Ghana loses $6.56bn in mining revenue -IFS

Ghana could have earned an additional US$6.56 billion from its mining sector in 2025 if it had mobilised revenue at the average rate achieved by Botswana, the Institute for Fiscal Studies (IFS) has estimated.

The Institute said Ghana generated only US$1.60 billion in revenue from mining in 2025, representing 11.9 per cent of the sector’s value added of US$13.40 billion.

However, applying Botswana’s average mining revenue-to-value-added ratio of 60.9 per cent, recorded between 2019 and 2023, would have increased Ghana’s mining revenue to approximately US$8.16 billion.

The estimated shortfall, according to the IFS, exposes Ghana’s inability to secure adequate financial returns from its considerable mineral wealth, despite the sector’s significant contribution to economic activity.

The Chief Executive Officer of the IFS, Kwabena Dwumfour, disclosed this when he presented the Institute’s latest policy brief, titled A Reexamination of the Low Government Revenue Mobilization in Ghana, at a pre-budget press conference in Accra yesterday.

The presentation identified low revenue generation from the extractive sector, persistent revenue leakages and excessive tax exemptions granted to attract investment as the three major factors undermining Ghana’s domestic revenue mobilisation.

Comparing Ghana’s performance with Botswana, the Institute observed that Ghana’s average mining value added between 2019 and 2023 stood at US$5.03 billion, compared with Botswana’s US$2.81 billion.

Despite having a mining sector with a lower average value added, Botswana generated average annual mining revenue of US$1.72 billion, significantly higher than Ghana’s US$729.61 million.

This meant that Botswana earned 135.7 per cent more mining revenue than Ghana over the period.

The IFS attributed Botswana’s stronger performance partly to the government’s active participation in the mining industry through partnerships with private companies.

It explained that this arrangement enabled the Botswana government to earn substantial dividends and royalties, in addition to corporate income tax revenue, while providing it with better knowledge of mining operations and the profitability of companies.

In Ghana, however, government participation in mining is largely limited, with private companies undertaking extraction under concession arrangements.

This, the Institute argued, restricts the government’s ability to benefit adequately from the sector’s profitability.

The policy brief cited Botswana’s 2022 mining revenue figures, showing that dividends and royalties accounted for US$1.86 billion, representing 68.9 per cent of the country’s total mining revenue of US$2.74 billion.

The IFS, therefore, recommended that Ghana consider direct government investment in the extractive sector through partnerships with private investors or adopt production-sharing agreements as an alternative to the existing concession regime.

It argued that improving revenue generation from mining alone could raise Ghana’s total revenue and grants-to-GDP ratio from 15.7 per cent to 21.4 per cent, above the Sub-Saharan African average.

GHANA’S REVENUE GAP

Beyond the extractive sector, the Institute raised concerns about Ghana’s overall domestic revenue mobilisation, noting that the country’s total revenue and grants amounted to only 15.7 per cent of Gross Domestic Product (GDP).

This compares unfavourably with the Sub-Saharan African average of 20.1 per cent, placing Ghana 18th among 25 African countries assessed using 2022 or the latest available data.

Countries such as Namibia, Seychelles and Botswana recorded revenue and grants-to-GDP ratios of 31.3 per cent, 30 per cent and 29.5 per cent respectively.

The IFS estimated that if Ghana had mobilised revenue at the regional average of 20.1 per cent of GDP in 2025, it would have collected GH¢288.26 billion instead of the actual GH¢224.88 billion.

That would have provided an additional GH¢63.38 billion to the public purse.

At Botswana’s rate of 29.5 per cent, Ghana’s revenue and grants could have reached GH¢423.06 billion, representing an additional GH¢198.18 billion.

The Institute warned that weak revenue mobilisation had serious implications for national development, including inadequate funding for infrastructure, excessive government borrowing, rising debt-servicing costs and recurring fiscal and debt crises.

It also argued that the situation constrained the government’s ability to finance development projects and contributed to comparatively low public sector remuneration and subdued domestic demand.

REVENUE LEAKAGES, TAX EXEMPTIONS

The IFS further identified revenue leakages through underreporting, tax evasion, tax avoidance and alleged collusion between businesses and revenue administrators as major obstacles to improving government revenue.

It noted that despite several administrative, institutional and technological reforms introduced since the 1980s, revenue leakage remained a significant problem in both tax and non-tax revenue collection.

The policy brief cited a disclosure by the Commissioner-General of the Ghana Revenue Authority (GRA), Anthony Sarpong, in April 2026 that Ghana had lost more than GH¢11 billion in revenue at its ports through incorrect declarations involving the country of origin, classification and valuation of imported goods.

The losses were reportedly uncovered following the introduction of the Publican AI system, with investigations revealing collusion among key players in the import chain.

The Institute also raised concerns about what it described as the excessive use of tax exemptions and other fiscal incentives to attract private, particularly foreign, investment.

It cited incentives under the Free Zones regime and the automotive industry, including corporate tax holidays, import duty exemptions and other concessions.

According to the policy brief, the Ghana Investment Promotion Centre’s Ghana Incentives Inventory lists as many as 31 income tax, customs and financial incentive packages provided to various industries.

The IFS argued that such exemptions had significantly undermined government revenue mobilisation and questioned whether the revenue forgone was justified by the benefits of attracting investment.

RECOMMENDATIONS

To address the challenges, the Institute called for a comprehensive review of existing tax incentive packages, with government discontinuing those that do not make economic sense when the revenue lost is weighed against the benefits received.

It also urged the government to intensify the fight against corruption, particularly within tax and non-tax revenue collection agencies.

The Institute proposed a ‘carrot and stick’ approach, under which revenue collection agencies and their personnel would be rewarded for good performance and swiftly sanctioned for misconduct.

It further advised the government against over-reliance on tax exemptions as a means of attracting investment, arguing that sustained improvements in the macroeconomic and political environment would be more effective in attracting both local and foreign investors.

The IFS maintained that addressing these structural weaknesses was essential to improving Ghana’s revenue mobilisation capacity and reducing the country’s dependence on borrowing to finance development.

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