 
resources are distributed based on personal ties such as membership to a group as opposed 
to the legal rules. Here, this kind of politics favors minority interest at the expense of the 
majority of the people. 
    
 
 
 
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2.6.4 Conceptual Framework 
 
  
 
 
 
  
  
   
  
 
 
Figure 2.2: Conceptual Framework                                     Source: from field work 
 
The establishment of the MDF in 1992 was influenced by certain factors that are worth 
noting. These are economic and environmental factors. Here the economic factors 
comprises of the expansion of mining activities, the increase in receipt of government 
revenue and the need to sustain the sector. The environmental factors that led to the 
establishment of the fund are the need to compensate those who bear the negative effects 
of mining, to compensate landowners and a shift from underground to surface mining. 
Mineral 
development fund 
(MDF) 
Uses  
Educational 
infrastructure 
Scholarship scheme  
Waste management 
Health 
General 
infrastructure 
Sanitation 
 
 
 
 
 
 
Effective Utilization 
Mitigate the negative 
effects of mining and 
enhance development 
in mining affected 
communities. 
Factors That Led To 
the Establishment of 
the MDF 
Economic 
Environmental 
 
 
 
Challenges  
No legal backing 
Absence of guidelines 
Delays 
Fluctuation 
Sharing of money according to 
ranks 
Weak Enforcement Mechanisms 
Insufficient money 
Poor accountability 
 
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However in the utilization of the MDF, there are certain challenges that hinder its effective 
utilization. These are no legal backing, absence of guidelines, delays in the receipt of fund, 
fluctuation, Chieftaincy dispute, sharing of money according to ranks among the chiefs, 
poor monitoring of projects, insufficient money, unawareness by the residents about the 
existence of the facility and poor accountability in the utilization of the fund. The absence 
of these challenges would lead to the effective utilization of the fund at the local level 
which would mitigate the negative effects of mining on residents and as well enhance 
development. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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CHAPTER THREE 
METHODOLOGY 
3.0 Introduction 
This chapter presents the methodology which details the research design, target 
population, sample size and sampling techniques, research instruments, data collection 
procedure and analysis of data used in determining the factors that led to the establishment 
of the MDF, its uses and the implementation challenges of the mineral development fund 
in the Obuasi Municipal Assembly. 
 
3.1 Research design 
According to Yin (1994) three conditions need to be considered in the choice of a research 
design. The nature of research questions posed, the degree of control over actual 
behavioural events and the extent to which one concentrates on current compared to 
historical events. The study adopted a case study qualitative approach in investigating the 
factors that led to the establishment of the fund, uses and challenges encountered in the 
use of funds in Obuasi Municipal Assembly. Qualitative research is a form of research that 
is concerned about developing explanations for social phenomenon and was used for the 
study because it helps one to understand opinions, beliefs and attitude of people in 
explaining social phenomenon (Trochim, 2006). The “how”, “what” and “why” nature of 
the questions also meant that qualitative research would be best for this study.  
 
According to Bogdan & Biklen (1997) Qualitative approach has some key characteristics 
that are worth noting. First, it has a focus on natural settings; secondly, data collected is 
descriptive; thirdly, there is an emphasis on process; fourthly, a concern with inductive 
analysis of data and fifthly concerned with the meanings respondents attach to a 
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phenomenon.  Although there are many strategies of enquiry in qualitative approach, this 
study employed a case study method of enquiry. This is because a case study method of 
enquiry enables the researcher to explore in depth “a program, an event, an activity, a 
process, or one or more individuals” (Creswell, 2003, p.15). A case study qualitative 
approach enabled the researcher to have a detailed understanding on the factors that led to 
the establishment of the MDF, how it has been utilised in OMA and chief and the 
challenges faced at the local level in the use of the fund for development and the extent to 
which they are held accountable in the use of the fund. 
 
3.2 Study Area  
The area that was used for the study was the Obuasi Municipal Assembly. The Obuasi 
Municipal Assembly is located in the Southern part of Ashanti Region and covers an area 
of about 162.4 square kilometres. The assembly shares borders with Adansi North District 
to the North, Adansi South to the East and South, Amansie Central District to the West 
(OMA, 2013). Obuasi, the capital of the Obuasi Municipal Assembly is located sixty-four 
(64) kilometres to the southwest of Kumasi. The Municipality has 63 Communities, 48 of 
which have populations above 5,000 thus making them urban settlements The population 
of the Municipality has been put at 168, 641 by the 2010 Population Census. It is projected 
to be 195,624 in 2014. It has a sex distribution of 52% female and 48% male. The annual 
growth rate in the Municipality is 4.0% which is relatively high as the result of large rush 
of people who come in search of jobs in the mining and related industries. It has been 
predicted that the current figure may rise due to increases in migration and attraction by 
the flourishing small scale mining (especially ‘galamsey’) and the mining services 
industry.  
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According to the 2010 Population and Housing Census, the population distribution of the 
Municipality is such that about 48% of the population are in the dependent age groups, 
that is, between 0-14 years and 60 years and above while the remaining 52% constitutes 
the potential labour force in the Municipality. The age-dependency ratio of about 1:1, 
which means that a person in the working age group takes care of himself/herself and an 
additional person. The relative large proportion of the children population of 43% is an 
indication to service providers such as the Municipal Assembly, NGOs, and CBOs to 
focus their development agenda to the provision of basic social infrastructure especially 
those the affect the development of children (OMA, 2013) . The composite budget of the 
OMA (2013) reveals that Obuasi is the home of one of the richest gold mines in the 
World. Mining and its related activities employ about 35% of the working population. 
Agriculture activities which are on small scale basis also employs about 25% of the 
working population, 25% of the population also engages in trading activities. Social 
services like water, electricity, hospital, roads and schools are generally available in the 
Municipal. The Obuasi Municipal was chosen because it produces bulk of the gold 
produced in Ghana and also receives significant amount of the Mineral Development Fund 
that is disbursed by the OASL to mining Districts in Ghana. 
 
3.3 Target population 
The Study population refers to aggregate of elements from which the sample is actually 
selected (Trochim, 2006).  The population for the study was chosen at both the national 
level and at the local level. At the national level, Minerals Commission (MC), office of the 
administrator of stool lands (OASL), ISODEC and Institute of Local Government Studies 
(ILGS) were the population for the study while at the local level, the population for the 
study was the Obuasi Municipal Assembly. At the national level, Office of the 
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Administrator of Stool Lands (OASL), the Minerals Commission (MC) and ISODEC and 
Institute of Local Government Studies (ILGS) were chosen because they play key roles in 
the mineral industry in Ghana.  The Obuasi Municipal Assembly (OMA) was chosen for 
the study because the Municipality contains a substantial number of large mines and is one 
of the Municipality that enjoys a significant amount of mineral royalties disbursed to 
District Assemblies apart from other central government transfers. Therefore, this study 
targeted the core members involved in the planning, disbursement of funds, development 
and the beneficiaries of the mineral royalties at the local level. These were the Planning 
Officers, Finance Officers, Budget Officers, Project Officers, Assembly Members, Chiefs 
and residents of the Obuasi Municipal Assembly.  
 
3.4 Sample Size  
Sampling is a procedure of choosing a subset of a population that characterizes the entire 
population so that one can acquire information in relation to the subject under study 
(Polite & Hunglier, 1995). A total of thirty (30) respondents were sampled for the study 
consisting of both male and females. Four (4) of the respondents were interviewed at the 
national level which was made up of an officer each from OASL, MC, ISODEC and 
ILGS. At the subnational level eleven (11) respondents were interviewed. This was made 
up of the Planning Officer, Budget Officer, two Finance Officers and four Assembly 
Members of mining affected communities. Three (3) focus group discussions (FGD’s) 
made up of five community members each were also held in three mining affected 
communities to solicit the views of residents. 
 
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3.4.1 Sampling Technique 
Nonprobability sampling was used for the study. This is a form of sampling that does not 
involve random selection. Non-probability sampling methods can be divided into quota 
sampling, heterogeneous sampling, snow balling sampling and purposive sampling. 
According to Miles & Huberman (1994) when conducting research it is not possible to 
study all dimensions of the work usually when conducting qualitative research, one 
generally selects a small group, in order to study the phenomenon deeply. The selection of 
respondents should be purposive rather than being random. The study employed purposive 
sampling methods. Purposive sampling is a sampling technique in which the researcher 
selects the sample with a purpose in mind, that is, the sample is selected based on certain 
characteristics that are relevant to the study (Trochim, 2006). This shows that with 
purposive sampling the researcher selects based on certain characteristic that are relevant 
to the study. 
The sample was selected based on certain particular characteristics. At the national level, 
respondents were key officials that were involved in the mining industry and had 
knowledge about the existence of the MDF. In the case of respondents in the Municipal 
Assembly, the respondents should be engaged in the planning, disbursement of funds and 
the development of the district. Community members and the chiefs were selected from 
the mining affected areas in the Obuasi Municipal Assembly (OMA). This was to ensure 
that the responses from the interview were relevant to the study and to make sure that the 
right kinds of respondents were spoken to.  
 
3.5 Sources of data 
Data for the study were collected using both primary and secondary sources. Malhotra 
(2007) opined that primary data are data originated by a researcher for the specific purpose 
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of addressing a research problem. Primary data was collected through the use of 
interviews and Focus Group Discussions (FGD’s). Secondary data on the other hand was 
collected through articles, reports, documents and financial statements of OMA. 
 
3.6 Data Collection Instrument 
There are so many forms of qualitative approaches that are used for collecting data under 
qualitative designs. The approaches may take the form observations, interviews, 
documentations and content analysis. Observations can take the form of direct observation 
and participant observation. Interviews on the other hand could take the form face to face 
interview, telephone and focus group discussion and it involves talking to people in a 
formal or conversational way. Documentation can take the form of external and internal  
analysis of documents such as memos, reports, newspaper articles, financial statement are 
used for collecting the data   (Bhatacherjee, 2012). 
However, the main data collection instruments that were used for the study were 
interviews (face to face interviews and focus group discussions).  Cooper (2005) defines a 
personal interview as a dialogue between the researcher and the respondent. Wood (2006)  
also opines that, if interviews are going to tap into the depths of reality of the situation and 
discover subjects meanings and understandings, it is vital for the researcher to first and 
foremost to identify with interviewees and win their confidence and secondly, to be 
modest in order not to influence the interviewee. An interview guide was used in order to 
capture relevant issues related to the study. The interview guide was a semi-structured one 
(that is both open ended and closed ended questions were used). The structure of the 
interview guide enabled the researcher to have a detailed understanding about the factors 
that led to the establishment of the fund, the uses of the fund and the implementation 
challenges at the local level in the disbursement and utilization of the funds and the extent 
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to which the DA’s and the chiefs are held accountable in the use of the fund. Gall, Borg & 
Gall (1996) note that open ended form of questions allows respondents to add information 
to the survey, whereas the closed ended questions make quantification and analysis of the 
results more manageable. Four (4) types of interview guides were used for the study, that 
is, one for the officers at the national level, one for the chiefs, one for the residents in three 
Mining Affected communities and one for the staff of the Obuasi Municipal Assembly.  
 
3.6.1 Face to face interviews 
Face to face interviews were held at the national and sub-national levels between the 
periods of 12th march to 31st march 2015. The interviews at the national level lasted 
between 25-32 minutes. In the OMA, interviews lasted between 9-20 minutes for 
Municipal Officers, between 5-18 minutes for Assembly Members and 5-15 minutes for 
Chiefs. Interviews at the national level were conducted in English. On the other hand, 
interviews held at the local level were conducted in both English and Akan language. This 
was because most of the residents were more fluent in the Akan language. 
 
3.6.2 Focus Group Discussions 
Focus group discussions (FGDs) were also used because it tends to enhance significant 
communication on given topics within a limited amount of time (Kidd & Parshall, 2000), 
enables you to know how society thinks and has the potential of showing how social 
processes are formed through debate and argument (Lunt & Livingstone ,1996). FGDs 
were used to collect data from the residents in the Municipal in order to know whether 
residents have knowledge about the utilization of mineral royalties in the Municipality. 
Three FGDs were held in three mining affected communities in the Obuasi Municipal A. 
These were Sanso, Ahansoyewodea and Binsere which lasted at an average 22 minutes for 
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the three communities. The Assembly Members of the communities mobilised the people 
for the FGD’s. FGD’s were conducted in the Akan language as most of the residents in the 
mining affected communities could not express themselves well in English. The focus 
group discussions were organized with the help of the Assembly Members in the three 
mining affected communities after interviews had been conducted with them in their 
communities. 
 
3.7 Ethical considerations 
Ethical considerations are very essential in data collection. Therefore, prior to data 
collection from the selected setting, ethical consent was sought from the institutions and 
individuals involved. Participants of the study were also ensured of confidentiality of the 
information provided and were allowed to take part in the study voluntarily after 
explanation of the study were made known to them. Data was also kept confidentially 
according to the provisions made by the school authorities. 
3.8 Data analysis 
Data were collected through the use of a recorder to enhance clarity when transcribing 
data. In order to enhance the safety of the data collected, data from the recorder were also 
stored on a memory stick. Data were analysed using descriptive statistics for the amount of 
money received from the fund. This was displayed using graphs, tables and charts. The 
rest of the data was transcribed, summarized, organized, coded and divided into themes for 
understanding. Interviews conducted in Akan language were translated during the 
transcription. 
 
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3.9 Challenges of the study 
Although the study wanted to look at how mineral royalties have been utilized by the 
OMA from the inception of the fund till date, reports on the utilization of mineral royalties 
covered from 2006 to 2012. 
At the time of the study, the main chiefs of Obuasi were not around. So the odikro’s, that 
is, the appointed chiefs of the various communities were the ones interviewed for the 
study. 
Due to financial and time constraints, the study was limited to only three mining affected 
communities.  
 
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CHAPTER FOUR 
DATA ANALYSIS AND DISCUSSIONS 
4.0 Introduction   
This section presents the data analysis and discussions on the factors that led to the 
establishment of the MDF, how much has been received as mineral royalties by the OMA 
from 2000-2012, utilization of mineral royalties by OMA from the year 2006-2012, 
utilization of mineral royalties by chiefs and perception of the residents on how mineral 
royalties received by chiefs are to be utilized.  
 
4.1 Factors that led to the establishment of the MDF 
This section focuses on objective one of the study, which seeks to explore the factors that 
led to the establishment of the MDF in Ghana.  Data collected on this objective have been 
analysed below. 
 
4.2 Economic Factors 
One factor that played a role in the establishment of the MDF is economic in nature. This 
manifested in the expansion of mining activities, the need to sustain the mineral sector and 
the fact that government was getting a lot of revenue from mining due to the expansion of 
mining activities. These key themes are explained below. 
 
4.2.1 Expansion of Mining Activities 
Expansion of mining activities played a major role in the establishment of the MDF. The 
intensity of mining activities in the early 1990’s made the negative effects of mining more 
pronounced thereby making the protestation and agitations from mining communities 
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more evident. Prior to the early 1990’s, the sector experienced a massive drop in the 
quantity of mineral produced. However, the SAP made the sector more liberal there by 
attracting a lot of foreign direct investment. This was also accompanied with the negative 
effects of mining, hence, the establishment of the MDF. A respondent from OASL opined 
that  
The expansion of mining activities influenced the establishment of the 
MDF, because then government was realizing a lot of revenue from mining, 
so it’s possible. In terms of the effect of mining those days (prior to the 
early 90’s) the negative effect of mining was not felt on a large scale as 
compared to the early 90’s because the mining companies were few 
(interview, 17th march, 2015) 
This partly explains why the MDF was established around the early 1990’s. Another 
respondent from ISODEC in explaining the factors that led to the establishment of the 
MDF revealed that 
The era of the 1980’s was characterised with the implementation of the 
SAP as a result of some 15 billion FDI from the IMF/ WB. If you attracting 
so much investment, the least you would want to do is to ensure that the 
people have a right or conducive environment to operate in, given the 
ascendency of protest within the mining communities (16th March , 2015) 
A respondent from LG also made the same assertion that the MDF was established in 
1992 because that period was marked with high levels of mining extraction activities due 
to the incentives introduced to make the sector liberal. The intensity of mining activities 
made the negative impacts of mining activities more obvious hence the need for a 
mechanism to address these problems. He said that 
The early 1990’s was one of the major periods where there was a boom in 
mining activities particularly gold. It was primarily because of the high 
point of the SAP in Ghana. When the programme began, the major area or 
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focus was the mining sector. Among other primary sector like cocoa and 
timber there was the conscious effort to liberalize and promote private 
sector in the mining sector.  To do that government deliberately provided a 
lot of incentives for private capital and protection for companies especially 
those that were coming outside the shores of Ghana. The main motivation 
was to get the foreigners to invest in the mining sector. The incentives and 
the instrument of protection attracted a lot of transnational capital to 
mining. The expansion of mining activities within the sector led to a lot of 
negative impacts here and there. I suspect that there was a need to respond 
to these challenge that could have been the reason why the MDF was 
established (interview, 19th March, 2015) 
 
4.2.2 Inflow of Mineral Revenues 
The expansion of mining activities also made it possible for the government at the time to 
earn substantial revenue from mining activities. Before the introduction of SAP, Ghana’s 
economy was performing very poorly and this affected the mineral output as well. The 
mineral sector in particular was undercapitalized outdated and lacked investment 
(Akabzaa & Daramani, 2001). So the government gave the mining sector attention as they 
signed on to the SAP. Due to the considerable FDI attracted during the period, the 
government was able to earn significant revenues from the mining sector. This put the 
government in a position to recycle part of the revenues from mining to mining 
communities and the mining sector institution through the MDF. A respondent from 
OASL disclosed that 
The main reason that I think motivated the establishment of the MDF is the 
fact that government was receiving something substantial from mining 
(interview, 17th march, 2015) 
This emphasizes the point that the ascendency in mining activities also put the government 
in position to recycle some of the mining revenues to those negatively impacted by mining 
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activities. As they were earning so much from FDI due to the incentives provided to 
investors under the SAP programme. 
 
4.2.3 The Need to Sustain the Sector 
Another factor that contributed to the establishment of The MDF was the recognition to 
help make the mining sector sustainable. As mining activities became intense in the early 
1990’s, the mining sector thought it would be necessary to put in place certain measures to 
make sure that the sector continually grows and create an industry that would be able to 
take care of not only the current needs of the industry but its future needs as well.  A 
respondent from the LG in relation to the sustainability of the sector opined that ‘we have 
a sector that is growing so what can we do to promote the growth of the sector?’ 
(Interview, 19th march, 2015) 
In order to have a mining sector that would take care of today’s needs and future needs the 
sector, the government at the time thought it would be prudent if that help come from the 
sector itself. This was how a respondent from ISODEC put it 
It was also necessary that we sustain the sector and ensure that its 
contribution to national revenue is further enhanced. This would require 
research, sound regulation of the industry and therefore that support was 
deem fit to come from the industry itself (interview, 16th march, 2015). 
This explains the reason why 10% of the MDF is given to mining sector institutions like 
the Mineral Commission, Environmental Protection Agency, The Ministry of Lands and 
Natural Resources among others to make sure that the mining sector generates more 
revenue to the national income purse and develop as well (GOG, 2013). These economic 
factors are contrary to the need to diversify the economy, savings for the future and to curb 
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the Dutch disease which has motivated the establishment of savings and stabilization 
funds (Palley, 2003; Davis et al, 2003). 
4.3 Environmental Factors 
From the interview with key officials in the mining industry, the data ascertained shows 
that the impact on mining on the environment was one of the main factors that led to the 
establishment of the MDF. Mining comes with both positive and negative impact on the 
environment. The positives have to do with the creation of employment, source of revenue 
for the government and provision of infrastructure in communities that host mining 
operations (Aryee, 2001; Addy, 1998) while the negatives include land degradation, water 
and air pollution, unemployment, crime, family disorganizations, prostitution, high cost of 
living, housing problems and drug abuse in mining communities (Gavin et al, 2009, 
Akabzaaa & Daramani, 2001; Garg, Huang & Cicero, 2010). However the need to address 
the ills caused by mining activities on the environment and consequently the very lives of 
the communities that host mining operations played a role in the establishment of the 
MDF. 
 
4.3.1 Compensation of Those Who Bear the Negatives of Mining 
The MDF was established because of the need to compensate the people who bear most of 
the negative effects of mining.  Mining in general comes with negative impacts like water 
pollution, land degradation, air pollution and destruction of livelihoods to the communities 
that host mining operations. This led to agitations and protestations by the host 
communities against the mining companies. So the government in power at the time 
thought it would be prudent to have a facility that would make sure that those who bear 
these negative effects of mining operations have a fair share of the mineral revenues at that 
time and also create a conducive atmosphere for mining activities to take place. This 
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information was ascertained when a respondent from ISODEC was asked why the MDF 
was established. The respondent opined that 
For the community, the potential threat of life and insecurity they suffer as 
a result of the presence of security can negatively affect development. The 
MDF was established as part of the recognition of the need to ensure that 
those who are directly and almost immediately affected by mining 
companies to get a fair share of the benefits from the industry (interview, 
16th march, 2015). 
Similarly, another respondent from the OASL made the same assertion when he was asked 
why the MDF was established. This was how he put it 
Basically mining has a lot of effect both good and bad. The good has to do 
with employment, attract a lot of people, puts money in the pockets etc. 
When people rush to mining locations, this put pressure on infrastructure 
such as health facilities. Apart from that, mining activities come with a lot 
of environmental hazards such as, water pollution, air pollution its impact 
on livelihood generally. It was for this reason that government in 1992 
established the MDF to compensate people for the harmful effect of 
negative effect (interview, 17th march, 2015). 
 
4.3.2 Need to Compensate Land Owners (Stools) 
The data gathered also made it clear that the MDF was not only established to only 
compensate only those who bear the negative effects of mining but to as well compensate 
land owners. This was because formerly, mineral royalties were paid directly to the land 
owners but the payment was changed and later paid to the state directly. So the 
government at that time found it obligatory to create a facility that would make sure that 
land owners also received a fair share of the mineral royalties. This information was 
discovered when a respondent from the Mineral Commission was interviewed. He 
revealed that  
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Under the concessions Act of 1962 Act 124 mineral ownership was vested 
in the owners of the land, therefore royalties was paid to the owners of the 
land. Under the same act minerals were the properties of the republic 
(belong to everybody). It’s therefore not good for only owners of the land to 
benefit from royalties. Even if it’s for all of us, some people bear the 
negative impacts of mining therefore those in that enclave should enjoy 
something more than those in the country and those who own the lands 
(stools) should enjoy something more than the people who just live around 
mining areas. In sum it was established for those who bear the negatives of 
mining activities to benefit from mining and to compensate landowners 
(interview, 12th march, 2015). 
The need to compensate those who bear the negative effects of mining and landowners 
confirms the assertion made by Otto & Cordes (2002) that mineral development funds has 
been used by countries as a way of compensation, risk reduction and as form of payment 
of the owner of the minerals  
 
4.3.3 Shift to Surface Mining 
Another factor that led to the establishment of the MDF is the shift from underground to 
surface mining which was closely related to the expansion of mining activities in the early 
1990’s. Prior to the adoption of SAP, most of the mines that operated in Ghana were 
underground mines. However, the expansion of mining activities as a result of the SAP 
also led to the introduction of new technologies (surface mining) by the private sector. 
This made the negative effects of mining to be more visible as that period was 
characterised by a lot of agitations from dissatisfied residents especially land conflicts. 
This was because surface mining required the acquisition of large tracts of land for mining 
activities. For instance in Tarkwa, mining has taken over 70% of the land. Which meant 
that in areas where the people were farmers; there was competition between the mining 
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companies and residents for the land. A respondent from the Mineral Commission said 
that  
Prior to the 1990’s most of the mines that were in operation were 
underground mines. However after the introduction of the private sector 
into the mining industry due to the ailing economy, there was a shift from 
underground mining to surface mining. Therefore the effects of mining due 
to surface mining became more visible and there were agitations from 
residents (interview, 12th march, 2015). 
In laying emphasis on this factor, it was found that the shift to surface mining made 
conflicts to be more pronounced in communities that host mining operations. This 
information was ascertained when a respondent from ISODEC was asked whether surface 
mining played a role in the establishment of the Fund. He said that  
The decision for surface mining increased the rate of conflicts in mining 
communities which then must have forced the government at the time to do 
something about it by appearing to be addressing the development needs of 
the community therefore establishing the MDF (interview, 16th march, 
2015). 
This means the negative impact of mining became more visible after the introduction of 
the private sector due to the introduction of the surface mining. The impact was very 
persuasive and undeniable that the government had to take immediate action. This lays 
emphasis on the notion that surface mining is environmentally polluting as compared to 
other mining techniques. Hence the need to take action to address the problems associated 
with surface mining. 
 
4.4 Summary 
This section seeks to explore the factors that led to the establishment of the MDF. This 
study found out Economic and environmental factors led to the establishment of the MDF. 
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The economic factor consists of the expansion of mining activities, the receipt of high 
mineral revenues and the need to sustain the sector. The environmental factors on the other 
hand focused on the shift to surface mining, the need to compensate land owners and those 
who bear the negative activities of mining 
 
4.5 UTILIZATION OF THE MDF AT THE LOCAL LEVEL 
This section looks at how mineral royalties from the MDF has been utilized by the Obuasi 
Municipal Assembly and the Chiefs. It specifically looks at how much has been received 
as royalties from the  year 2000 to 2012 OMA, the process of how expenditure are decided 
by OMA and how it has been utilized by the OMA from the 2006 to 2012. 
Table 4.1: Royalties Received From the MDF year 2000 to 2012 
YEAR  AMOUNT IN  GHANA CEDIS 
2000 148020 
2001  
2002 119180 
2003 286104.17 
2004 198170 
2005 97000 
2006 143769 
2007 70600 
2008 125300 
2009 254169 
2010 256485.18 
2011 306449.33 
2012 335877.11 
TOTAL 2341123.79 
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Source: Authors construct based on the financial reports from the OMA 
Table 4.1 shows the amount of money received by the Obuasi Municipal Assembly from 
the Mineral Development Fund (MDF) from the year 2000 to the year 2012. In total, the 
Obuasi Municipal has received 2,341,124 Ghana Cedi’s as mineral royalties. In 2001, the 
fund was not disbursed so the Obuasi Municipal Assembly did not receive money for 
mineral royalties in that specific year. The receipt of mineral royalties from the MDF 
shows that significant amount of money goes to the Obuasi Municipal Assembly for 
development purposes in communities that host mining operations.  
 
4.5.1 Process on How the Fund Is Utilized At the Municipal Assembly 
In terms of how the expenditure is determined, due to the absence of guidelines on how 
the fund is to be utilised, plans on how it should be used is based on the normal planning 
system of the Municipal Assembly. This involves conducting needs assessment with the 
community members through a public forum, prioritize the needs based on popular request 
of the community members and then put those needs in their medium term plans. So the 
use of the fund is based on their medium term plan. Any project is selected based on the 
medium term plans. This information was ascertained when the Planning Officer was 
interviewed on how the decisions on the use of the fund are arrived at.  
We normally conduct needs assessment with the communities and the 
communities comes out with their needs and we prioritize with them and 
that goes into our medium term development plan. So it’s like whatever we 
want to do we go to our plan because we have sat with the communities to 
prioritize with them. So we pick the projects based on the prioritized needs 
of the community and we use the mineral fund (Planning Officer, 25th 
march, 2015). 
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The municipality also creates a budget which serves as a guide for the selection of projects 
at any particular time. In an interview with the Finance Officer, he said that  
We have budget for the use of mineral royalties and this informs the choice 
of projects on whether we would be using it for example to build schools or 
feeder roads (interview finance officer, 25th march, 2015) 
In order to check the correctness of the data gathered from the Municipality, focus group 
discussions were held with community members and interviews were held with the 
assembly members of the mining affected communities.  The data gathered from the 
community members on whether they are involved in the utilization of mineral royalties 
showed that majority of the community members do not even have knowledge on the 
existence of such a facility. So this presupposes that they are not involved on decisions as 
to how the mineral royalties would be utilised. The few community members that new 
about the existence of the facility also claimed they were not involved on how the fund 
was utilised by the Assembly.  
In Sanso and Ahansoyewodea, which were mining affected communities, when asked 
about the knowledge about the existence of the facility, there was an overwhelming no 
from the respondents. One of the residents was of the view that ‘There is nothing like even 
development in this place. Development is like pregnancy which can be seen by all’ (FGD, 
26th March, 2015) 
This shows that community members feel mining has not benefited them in any way and 
they are also deprived in terms of development. Some of the community members even do 
not believe that part of mineral royalties is even allocated to the District Assemblies and 
the traditional authorities for development. They were of the view that if there is such a 
facility then their Assembly Members have the responsibility of reporting to them. One of 
the respondents from the mining affected community revealed that 
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I don’t think the money even comes in the first place. However if what you 
saying is true. We have elected an Assembly Man to represent our 
community at the Assembly. However, he has not told us about the 
existence of such a facility. This means that he’s not being truthful to us’ 
(resident, 26th march, 2015). 
Contrary to what the community members said, the Assembly Members of the mining 
affected areas were of the view that they are involved on how mineral royalties are utilised 
by the Municipal Assembly. Their involvement is normally at the planning stage and post- 
implementation. At the planning stage they develop budgets on what projects would be the 
priority in case the money is received after which they turn it in to the general assembly 
for approval. In support of this assertion, one of the assembly members noted that 
Before the money comes, we budget on how we would use the mineral 
royalties and determine what projects the royalties would be used for 
(Assembly Member, 25th march, 2015). 
Budgeting on what to use the mineral royalties for was not done separately. It was done 
alongside with the other sources of funding like the common fund and property rates. This 
information was discovered when one of the assembly members from the mining affected 
areas was spoken to. He said that 
When we budgeting, there are some projects that go under mineral royalties 
and some also go under the common fund and the property rates (Assembly 
Member, 25th March, 2015). 
In addition to this, the assembly members were not only involved in just creating the 
budget but also involved in budget reviews. This gives the opportunity to know the 
amount received as royalties, the projects that are ongoing and why some projects have 
still not started. One of the Assembly Member said that 
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We also do budget review on the amount received as mineral 
royalties and the projects that are being undertaken and why some 
of the projects have not been undertaken (Assembly Member, 25th 
March, 2015). 
The data shows that the decision making process for the use of the fund is entirely done by 
the Municipal Assembly without the involvement of the residents of the mining affected 
communities. These finding are consistent with Marfo et al (2012) that the entire decision 
making process is captured by the elite. Additionally, access to information on the MDF is 
not known to the people. This makes the Obuasi Municipal Assembly more powerful in 
terms of access to information as compared to the mining affected residents as they are 
almost not aware of the existence of the facility and as well as their non-involvement in the 
use of the fund. This confirms the theory of political ecology that benefits of resource 
extraction are a product of power relations (Bryant & Bailey, 1997). 
 
4.5.2 Utilization of the MDF at the Obuasi Municipal Assembly from 2006-2012 
On the uses of the mineral royalty by the Municipal Assembly, it was found out that the 
municipality has used the money for development projects for the entire communities in 
the municipality without necessarily concentrating on the mining affected communities. 
The utilization of the money has been centred on educational infrastructure, scholarship 
schemes, waste management, sanitation, health infrastructure and for general 
infrastructure in the market place. This was ascertained with an interview with the 
Municipal Officers and through documented reports on how mineral royalties have been 
utilised. Receipts and Expenditure on mineral royalties have been presented in table 4.2 
and table 4.3 
 
 
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Table 4.2: Amount Received and Expenditure of Mineral Royalties in Ghana cedis 
for Obuasi Municipal Assembly from 2006-2012 
YEAR  RECEIVED  EXPENDTIURE 
2006 143,769 42,984.72 
2007 70,600.00 147,142.62 
2008 125,300 110,927.93 
2009 254,169 245,488 
2010 256,485.18 314,169.62 
2011 306,449.33 427,828.42 
2012 335,877.11 304,368.71 
TOTAL 1,492,650 1,592,910.02 
Source: Authors construct based on the financial reports from the OMA 
The table 4.2 shows the amount of mineral royalties received from government and its 
corresponding expenditure by the OMA from the year 2006 to 2012. The table shows 
significant difference between the amount received from the MDF and its corresponding 
expenditure. In 2006 for instance, the Municipality received 143,769 Ghana Cedis and the 
expenditure for that year was 42,984.72 Ghana Cedis which shows that the expenditure for 
that year is far less than the amount received. In 2007 the municipality received 70,600.00 
Ghana Cedis and made an expenditure of 147,142.62 Ghana Cedis which shows a higher 
expenditure compared to the amount received as mineral royalties. This is an indication 
that mineral royalties come late and its effects are that most of the planned expenditure is 
carried forward to the next year. 
 
 
 
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Table 4.3: Expenditure of Mineral Royalties for the Year 2006- 2012 
ITEMS AMOUNT IN GHANA CEDIS 
SCHOLARSHIP SCHEMES 188,666 
EDUCATIONAL INFRASTRUCTURE 692,484.40 
HEALTH 40,819 
WASTE MANAGEMENT  516,905.86 
GEN INFRASTRUCTURE 54,003.81 
SANITATION 17,337 
TOTAL 1,510,216 
 
The expenditure of the MDF from the Obuasi Municipality from the year 2006 to the 2012 
has been summed up in table 4.3. It has been categorised into the following; Scholarship 
Schemes, Educational infrastructure, Health, Waste Management, General Infrastructure 
and Sanitation.  
Figure 4.1: Expenditure of Mineral Royalties Expressed as Percentage in a pie chart  
 
Source: Authors construct based on the financial reports from the OMA 
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The pie chart above shows how receipts from the MDF has been utilised by the Obuasi 
Municipal Assembly from the year 2006 to 2012. The chart shows that 46% of mineral 
royalties was used for educational infrastructure purposes, 34% for waste management, 12 
% for scholarship scheme, 4% for general infrastructure, 3% for health and 1% for 
sanitation. 34% of the utilization of the mineral royalties for waste management confirms 
the EITI reports of 2013 which found that a significant portion of mineral royalties is used 
for waste management in the OMA.  The chart also shows that 37% of the funds were 
utilised for health, sanitation and waste management. This is contrary to the findings of the 
auditor general report which found that only 14.2% of the funds were used health, water, 
sanitation, waste management, land degradation and alternative sources of livelihoods 
which were areas directly related to mining effects (GOG, 2013). The differences in 
findings may be because the findings from the Auditor General’s report lumped three 
District Assemblies and therefore did not allow for individual difference in the Assemblies 
under study. Also, the differences may be related to the time differences of the study 
because the Auditor General’s report of 2013 covered the period of utilization from 2004-
2009 while this study looked at the utilization of mineral royalties from 2006-2012. 
Figure 4.2: Expenditure of Mineral Royalties Expressed In a Bar Chart 
 
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Figure 4.2 is a bar chart of the expenditure of the municipality from the year 2006 to the 
year 2012. The figure shows that the municipality has used the royalties for Scholarship 
Schemes, Education, Health, Waste Management, General Infrastructure and Sanitation. 
The bar chart gives a clear pictorial view of how much has been utilised on the various 
amenities and the ones that have been given considerable attention. Figure 4.2 shows that 
majority of the money was spent on educational infrastructure, waste management and 
scholarship while general infrastructure, health and sanitation remained the lowest 
expenditure items from the bar chart. The figure 4.2 shows that considerable attention has 
been given to development projects in the municipality from the year 2006 to 2012. The 
reason for the use of majority of the money for educational purposes is because mining 
activities in Obuasi has attracted a lot of people to the municipality for employment and 
other lucrative activities. Evidence from the composite budget showed that the annual 
growth rate in the Municipality is 4.0% which is relatively high as the result of large influx 
of migrants who come in search of jobs in the mining and related industries (OMA, 2014). 
This has put pressure on the infrastructure of the entire municipality of which the 
educational sector is one of them. This have caused the number of school going age 
children to have increased in the municipality and it would be reasonable to put in place 
educational infrastructure to cater for the negative impact of mining activities in the 
municipality. More also, increase in the population due to mining activities may be the 
same explanation why a lot of royalties received go into scholarship schemes for people of 
school going age in the Municipality. Currently, the children in the municipality constitute 
about 43% of the general population (OMA, 2014). These show that human development 
has been made a priority in the Municipality. As to the number of people who benefit from 
mining affected areas, this is not really known as the documents just stated scholarships 
but if mining affected areas were given priority in the award of scholarships, then this 
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should have come in the focus group discussion in the communities which host mining 
operations. 
Similarly, waste management has been one of the priority areas for the use of the mineral 
royalties. This has stemmed from the fact that mining activities have attracted a lot of 
people to the Obuasi Township. This has increased the level of waste generated there 
hence the need to spend more on waste management in the municipality but this confirms 
the report made by the Extractive Industry Transparency Initiative in 2013 that majority of 
the District Assemblies use a considerable amount of the money for waste management. 
However, the municipality also explained that the reason why they use a chunk of the 
money for waste management is because they think that mining activities has attracted a 
lot of people to the area, so using mineral royalties for sanitation should be 
understandable. This information was ascertained when a respondent from the 
Municipality was spoken to. He revealed that  
Sanitation (waste management) was what we considered as having a 
greater impact in the sense that because of the mining it has attracted a lot 
of people and we thought that by using the mineral royalties for sanitation 
purposes would be a step in the right direction (Budget Officer, 25th March, 
2015). 
Health and sanitation (provision of toilets) which should have been one of the areas where 
the focus of the municipality should have been has been given little attention. Population 
increase in the municipality due to mining activities would bring more pressure on public 
toilets, so more structures had to be put in place in respect of that facility. The documents 
showed that in terms of health the focus was on the construction of mortuary in the Obuasi 
government hospital. Dust, air and water pollution associated with mining activities have 
caused diseases such as malaria, diarrhoea, skin diseases, Respiratory Infections, acute eye 
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infections, sexually transmitted diseases and schistosomiasis (Schisto) in mining areas 
(Akabzaa, Seyire & Afriyie , 2007; Akabzaa & Daramani, 2001, Gavin et al 2009 ). This 
suggests that the area of health infrastructure should be a priority in the utilization of 
mineral royalties by the Municipality. Clinics should have been set up in mining affected 
areas to cater for the health problems associated with mining activities although the 
construction of the mortuary is equally important. The community members in that host 
mining operations were of the view that although mining activities take place in their 
communities they do not have a clinic in their community. When having health issues, 
they have to go to the Obuasi government hospital to seek medical care. 
 
4.5.3 Beneficiaries of mineral royalties in the Obuasi Municipal Assembly 
Mineral royalties distributed to the stools, traditional authorities and District Assemblies 
are supposed to be used for development purposes in the mining affected communities and 
to mitigate the negative effects of mining (GOG, 2013). Royalties received by the 
Municipality have been used to undertake various projects as outlined in their reports. 
These are educational infrastructure, scholarship schemes, waste management, health 
infrastructure and sanitation (latrines). The beneficiaries of the projects should be 
communities that host mining operations but this is not the case for the OMA. The 
financial report of the OMA showed that most of the projects were located in areas that are 
not directly affected by mining operation. Although communities directly affected by 
mining operations are Sanso, Binsere, Ahansoyewodea, Kunka, Anyinam and Dokyiwaa 
among others, most of the projects were found in communities like Boete, Bediem, 
Asonkore, and New Nsuta among others. This does not mean that mining affected 
communities have not benefited from the mineral royalties rather; little attention has been 
given to them. An educational facility was set up in Anyinam and furniture for a school in 
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Sanso. This shows that mining affected communities were not really given priority in the 
construction of these projects. These findings also confirm the assertion by Taabazuing et 
al (2012) in the Wassa West that projects undertaken using mineral royalties are found in 
urban areas rather than the periphery of mining activities. It is also similar to findings of 
Hansen & Treue (2009) (as cited in Marfo et al, 2012) that projects undertaken by District 
Assemblies with forest revenues did not give communities where the revenues came from 
priority. This also tends to widen the inequality gap between mining affected communities 
and non-mining affected communities in terms of development progress. These findings 
also confirm the assumption of the political ecology theory that the unequal distribution of 
mining benefits inevitably reinforces social and economic inequalities (Bryant & Bailey, 
1997). This is because mining affected communities continue to wallow in poverty as 
other communities tend to progress in terms of development. 
The Assembly Members of the mining affected communities also attested to the fact that 
mining affected communities were not the beneficiaries of mineral revenues. They further 
added that royalties are utilised by the Municipality for the entire development of the 
Municipality. An Assembly Member for Sanso revealed that 
 The beneficiaries are supposed to mining affected communities but this is 
not so while communities like Sanso, Anyinam and Binsere are the main 
mining affected areas. However the new MCE has put mechanisms in place 
to make sure that the mining affected areas receive the bulk of money 
(interview, 25th March, 2015) 
This means that this is a challenge recognised by the Municipality. Similarly another 
Assembly Member from Anyinam was opined that  
I can’t remember any project captioned under mineral royalties in my area 
since I became an Assembly Man. However I have received some projects 
under the AngloGold Ashanti property rates, common fund. Since I have 
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those projects I don’t think it would be necessary for me to fight for mineral 
royalties (Assembly Member, 27th March, 2015). 
This presupposes that royalties’ utilization focused on non-mining affected communities 
rather than the communities directly affected by mining activities. Contrary to the views 
held by the two assembly members, another assembly member from Binsere was of the 
view that ‘He has heard of royalties here and there but I do not actually know how they 
are utilised.  The assembly does not involve us on how it’s utilised’ (Assembly Member, 
26th march, 2015). 
This is because he is not part of the finance and administrative committee. An Assembly 
Man noted that if you are not part of the finance and administrative committee it would be 
difficult to have knowledge on how mineral royalties are utilized.  
The Municipal Assembly also made it clear that royalty utilization did not give mining 
affected communities attention and they explained why things were done that way. They 
explained that one of the reasons had to do with the need for balanced development in the 
municipality. They explained that it was not fair to use all the mineral royalties for just the 
mining affected communities as this can lead to conflicts in the Municipality. This was 
ascertained when the finance officer for the municipality was interviewed. He said that 
Sometimes a particular area might not be a mining area but once they all 
fall within the Municipality and for the sake of balanced development if 
you say you are using the money for mining related areas, there’s the 
likelihood that those areas that are not affected by mining would be 
lagging behind in terms of development and this would bring about 
agitations and chaos. When these things happen the mining affected 
areas would not also have their peace (Finance Officer, 25th march, 
2015) 
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Another factor that has contributed to use of mineral royalties for development of the 
entire Municipality rather than communities that host mining operations is the fact there 
are no guidelines for its usage. So where to undertake various projects is selected based on 
the discretion of the Municipal Assembly. This also confirms the findings that, although 
there is a constitutional provision for the sharing of benefits among the District 
Assemblies and the chiefs, there is no provision made by the constitution as to the 
distribution and accountability of the revenues among stakeholders (Marfo et al, 2012).  
This was how one of the officers put it; 
Due to no guidelines, the money is used according to what the Assembly 
will agree on. Sometimes these projects may not benefit those affected by 
the negative effect of mining (Budget Officer, 25th March, 2015) 
The data gathered clearly shows that reasons why mining affected communities have not 
been the actual beneficiaries of the fund is because they lack information of the existence 
of such a facility which is a source of power . The Municipal Assembly on the other hand, 
have used mineral revenues based on their discretion because of the power to decide on 
issues for the entire Municipality without necessarily consulting the ordinary citizen in 
mining affected communities. Comparing the Municipal Assembly and the mining 
affected communities in terms of the power of information and status in society, the 
Municipal Assembly is more powerful and has been the reason why the mining affected 
communities have not been the beneficiaries of the fund. Data gathered confirms the 
assertion that the framework to enhance the equitable sharing of benefits has rather 
fostered minority interest and have not dealt with the power dynamics found in mining 
areas (Tsuma, 2010). 
These findings confirm the theory of political ecology which says that the distribution of 
benefits or exchange of costs within a given local context is as a result of unequal power 
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relations between individual actors and not a product of the structures (norms, rules, laws) 
of resource exchange (Bryant, 1998; Walker, 1991).  
More so, the unavailability of guidelines on the use of the fund also suggests that unequal 
power relations is not the only reason why mining affected communities have not been the 
beneficiary of the fund as stipulated by the political ecologists but there is an institutional 
problem as well. This suggests a weakness in the laws guiding the use of the fund and 
confirms the findings by Mehlum, Moene & Torvik (2006) that there are poor 
developmental outcomes in countries with low institutional quality (When the institutional 
barriers for rent seeking activities are unavailable) while it’s non-evident in countries with 
high institutional quality. This confirms the point made by Weinthal & Luong (2006) that 
the fund would amount to nothing if the institutions regulating the use of the fund are 
unavailable. 
From the community member’s perspective, it seems they have no knowledge on who the 
beneficiaries are and how the Assembly and the chiefs have utilized the money. This 
information was ascertained through focus group discussion with the members of the 
mining affected communities. One of the community members of Sanso was of the view 
that  
Although guidelines have been put in place for us to benefit, there has not 
been any discussion with us. So if the money passes somewhere who are we 
going to ask? If you had not told us of the existence of such a facility I 
would not have known (Resident, 25th March, 2015) 
There was an overwhelming agreement by the community members on this assertion that 
they had no knowledge about the existence of such a facility so it would be difficult to 
know who benefit from this facility. The community members therefore advocated for 
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more education on the radio stations and at the community level so that everybody would 
know the provisions that have put in place for them to benefit.  
Another community member also added that although the Assembly gives them 
(community) projects, they do not tell them the sources of funding for these projects. 
Recently, they received lights and their roads are about to be graded but as to the source of 
funding they were not told. This was what one of the community members had to say 
Recently we were given some light in the town and their about working to 
grade our roads, we don’t really know the source of funding for these 
projects (Resident, 31st March, 2015). 
This shows that projects that are financed using mineral royalties are not made known to 
the people. This is similar to the findings in Wassa West, where resident’s claim that 
projects that are undertaken are not publicised (Taabazuing et al, 2012).  
Some of the residents think their Assembly is being dishonest to them by not telling them 
how the fund is being utilized by them. One of the community members noted that 
For the assembly, if we even mention that they don’t use the royalties for 
development purposes, they can defend themselves by saying that the 
projects that were done for us were from the royalties. I know that their 
cheating us in a way (Resident, March 31st, 2105) 
This shows that the residents in mining affected communities lack confidence in their 
leaders because of their non-involvement in royalty utilization. This gives credence to the 
assertion that residents become distrustful of their leaders because of their non-
involvement on how the funds are utilized in the Wassa West (Taabazuing et al, 2012). 
Generally, the beneficiaries of the fund have been the mining affected communities 
because the entire decision making process about the utilization of the fund have been 
undertaken by the Municipal Assembly. Which confirms the findings of Marfo et al 
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(2012) that there is elite capture in the utilization of the fund. More also, there is unequal 
power relations between the Municipal Assembly and residents of mining affected in 
terms of access to information and their status in society. This confirms the findings that 
the distribution of benefits or exchange of costs within a given local context is as a result 
of unequal power relations between individual actors and not a product of the structures 
(norms, rules, laws) of resource exchange (Bryant, 1998; Walker, 1991).  
 
4.6 Traditional Authorities and the Utilization of Mineral Royalties 
This section looks at the receipt of mineral royalties, how decisions are made relating to 
the funds, how chiefs have utilized their share of the fund, the perception of residents as to 
who are the beneficiaries of the fund and whether chiefs should use their share of mineral 
royalties for development. 
 
4.6.1 Receipt of mineral royalties 
Three chiefs in the mining communities were interviewed in order to ascertain how much 
has been received as mineral royalties and its uses. Out of the three chiefs interviewed, 
only one of them claimed to receive mineral royalties. However, the other two chiefs made 
it clear that they do not receive mineral royalties from the government. One of the chiefs 
from Ahansoyewodea claimed that he as a chief has never received mineral royalties 
before due to a chieftaincy dispute. He claims his successor who is supposed to hand down 
some of the royalties to him has not been enstooled. This information was ascertained 
when the chief was asked how much he has received as mineral royalties and how it has 
been utilised.  
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With the chief who receives mineral royalties, the last time he received some of the 
royalties was in 2013 and the amount was 50 Cedis. This information was discovered 
when he was asked whether he receives mineral royalties and this was what he had to say 
Yes I do, when you take Akokere division, it’s made up of Kusa, Borbriase, 
Odumasi and others so they share the money from the top before its get to 
my turn. The last time I had some, it was 50 Ghana Cedis as royalties. What 
am I going to do with 50 Ghana Cedis? (Resident, 27th March, 2015) 
It’s worth noting that the money meant for development purposes in mining affected areas 
is shared among the chieftaincy institution according to ranks. This might explain why the 
chief of Bogobiri received just 50 Ghana Cedis as royalties from the chieftaincy 
institution. This point was also brought to bear by one of the community members during 
the focus group discussions. He was of the view that 
In terms of what comes to the chief, the chief here is under somebody, that 
is, there are ranks in the sharing of the royalties therefore what the chief of 
our town receives would be something very little (Resident, 25th March, 
2015) 
Similarly, this point was also emphasized by one of the Assembly Members in the mining 
affected communities noted that ‘The chieftaincy institution is more like a political body. 
So when the money comes it shared according to ranks in the body’ (Assembly Member25th 
March, 2015). 
This data ascertained means that money meant for development purposes is shared 
according to ranks in the chieftaincy hierarchy. This means that the powerful ones at the 
top would receive more of the funds while the ones who at the bottom of the rank would 
receive something little. This explains why the chief of Bogobiri received 50 Ghana cedis 
from the share of the cake. This also support the assertion by the political ecology theory 
that the distribution of benefits or exchange of costs within a given local context is as a 
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result of unequal power relations between individual actors and not a product of the 
structures (norms, rules, laws) of resource exchange (Bryant, 1998; Walker, 1991). This 
also supports the assertion of the political theorist that the unequal distribution of benefits 
tends to reinforce or reduces existing social and economic inequalities (Bryant & Bailey, 
1997) as those at the top of the hierarchy of the chieftaincy institution receive more of the 
mineral royalties as compared to those at the bottom of the hierarchy. Additionally, the 
chiefs also continue to be more powerful socially and economically than residents thereby 
reinforcing the social and economic inequalities in society (Bryant & Bailey, 1997). 
 
4.6.2 Involvement of the people in the utilization of mineral royalties 
The data gathered from the focus group discussions and interviews shows that the 
community members and the Assembly Members from the mining affected areas are not 
involved on how mineral royalties are utilized by the traditional authorities. They don’t 
even know how it’s utilised and some of the projects even undertaken by the chiefs. One 
Assembly Member said that ‘the chiefs do not involve us on how the money is utilized’ 
(interview, 28th march, 2015). 
This shows that decision making is left in the hands of the chiefs. This confirms the point 
made by Marfo et al, 2012 that decision on the use of mineral revenues has been captured 
by the elite.  
 
4.6.3 Utilization of Mineral Royalties 
On issues relating to the utilization of mineral royalties by the traditional authorities, the 
chiefs in the OMA revealed that royalty goes to Adansehene since they are the owners of 
the land of Obuasi. Mineral royalties have been utilized by the chiefs at the top of the 
hierarchy of Obuasi for educational purposes (built Asare Bediako senior high school), the 
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refurbishment of the palace at Fomena and Edubease, rehabilitation of toilets and street 
bulbs for their area. This information was ascertained when the chief of bogobiri was 
asked how mineral royalties have been utilized in the municipality. He said that  
In the case of Adansi Fomena the mineral royalties was used the 
construction of the chiefs palace, Akokere used their royalties for a 
secondary school (Asare Bediako), in Edubease too part of the royalties 
have been used for the construction of the palace. At times they provide 
street bulbs for the streets and the rehabilitation of public toilets (Chief, 27th 
March, 2015). 
The use of mineral royalties for the establishment of a palace by the Adansi and Edubease 
chiefs support the assertion that use of royalties for the maintenance of stools has been 
understood to mean “that it is legitimate to pay for regalia and the trappings of royalty – 
limousines, jewellery and ceremony” (ICMM, 2007, pp 77). This also similar to the 
findings of Hansen & Treue, (2009) that where projects were mentioned, it focused mainly 
on the construction and rehabilitation of the chiefs’ palace in a study of forest revenue 
utilization by chiefs (as cited by Marfo et al, 2012). These findings support the assertion 
that poor developmental outcomes in mineral resource rich countries is because political 
elites tend to use rents to pursue development programs that are controversial in nature, 
create opportunity for rent seeking activity to promote their interest, provide economic 
benefits to particular interests group, capture rents and avoid accountability (Ascher, 
1999). This also shows that there is the absence of effective institutions constraining how 
the funds should be utilized this support the argument of Lane & Tornell (1999) that the 
presence of effective institutions can help curb these rent seeking activities associated with 
the discoveries of natural resource wealth. 
The chief of Bogobiri on the other hand, has not been able to use his share of mineral 
royalties for development purposes due to the insignificant amount of mineral royalties as 
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an Odikro in his community. This shows that as an Odikro of the community, it would be 
very difficult to embark on development projects if the money received from the superiors 
is not enough. This also confirms the findings by Akabzaa (2009) that chiefs who are 
entitled to a share of mineral royalties claim that they are not given a fair share and have 
been the reason why they have not been able to commit their share or royalty payment to 
development projects. The trickling down of small amounts of money as royalties as an 
Odikro also confirms the theory of political ecology which says that the sharing of benefits 
from mining is a product of power relations among individual actors (Bryant, 1998; 
Walker, 1991). This is because the chiefs at the top of the hierarchy enjoy more of the 
royalties although it should rather be for the entire mining affected communities. This is 
partly because of their influence in society. This also shows that like the Assemblies, the 
utilization of mineral royalties by the traditional authorities have concentrated on areas 
that are not in close proximity with mining affected communities as the bulk of the money 
are kept at the top of the hierarchy while peanuts are given to the Odikro. This confirms 
the findings by Taabazuing et al (2012) in the Wassa West District, about the claim made 
by residents that projects have been undertaken in the urban areas to the neglect of the 
periphery were mining activities took place. The amount given to the Odikros also directly 
implies that they should use it for their personal activities rather than development 
purposes, hence elite capture of mineral royalties (Marfo et al, 2012).  
 
4.6.4 Perception of residents on who are the beneficiaries of mineral royalties 
The data gathered from the community members also gave a different connotation. Some 
(community members) do not think that chiefs use their share of mineral royalties for 
development purposes. They rather think chiefs use their share of mineral royalties for 
their own personal activities. This information was ascertained from the community 
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members when asked who they think are the beneficiaries of the mineral royalties. As one 
community member put it 
The chiefs tax us every year to pay tax on our lands and also spend the 
money given to them for development.  When the government and the 
company give them money for development, they just spend the money. 
(Resident, 31st March, 2013) 
 
This creates the impression that some of the community members see their chiefs as 
corrupt. This is because they do not only spend their money meant for development but 
also tax them.  
In support of the assertion that the leaders are the beneficiaries of mineral royalties another 
community member said that ‘As for the chiefs they don’t give us development projects’. 
This means that the community members cannot pinpoint a project that has been 
undertaken by their chiefs in their community. The community members rather gave credit 
to the Assembly for giving them some few projects. 
Although some chiefs claim they use mineral royalties for scholarship schemes, there is no 
evidence of development. Some also use it for their personal activities. This information 
was ascertained when some of the Assembly Members were asked about who the 
beneficiaries of the royalties were.  One Assembly Member opined that 
Sometimes they claim that they use money for scholarship schemes but you 
see nothing. However some of them claim that, ‘ye de ka yen mpaboa ho’ 
meaning they use it to buy polish for their slippers or sandals’ (Assembly 
Member, 26th March, 2015) 
 
The assertion made by the community members that the chiefs are the sole beneficiaries of 
the facility tend to confirm the argument by Ross (2001a) that during windfall gain 
political elites take the opportunity to capture rent and have a control to distribute. It also 
confirms the Human Rights report (2008) which indicated that residents of mining 
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affected communities claim their leaders are the beneficiaries of mineral royalties. These 
findings also show that the people see their leaders as corrupt as they have abused public 
trust for personal gain. This also supports the assertion by Standing & Hilson (2013) that 
the poor management of the fund has led to mistrust between communities and their 
leaders (traditional authorities and local government).  
 
4.6.5 Perception of residents on whether chiefs should use their share of mineral 
royalties for development 
Residents of mining affected communities were all of the view that chiefs should use their 
share of mineral royalties for development purposes. This was because they feel mining 
activities have had negative impacts on their lives due to the pollution caused by mining 
and the destruction of their livelihoods through destruction of their farm lands. One of the 
resident was of the view that 
We should use it for development purposes because AngloGold Ashanti has 
taken over the lands from this community to Obuasi Township and we bear 
the negative consequences of mining such as cyanide spillage and our 
livelihoods has been destroyed as well (Resident, 26th March, 2015) 
 
This means that the use of the chief’s share of mineral royalties for development projects 
can serve as a form compensation for the negative effects of mining on their lives.  
Some Assembly Members agreed with the community members that the chief should use 
their share of mineral royalties for development purposes. Although chiefs are not the 
main development agents of the Municipality, they should be able to give the community 
members at least one or two projects at the end of the year which should be infrastructural 
projects rather than scholarship scheme. This was what one Assembly Member had to say 
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Yes they should. The use of the money for scholarships scheme it’s good but 
at least would be better if they use it for physical projects (infrastructure). 
(Assembly Member, 26th March, 2015) 
 
This means that the development priority should focus mainly on infrastructure. However, 
some Assembly Members were of the view that when some chiefs are asked about the 
utilization of mineral royalties, they tell you ‘omudeka omu mpabua’ meaning they use it 
to buy polish to shine their sandals. This information was ascertained when one of the 
assembly man was asked whether the chiefs should use their share for development 
purposes. One Assembly Member noted that  
How can a chief conduct a development project because the developmental 
issue is solely on the Assembly. However, they can use it for small projects 
but they would tell you that ‘omudeka omu mpabua’ and at the end of the 
day the same chiefs would walk to the Assembly and demand for 
development projects (Assembly Member, 27th March, 2015). 
 
The information ascertained then implies that, chiefs advocate personal use of mineral 
royalties at the expense of the community members.  This shows that although community 
think their share of mineral revenues should be used for development purposes, some 
chiefs think that it should be used personally. This give support to the report of the ICMM 
(2007) that the use of the funds for personal purpose is contrary to the expectations of the 
subject who think it should be basically used for development purposes. The differences 
interests as to how the fund should be utilized from the chief’s perspective and that of the 
resident’s perspective also confirms the point made by the political ecologist that resource 
extraction activities create a lot of actors with different interests sometimes conflicting and 
competing in the environment (Bryant, 1998; Walker, 1991).  
 
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4.6.6 Summary 
This chapter looked at how the MDF has been utilized by the OMA and the chiefs in the 
Obuasi Municipality. The OMA have utilized the share of mineral royalties for the 
educational infrastructure, scholarship schemes, waste management, general infrastructure 
and sanitation. However, the beneficiaries of the fund have not been mining affected 
communities due to the elite capture of the entire decisions relating to the utilization of 
mineral royalties and lack of clear guidelines on the use of the fund. This has been 
compounded by the fact that residents in mining affected communities do not have 
knowledge about the existence of the fund. This therefore means that poverty found in 
mining affected communities has been caused by unequal power relations (Bryant, 1998; 
Walker, 1991) in terms of access to information about the fund and the status of relevant 
actors, that is, OMA and residents in mining affected communities as well as institutional 
weakness due to no guidelines for the use of the fund. 
 
The chiefs on the other hand have utilized their share of mineral royalties for personal use 
which is contrary to the expectations of their residents who think it should rather be used 
for development purposes. This confirms the propositions of the political ecology theory 
that mining activities creates a lot of actors with different interests sometimes conflicting 
and competing in the environment. The developmental outcomes found in mining affected 
is related to weak institutional framework guiding the use of the fund and confirms the 
assertion that poor developmental outcomes  is characterized in countries with low 
institutional quality (When the institutional barriers for rent seeking activities are 
unavailable) while it is non-evident in countries with high institutional quality (Mehlum, 
Moene & Torvik, 2006). 
 
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CHAPTER FIVE 
THE MDF AND LOCAL DEVELOPMENT: SOME KEY 
CHALLENGES 
5.0 Introduction  
This section examines the challenges District Assemblies and traditional authorities face in 
the utilization of the mineral royalties for development and the extent to which District 
Assemblies and chiefs are held accountable in the use of the fund. 
5.1 Challenges in the utilization of mineral royalties by OMA 
The challenges encountered by OMA in the utilization of the MDF are fluctuations in the 
amount received as mineral royalties, delays, absence of guidelines as to how to utilize 
mineral royalties, poor monitoring of projects, and insufficient monies for development. 
 
 
Figure 5.1: Fluctuations in the Amount Received from the MDF                          
Source: Financial reports from OMA March, 2015.  
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Figure 5.1 is a diagram on the amount of money received from the MDF and the 
corresponding years. In 2001 there was no disbursement made to the Municipal Assembly. 
From 2002 to 2012 the Municipality continually received money from the MDF. 
However, there have been year to year differences in the amount of money received from 
the MDF by the Municipality. From the year 2002 to the year 2007, there has been wide 
variations on the amount of money received from the fund. The amount received goes up 
in one year then suddenly drops in another year. For instance in 2003 the amount received 
from the MDF went up significantly but dropped from 2004 to 2008. It was from 2009 to 
2012 that the money received from the MDF has consistently gone up. The year to year 
fluctuations in the amount received from the MDF would certainly affect the performance 
of the budget and the implementation of projects that are supposed to be funded by the 
MDF. These findings are consistent with the findings by the ICMM reports of 2007, which 
found out that there are year to year fluctuation that are large in the amount of money 
received from the MDF in the Ashanti and Western mining districts. This could explain 
why some of the projects take long periods to be completed in these areas and why some 
years are characterised by the implementation of just a single project. 
 
5.1.2 Delays in the Receipt of Funds 
The data gathered from the assembly also shows that another challenge that also hindered 
the effective utilization of the MDF at the assembly is delays in the release of fund. Unlike 
other sources of funding for the district assemblies that has clear time periods that are 
released, that is not the case for the MDF. Its predictability in terms of when it will be 
received is not known. Evidence from documents showed that allocations from 2013, 2014 
and 2015 are still outstanding.  The finance officer was of the view that  
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The release of the funds unlike common fund and the urban development 
has no time lines. For example the common fund is released quarterly. With 
the funds (mineral royalties) you don’t know when it would be released and 
you would be called that you have a cheque. So I will describe the release 
of the funds as erratic. Even as we speak now it has been released up to 
2012 but 2013 and 2014 are still outstanding. This tends to affect the 
execution of budgets and hence the implementation of project’s (Finance 
Officer, March, 2015) 
 
The statement clearly exhibits a clear irregularity in the release of the fund. There are still 
arrears for the years 2013 and 2014 although we are in the year 2015. This also means that 
programmes that have been earmarked for the fund would be delayed which would 
consequently affect the implementation of budget for the years 2013 and 2014. 
Another respondent from the Assembly further elaborated on the delays in the utilization 
of the MDF on the current receipt of the funds of the Municipality. He said that  
Currently, we have just received the third quarter of 2013 in the first 
quarter of 2015. So all the programmes earmarked for that fund were not 
undertaken (Planning Officer, March, 2015) 
This gives a clear picture of the extent to which the untimely release of fund affects the 
implementation of projects in the Municipality. 
Additionally due to the untimely release of the MDF to the Assembly, it takes a long time 
to finish projects and some projects have been abandoned.  
When we award projects using the mineral royalties, because its flow its 
untimely the contractors work to a certain point and leave the site and wait 
until the  next tranche comes in, so it takes long time to complete projects 
and some have been abandoned. For instance the MCE’S bungalow project 
and a bridge have been abandoned (Budget Officer, March, 2015) 
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This means that development in the municipality would be slowed down due to the delays 
in the receipt of the funds. These confirms the findings that delays and the fluctuation in 
the funds received tend to have a negative effect on planning, expenditure and budgeting 
programs of District Assemblies (Kuyole, 2008 as cited in Morghandi, 2008; ICMM, 
2007). 
 
5.1.3 Absence of Guidelines  
The data gathered also showed that the absence of clear guidelines is a factor that has 
hindered the effective utilization of the MDF at the local level for development. Unlike the 
other sources of funding from the government, the MDF received by MMDAs comes with 
no guidelines. Due to this, officials at the Assembly use the money according to their 
discretion. In some cases, the money has been treated as part of their IGF and used for 
recurrent expenditure. This supports the assertion of Marfo et al (2012), who notes that 
although there is a constitutional provision for the sharing of benefits among the District 
Assemblies and the Chiefs, there is no provision made by the constitution as to the 
distribution and accountability of the revenues among stakeholders. One of the officers 
noted that  
In our accounts considerable part of the money have been used for 
sanitation but they (civil society groups and government ) are insisting that 
it should not be used for sanitation because they want to identify the 
projects and that when we use it for sanitation when they come they would 
not see (Finance Officer, 25th March, 2015) 
 
This supports the EITI report of 2013 which says that a significant portion of mineral 
royalties are used for waste management in the Obuasi Municipal Assembly. Additionally 
the mining affected areas who are supposed to benefit from the fund are rather not the 
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beneficiaries as the money has been used according to the discretion of the Municipal 
Assembly for the entire development of the Municipality. One of the officers of the 
Municipal Assembly was of the view that  
Due to no guidelines, the money is used according to what the Assembly 
will agree on. Sometimes these projects may not benefit those affected by 
the negative effect of mining. For instance, when we were sent to the 
Public’s Account Committee we were told that we were not supposed to use 
the money for MCE bungalow and the arch of welcome to Obuasi. This was 
all because there are no guidelines for the use of the fund (Budget Officer, 
25th march, 2015) 
 
Lack of guidelines on how to use the MDF has given discretion to the Obuasi municipal 
Assembly on how to utilize mineral royalties from the fund.  This has put more power in 
the hands of the Assembly in relation to the mining affected communities; hence, the 
utilization of mineral royalties has been in the interest of the OMA. This gives credence to 
the political ecology theory that the unequal sharing of benefits is as a result of unequal 
power relations Bryant, 1998; Walker, 1991). It shows that framework established to 
ensure equitable sharing of benefits have rather served the interest of the minority have not 
addressed the power dimensions in mining areas (Tsuma, 2010). 
In effect the Municipality uses the money to fund projects that are not appropriate. For 
instance, mineral royalties were used for the construction of MCE bungalow and the arch 
of welcome to Obuasi although these uses did not benefit the mining affected 
communities. This confirms that the fund would amount to nothing if the institutions 
regulating the use of the fund are unavailable (Weinthal & Luong, 2006).   
 
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5.1.4 Inadequate mineral royalties 
Another challenge that affects the effective utilization of the MDF is the insufficient 
nature of the funds released. Mining has direct and indirect impacts on the livelihoods of 
the people in the entire Obuasi. In some instances, some mining communities are the 
centre where mining operations are directly undertaken and in certain communities, the 
waste product from mining activities are dumped there although mining does not directly 
take place there. So it would be necessary if the monies sent to the Municipality to take 
care of mining affected areas are increased. This is how one of the officials of the 
assembly puts it 
It’s also inadequate in the sense that almost all the communities are 
affected with the mining negative effects of mining. If the community is not 
inside the mining area, then the waste product are thrown into some of the 
communities. In other communities, they have their finite there and the 
stations there 
 
This shows that a lot of communities are affected by the negative impacts of mining 
activities although they may not be the areas where the mining operations were 
undertaken. This then makes the receipt of mineral royalties from the MDF insufficient. 
Although the ICMM report (2007) mentioned Bibiani and Akim North as some of the few 
areas that received small amounts from the MDF, the case of the OMA could be because 
the impacts of mining on the livelihoods of the people have increased overtime.  
 
5.1.5 Weak Enforcement Mechanisms 
Poor monitoring of projects is one of the factors that hinder the effective utilization of 
royalties at the local level. Unlike the common fund where the administrator visits the sites 
where the projects are being undertaken to monitor the progress of the work, this is not the 
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case for the MDF disbursed to the Assemblies. The money is disbursed and there is no 
supervision from the office of the administrator of stool lands (OASL) on the projects that 
are being undertaken by the Municipality or how the money is being utilized by the 
Assembly. In some cases, these have led to shoddy projects.  One of the officers disclosed 
that  
With the common fund there’s the common fund administrator who visits 
the site regularly. Apart from our Municipal monitoring team, we have 
regional coordinating council and the ministry of finance. However with 
the MDF this is not so, the OASL releases the money and monitoring is not 
done by them. In view of this, some of the projects that have been 
undertaken with the money are shoddy work. Some of the contractors did 
shoddy work and some of the projects cannot be used. For example the 
bridge at Kwabrefoso cannot be used because the urban roads realised that 
long vehicles could not use the roads. 
 
Due to poor supervision contractors sometimes undertake projects that are shoddy. In the 
case of the bridge at Kwabrefoso, because it was constructed poorly, long vehicles cannot 
use the bridge. This means that the resources that have been invested into the building of 
the bridge have become waste as the bridge there has been abandoned. This confirms the 
report by the ICMM (2007) that sometimes there is a disjoint between the capacity of the 
local authorities and their ability to enforce the objectives of the fund.  
 
5.2 Challenges Faced By the Traditional Authorities in the Utilization of the MDF 
The challenges that chiefs encounter in the utilization of mineral royalties would be 
discussed below. The challenges encountered by the chiefs in the utilization of the MDF 
are the sharing of money according to ranks in the chieftaincy system, insufficient funds 
and delays in the receipt of mineral royalties.  
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5.2.1 Sharing of money according to ranks 
Sharing of mineral royalties according to ranks in the chieftaincy institution is one of the 
challenges that have inhibited the effective utilization of royalties for development. 
Although the decision to distribute mineral royalties to the chiefs is for development 
purposes, receipt of mineral royalties is shared according to hierarchy in the chieftaincy 
body. The sharing of money among the chieftaincy institution exhibits the politics of 
neopatrimonialism as funds are shared among the chiefs based on personal ties at the 
expense of the mining affected communities who are not part of the group. This might 
explain why a chief would receive as low as 50 Ghana cedis as mineral royalties for 
development purposes.  One chief revealed that 
When you take akokere division, it’s made up of Kusa, Borbriase, Odumasi 
and others so they share the money from the top before its get to my turn. 
Sometimes I get 50 Ghana Cedis as royalties.  
Although the money is shared from the top, it is the chiefs who are close to mining areas 
that receive the least of the money shared because they are the Odikro’s for the area. This 
data was confirmed by some of the Assembly Members of Obuasi municipal. One of them 
opined that ‘I know from the OASL the money would go to Otumfuo, Adansi, Fomena, 
Akokeri, Edubuase before it comes down to our Odikros’(Assembly Member, 27th march, 
2015).  This means that those who are at the top of the hierarchy receive more of the 
money as compared to those below which emphasize the point made by the political 
ecology theory that the benefits or cost of resource extraction are a product of unequal 
power relations (Bryant, 1998; Walker, 1991). The sharing of mineral royalties according 
to ranks would definitely inhibit the development objective attached to the disbursement 
of the fund. Even after several years of disbursement no improvement in the livelihoods of 
people would be seen. The sharing of mineral revenues according to ranks confirms the 
finding made by Hilson & Standing (2013) that chiefs use the monies personally rather 
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than the expectation of their residents. It also supports the assertion that, the framework to 
ensure equitable distribution of benefits has rather fostered the interest of the minority and 
have not addressed the power dynamics found in mining areas (Tsuma, 2010). It also 
confirms the assertion that  poor developmental outcomes is evident in countries with low 
institutional quality (When the institutional barriers for rent seeking activities are 
unavailable) while its non-evident in countries with high institutional quality (Mehlum, 
Moene & Torvik, 2006). 
 
5.2.2 Insufficient Money 
The data gathered from the traditional authority, also showed that money received as 
mineral royalties from the government are inadequate. One of the respondents 
passionately said that they know the government is cheating them and it would therefore 
be necessary if the government changes the whole sharing system of the MDF to one that 
would be favourable to the chieftaincy institution and the Assembly. One of the chiefs 
pointed that 
The mineral royalties is inadequate to commensurate for the land we give 
out for mining. I know the system for sharing the royalties what comes to 
the chief and the Assembly is just peanuts. What are we going to do with 
this? I think the share of mineral royalties should be revised by the 
government. They should share it in the ratio 60, 20, 20. So that at least the 
Assembly and the chiefs could share 20% of the royalties. At the moment 
we feel that we are being cheated by the government, because we face all 
forms of hazards in relation to mining activities (Chief, 27th march, 2015). 
The current system of sharing mineral royalties to the chiefs and the assembly are seen as 
not being favourable to mining communities as they are the people who bear most of the 
negative effects of mining activities, hence, the need for a revision on how mineral 
royalties are utilized. This give credence to the assertion that chiefs are unable to embark 
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on development projects because of the unfair share of mineral royalties received 
(Akabzaa, 2009). 
 
5.2.3 Delays in the release of funds 
Like the Municipal Assembly, Chiefs face the problem of delays in the release of the 
funds. There are still arrears for the year 2013 and 2014 in addition to 2015. This 
information was gathered from the chief of one of the mining areas. He was of the view 
that ‘The flow is not consistent. In 2013 we received one quarter and we have not received 
any thing till date’ (Chief, 27th march, 2015). 
The delays in the receipt of the funds would inevitably affect the implementation of 
project in these mining affected communities and consequently affect the development 
process in the community in question. 
 
5.3 Accountability and MDF Utilization 
This section examines the extent to which District Assemblies and chiefs are held 
accountable in the use of the mineral royalties from the MDF. It specifically looks at the 
extent to which the constitution enhances accountability in the use of mineral royalties, the 
role of GHEITI, the role of guidelines in the use of the fund and the awareness and 
involvement of the residents in the utilization of the fund. 
 
5.3.1 Poor legal framework 
The 1992 constitution of Ghana has given a formula for the sharing of mineral revenues 
which is found in article 267. The constitution states that ten percent of the revenue 
accruing from stool lands shall be paid to the office of the Administrator of Stool Lands to 
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cover administrative expenses; and the remaining revenue shall be disbursed in the 
following proportions-(a) twenty-five percent to the stool through the traditional authority 
for the maintenance of the stool in keeping with its status; (b) twenty percent to the 
traditional authority; and (c) fifty-five percent to the District Assembly, within the area of 
authority of which the stool lands are situated. However, the utilization of mineral 
royalties ‘for the maintenance of the stool in keeping up with its status’ is not clear. Due to 
this, most of the chiefs have understood it to mean “that it is legitimate to pay for regalia 
and the trappings of royalty – limousines, jewellery and ceremony” (ICMM, 2007, pp 77). 
This makes it difficult to hold chiefs accountable in the use of mineral royalties. Although 
the constitution of Ghana states that those who manage public, stool, skin and family lands 
are supposed to act to benefit the people and are supposed to be accountable, the 
constitution does not clearly state how these leaders should be held accountable. Art 35(8) 
of the constitution of Ghana states that 
The State shall recognise that ownership and possession of land carry a 
social obligation to serve the larger community and, in particular, the State 
shall recognise that the managers of public, stool, skin and family lands are 
fiduciaries charged with the obligation to discharge their functions for the 
benefit respectively of the people of Ghana, of the stool, skin, or family 
concerned and are accountable as fiduciaries in this regard. 
This shows that the extent to which chiefs are held accountable in the use of the fund have 
been limited by the constitutional provisions of Ghana. It also supports the assertion by 
Marfo et al (2012) that although there is a constitutional provision for the sharing of 
benefits among the District Assemblies and the chiefs, there is no provision made by the 
constitution as to the distribution and accountability of the revenues among stakeholders. 
This clearly exhibits a weakness in our institutions of governance and supports the 
assertion that the fund would amount to nothing if the institutions regulating the use of the 
fund are unavailable (Weinthal & Luong, 2006). The inability of the constitution to 
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explicitly state the way in which chiefs should be held accountable in the utilization of the 
fund and their role in the development process clearly exhibits the inability of our 
constitution to restrain chiefs from engaging in rent seeking activities with regards to how 
the funds and hence poor developmental outcomes in mining affected communities 
(Mehlum, Moene & Torvik, 2006). 
 
5.3.2 Unawareness of the fund and non-involvement of residents in decision making 
The study found out that most of the residents in mining affected communities are not 
aware that mineral royalties are distributed to the local leaders and not involved in 
decisions relating to the use of the fund. In view of this, residents in the mining affected 
communities are not able to question the Assembly and the Chiefs as to how mineral 
royalties have been utilized. This has further given the Assembly and the Chief’s 
discretion as to how the fund is utilized. This shows that EITI’s role in making sure that 
there is transparency in the utilization of mineral royalties have been limited. 
 
5.3.3 No guidelines for the use of the of the fund 
Due to the absence of clear guidelines on how the fund is to be utilized, the Assembly and 
chiefs have utilised the money according to their discretion. The outcomes therefore for 
the Assembly is that, projects that have been undertaken have not benefited communities 
that are directly affected by mining activities. The chiefs on the other hand, have utilised 
funds personally at the expense of their communities. This support’s the assertion that 
fund would amount to nothing if the institutions regulating the use of the fund are 
unavailable (Weinthal & Luong, 2006). One of the officials noted that 
There are no guidelines with regards to the use of the MDF. So 
when we called to the Public Accounts Committee, the woman in 
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charge of OASL was challenging the MP that there’s no legally 
bound MDF (Budget Officer, 25th March, 2015) 
Due to the absence these guidelines, there is no benchmarking to ensure that funds are used 
properly, hence limiting the extent to which the districts can be held accountable in the use 
of the fund. This supports the argument that countries with institutions that enhance 
accountability and state competence will tend to enjoy from resource booms since these 
institutions ameliorate the perverse political incentives that such booms create (Robinson, 
Torvik & Verdier, 2006). 
 
5.3.4 Ghana’s Extractive Industry Transparency Initiative (GHEITI) 
The information gathered from the respondents also showed that EITI also holds the OMA 
accountable through the publishing of the revenues received as mineral royalties and its 
corresponding expenditure. This point was brought to bear by two top officials from the 
OMA. One was of the view that ‘GHEITI is an oversight body that publishes how we have 
utilized the funds among the districts’ (Assembly Member, 25th march, 2015) 
According to the GHEITI report, the main aim for doing this is to enhance transparency as 
to how mineral revenues are utilized. However, GHEITI’s activities have been limited to 
the District Assemblies, mining companies and OASL. Therefore traditional authorities 
continue to misuse the funds meant for local level development. Making information on 
mineral revenues and expenditure available to citizens as a way of enhancing 
accountability and transparency in natural resources has been questioned. Standing & 
Hilson (2013) have argued that making information available is not the key to issue to 
address. Rather ‘the problem is one of agency and the inability of people to have influence 
through exit, voice or voting mechanisms.’ 
 
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5.3.5 Chiefs 
For the chiefs there are no mechanisms for accounting for the funds, as the money is 
shared amongst the hierarchy according to one’s position. Currently, they do not have any 
oversight body that makes sure that the funds are properly used. Therefore, most projects 
undertaken have benefited minority interests (chiefs) at the expense of the people. This 
confirms the findings of standing & Hilson (2013) that there no mechanism to enhance 
accountability and transparency in the funds paid to chiefs and that of Morghandi (2008) 
that there are no guidelines to make sure funds are accounted for by the traditional 
authorities. These support the assertion that poor developmental outcome is evident in 
countries with low institutional quality (when the institutional barriers for rent seeking 
activities are unavailable) while it’s non-evident in countries with high institutional quality 
(Mehlum, Moene & Torvik, 2006). Generally, there seems to be poor accountability 
mechanism at the local level to make sure that funds are used properly. 
 
Summary 
This chapter investigated the challenges the OMA and the chiefs’ encounter in the 
utilization of the MDF for development purposes and the extent to which they are held 
accountable in the use of the fund. The challenges encountered by the OMA in the 
utilization of the fund for development purposes are fluctuations and delays in mineral 
royalties, absence of guidelines, inadequate mineral royalties and weak enforcement 
mechanisms to make sure funds are utilized properly. The chiefs encounter delays in the 
receipt of mineral royalties, sharing mineral royalties according to ranks and inadequate 
mineral royalties.  The extent to which they are held accountable have been limited by 
poor legal framework, absence of guidelines in the utilization of the fund, unawareness 
and non-involvement of residents on royalty utilization and the weak role of EITI. 
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CHAPTER SIX 
SUMMARY OF FINDINGS, RECOMMENDATIONS AND 
CONCLUSIONS 
6.0 Introduction 
This study looked at how mining has enhanced development in Ghana by using the MDF 
as case study in the Obuasi municipal assembly. The study specifically looks at the factors 
that led to the establishment of the MDF, it uses and challenges encountered in the use of 
the MDF by the OMA and Chiefs and the extent to which the OMA and the Chiefs are 
held accountable in the use of the fund. This chapter is the final section of this research 
and it presents the summary of findings, recommendations for the way forward, theoretical 
contribution and conclusion for this work. 
6.1 Summary 
The study found at that the main factors that led to the establishment of the MDF are 
mainly economic and environmental factors. The economic factors were the expansion of 
mining activities, government attracting much revenue and the need to sustain the sector, 
the environmental dealt with the need to compensate those who bear the negative impacts 
of mining activities and land owners and a shift to surface mining. 
 
In terms of how the OMA and its chiefs had utilized mineral revenues, it was found out 
that the Obuasi municipal assembly has used its share of mineral royalties for the general 
development of the municipality rather than for mining affected communities. The areas of 
development focused on scholarship schemes, educational infrastructure, health, waste 
management, general infrastructure and sanitation with educational infrastructure, 
scholarship schemes and Waste Management being the major utilization of mineral 
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royalties for the period of between 2006- 2012. The chiefs including the odikro’s on the 
other hand, have used their share of mineral royalties personally due to the insignificant 
amount received by them. The beneficiaries of mineral royalties have rather been a 
product of power relations rather than stated structures (the requirements of the MDF). 
This is because the educated, the influential and those who are rich, have benefited at the 
expense of the mining communities who are the vulnerable. 
 
In the utilization of mineral royalties for development purposes the challenges encountered 
by the OMA are fluctuations in mineral royalties, delays, absence of guidelines as to how 
to utilize mineral royalties, poor monitoring of projects, and insufficient monies for 
development.   The challenges chiefs face in the utilization of the MDF are delays in the 
receipt of mineral royalties, inadequate monies compared to damaged caused by mining 
and the unawareness of some chiefs about the existence of the facility, chieftaincy dispute 
and the sharing of money according to ranks in the chieftaincy system. 
 
In terms of the extent to which the chiefs and the OMA are held accountable, this has been 
limited due to poor legal framework, absence of guidelines in the utilization of the fund, 
unawareness and non-involvement of residents on royalty utilization and the weak role of 
EITI. The chiefs on the other hand, have no oversight body to make sure funds are 
accounted for and mechanisms for accounting for the funds. Additionally, the 
administrative fiat that established the MDF did not establish any oversight body. 
 
6.2 Theoretical contribution 
This study used the theory of political ecology to explain why the benefits from mineral 
royalties have benefited the minority at the expense of the majority of the people. This 
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study found out that unequal power relation in terms of the power of information and 
political power have been one of the major reasons why mining affected communities 
have not benefited from mineral royalties. Therefore this research supports the argument 
made by the political ecology theory that unequal power relations is the reason why the 
benefits and costs of resource extraction are distributed unequally (Bryant & Bailey, 1997; 
Bryant, 1998). 
 
The study contributes to the neo-patrimonial literature by showing that chiefs in particular, 
share the funds among themselves rather than acting to the dictates of the constitution. 
Therefore utilization of mineral revenues has benefited chiefs at the expense of the 
majority of the people found in mining affected communities. 
 
The study also contributes to the resource curse literature by showing that one of the 
reasons why resource rich countries have not been able to transform their wealth into 
positive economic outcomes is due to weak institutions (Mehlum, Moene & Torvik, 2006; 
Robinson, Torvik & Verdier, 2006). The study found out that there is no legal framework 
and the absence of guidelines as to how the funds should be utilized. Additionally, the 
constitution, which provides the mechanism for sharing of revenues does not state how 
these funds should be distributed and accounted to their relevant stakeholders. This 
therefore limits the extent to which the OMA and the chiefs can be held accountable in the 
use of the fund. This is a clear sign of institutional weakness as institutional frame work 
does not emphasize “oversight, transparency, and accountability” (Weinthal, & Luong, 
2006).   
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6.3 Recommendations 
Based on the findings from the OMA it seems that a lot of people do not have knowledge 
that government of Ghana distributes a percentage of mineral royalties collected from the 
mining companies to the chiefs and the MMDAs for the purposes of development in 
mining affected communities. This calls for the need for civil society groups, the ministry 
of lands and natural resources to educate the people who are supposed to be the 
beneficiaries of the MDF. This could be done through community forums, house to house 
campaign and the media (radio and television). This would help to sensitize people about 
their rights and privileges. 
There is the need for the government in power to pass the MDF bill in parliament. This 
would make it possible for the local authorities to put pressure on the government to give 
them what is due them. Additionally, backing the MDF with a law would prevent arbitrary 
discretion in the use of the MDF and would make it possible to demand accountability in 
the use of the fund. 
 
Guidelines have to be created for the MMDAs by GHEITI in the use of the MDF 
disbursed. Guidelines would prevent MMDAs from using their share of mineral royalties 
for recurrent expenditures and other uses that does not really benefit the mining affected 
communities. Also guidelines can serve as benchmark by which actual use of the fund 
could be compared to the stipulated guidelines.  
 
Delays and fluctuations that are associated with the receipt of the MDF at the local level 
should be addressed. This is because delays in the receipt of mineral royalties tend to 
affect the planning and budget preparation of the assembly. Delays in receipt of the funds 
also inevitably affect the implementation of projects earmarked for that fund. 
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The people who are supposed to be the beneficiaries of the MDF are supposed to be 
involved in the decision making process of how mineral royalties would be utilized. This 
is because the money received by the assembly is for the people affected by mining 
operation. This would enable the local authorities to be more accountable in the use of the 
fund and to make the people aware of the projects that are being undertaken using the 
fund. 
 
The chief’s role in the development process in Ghana should be clearly spelt out by the 
constitution. This is because the dictates of the constitution has made it unclear as to how 
chiefs should use their share of mineral revenues. In some cases the use of mineral 
revenue for the maintenance of the stool has been understood to mean by some chiefs that 
it was legitimate for them to advocate personal use of the resources.  
 
It should be made mandatory for chiefs and MMDA’s to operate a separate account for 
mineral royalty. On the part of the Assembly, it will prevent them from using mineral 
revenues for recurrent expenditure and make it possible to track the utilization of the 
money for chiefs and the Assembly respectively. 
 
There is the need to form a committee that would be mainly concerned with the utilization 
of mineral royalties. This should consist of representatives from mining affected 
communities, Assembly Members of the mining affected communities and core official of 
MMDAs. This would provide the opportunity for the affected communities not to only 
take part in community hearings and needs assessment but also to make sure that their 
needs are catered for.  
 
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The current system of sharing mineral revenues between the government and its local 
actors should be reviewed in favour of the communities affected by mining operations. 
Instead of the 20% being allocated to the MDF, it would be better if this was shifted to at 
least 30% so that the local level authorities would receive enough revenue to contribute 
meaningfully to development in the mining affected communities. The current bill in 
parliament must be adjusted so that the MDF would constitute 30% of mineral royalties 
paid to mining affected communities. 
 
The MDF bill in parliament should also create a separate body like the common fund 
administrator that would be solely responsible for providing oversight on how the fund 
disbursed into the fund and monitor projects that are ongoing to make sure that these 
projects are of good quality. 
 
Mineral royalties disbursed for development in mining affected communities should not be 
solely put in the hands of the MMDAs and the traditional authorities. Rather a board must 
be set up that would comprise the chiefs, the district assembly and some selected 
community members who would have the mandate of  reporting to the community 
members on the amount received from the fund, deciding with community members how 
the money would be utilized and involving them in implementation, monitoring  and 
maintenance of the projects. 
 
The accountability institutions like the Auditor General, Public Accounts Committee and 
EITI must be strengthened in order for them to carry out their duties well. They must also 
come out with clear sanctions on the misuse of mineral revenues and make sure it is 
enforced no matter who the culprit is. 
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6.4 Conclusion 
This study found out that mining affected communities have not really benefited from 
mineral royalty utilization in the OMA. This is because residents in these communities 
lack the power of information on the existence of the fund and are not involved in the 
decision making related to the utilization. Furthermore, the constitution which provides the 
framework for the sharing of mineral royalties does not provide the method of distributing 
mineral revenues as well as the way of accounting to their relevant stakeholders on how 
these monies are utilized. Besides, due to the absence of guidelines and legal backing for 
the fund, decisions relating to the utilization of the fund are based on the discretion of the 
local authorities (OMA and the chiefs) hence a reflection of their interest. 
 
 
 
 
 
 
 
 
 
 
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Appendices A -Interview Guide 
RESPONDENTS MAIN QUESTION SUB-QUESTIONS 
NATIONAL 
LEVEL 
 Minerals 
Commission 
 Ministry of  
Lands and 
Natural 
Resource 
 Ghana 
Chamber of 
Mines 
 Steven 
Mantheaw 
(ISODEC) 
 Yaw Graham 
(TWN) 
 Thomas 
Akabzaa 
What are the factors that led 
to the establishment of the 
MDF? 
 Why was the MDF 
established? 
 Why was it established in 
1993? 
 Why was it established by 
an executive  fiat 
 Did the return to multi-
party democracy play a 
role as the fund was 
established at the same 
time? 
 Was it established  as result 
of  the expansion of mining 
activities 
 Whose idea was it? Bretton 
woods institution?  Foreign 
investors or companies? 
Ministry? 
 
 
 
 
 
 
 
 
 
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Obuasi Municipal 
Assembly 
How have DA’S utilised 
MDF from 1993 to date? 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 How long has your 
municipality been 
receiving royalties from 
MDF? 
 How has the royalties 
received being utilised? 
 Do you set it aside for 
specific expenditures?  
 What is the nature of these 
expenditures? 
  What informs the choice 
of these expenditures? Das 
budget? Community needs 
assessment? Community 
appraisals? 
 How are community 
members involved on how 
the fund is utilised? 
 Are there any internal 
controls to make sure funds 
are accounted for? 
 Are they operated as 
separate accounts? 
 
 
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What are the challenges DAS 
encounter in the use of the 
fund? 
 
 
 
 
 
 
 
 
 
How das are held accountable 
on the utilization of the fund? 
 
 What are some challenges 
encountered in the use of 
the fund? 
 Are the flows of fund 
consistent? 
 Do the das experience year 
to year fluctuations in the 
receipt of funds? 
 Do you encounter delays in 
the receipt of funds? 
 How does this affect the 
usage of the fund? 
Budgeting and 
implementing projects 
 
 How is accountability 
ensured in the use of the 
fund? 
 
 Are there any internal 
controls? 
 
 What forms do these 
mechanisms take? 
 
 Is there any external 
oversight body to make 
sure funds are utilized 
properly in the 
municipality?   
 What forms does this take? 
Probing - Auditing and 
publishing accounts? 
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Chiefs  How have traditional 
authorities utilised the 
MDF from 1993 to 
date? 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
What are the challenges 
Chiefs encounter in the use of 
the fund? 
 
 
 
 
 
 
 
 
 
How traditional authorities 
are held accountable in the 
utilization of the funds? 
 Do you receive mineral 
royalties from the Mineral 
Development Fund 
(MDF)? 
 Do you have a general idea 
about how the mineral 
royalties from the MDF are 
to be used? 
 How much have you 
received as mineral 
royalties from 1993 to 
date? 
 How has the amount 
received from 1993 to date 
been used? 
 Are the residents involved 
on how the royalties are 
being used? 
 What specific challenges 
do you face in the use of 
the funds? 
 Are the flows of fund 
consistent? 
 Are the year to year 
fluctuations in the receipt 
of fund? 
 
 Are the delays in the 
receipt of funds? 
 
 How do these challenges 
affect the utilization of the 
funds?  Probing -Planning 
and implementation of 
projects? 
 
 What specific mechanisms 
have been put in place to 
ensure that funds received 
are accounted for? 
 
 Are the central government 
controls on how the funds 
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are to be accounted for? 
 
 Is there any oversight body 
that makes sure funds are 
accounted for? 
 
 
 
 
 
 
 
 
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QUESTIONS FOR COMMUNITY MEMBERS 
1. Do you have any idea or knowledge about the existence of the fund? 
2. Do you have any idea on what the fund is to be used? 
3. Do the municipal assembly and the chiefs involve you on how the fund is utilised? 
4. Do you know how the funds are utilised? 
5. Do you know some of the uses of the fund by the das and chiefs? 
6. Who do you think are the beneficiaries of the fund? 
7. Why do you say so? 
8. Do you think chiefs should use their share of the fund for community 
development? 
9. Why do you say so? 
10. Do you think Chiefs and DAS can be held accountable for the use of the fund?  
Why? 
11. How could they be held accountable? 
 
 
 
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