In Ghana, 20% of the revenues from the extractive sector are earmarked for sharing between various national regulatory and oversight bodies, the local government authorities (District and Municipal Assemblies), the traditional land-owning authorities and other communities which are impacted by mining activities. The EITI Report identified that the amount of payments from the government to the regional Offices of the Administrator of Stool Lands (OASL) and local governments were inaccurate: The actual payments by OASL to District and Municipal Assemblies were often smaller than they should have been.
The report also found that irregular transfers made budgeting challenging, as the OASL did not always forward the full amount due to districts and municipalities and payments were made in instalments, which made planning and budgeting difficult for the District Assemblies. In addition, it appeared that there was a misapplication of funds by local authorities, as much of the revenue was spent on recurrent expenditures such as waste management, purchase of fuel and vehicles instead of economic development projects.
In light of these findings, the Ghana 2004-2011 EITI Report recommended that:
- The revenue authority should regulate the timeliness of royalty transfers from companies.
- Transfer of royalty from government to District Assemblies should be made in full and not in tranches.
- Monthly royalty payments should be regularized for efficient calculation of royalty based on production.
- Guidelines for the utilisation of royalty receipts by District Assemblies should be implemented to avoid recurring expenditure.
To follow up on these recommendations, the Government of Ghana and the multi-stakeholder group have taken several actions to ensure improved management of the local government funds from extractives. The OASL have ensured that the correct amounts of mining royalties are passed on to districts and municipalities; District Assemblies have established dedicated bank accounts for the revenues being transferred from central government; and the Minerals Commission has developed policy guidelines for the use of mineral revenues at the subnational level. The guidelines were developed alongside tracking mechanisms to ensure that the guidelines are being followed.