What have been the main developments at PwC over the past year?

We launched “The New Equation”. This is built on two interconnected needs: trust and sustained outcomes.  To help our clients and stakeholders address these needs, we committed to investing significantly in our community of solvers (i.e., our people), and using a diverse team that is human-led, tech-enabled and prepared to solve important problems today and tomorrow. We also embarked on a campaign called “New World New Skill” aimed at shaping the workforce of the future.

How has the Ghanaian economy managed growing inflation?

Ghana was on a robust growth path before the pandemic with all economic indicators looking up, while the country enjoyed a good standing in international markets. The post-Covid economy looks different. Like in other parts of the world, inflation spiked. In response, the central bank increased the policy rate from 22% in August to 24.5% effective 6 October 2022. The government in the mid-year budget also proposed to cut down on its budgeted expenditure. With investors not seeing the government’s fiscal efforts on debt sustainability as sufficient, rating agencies began to downgrade the country’s bonds leading to some non-resident investors exiting the country’s domestic bond market. This, among other external factors and the periodic demand for foreign currency for imports, led to pressure on the country’s foreign exchange reserve and significant depreciation of the cedi during the period. With the country losing its access to the international capital market, it turned to the IMF for a US$3 billion assistance package. The government is hopeful a deal can be reached with the IMF by the end of 2022. The central bank of Ghana has also begun an initiative to purchase 10,000 oz of gold annually from mining companies locally to shore up the country’s reserves.

How has the mining industry performed in the last year?

Ghana has lost its title as Africa’s top gold producer to South Africa. Ghana’s total gold production declined by 29.92% in 2021, from 4 million oz in 2020. The main contributor to this drop is the reduction in official production output in the small-scale mining sector. While production from large-scale miners decreased by only 4.4% in 2021 from 2.8 million ounces recorded in 2020 on account of mostly internal operational challenges, production from the small-scale mining sector per official records fell by 91.66% in 2021 from 1.175 million oz recorded in 2020. The significant decline in production in the small-scale sector is attributable to the effect of a 3% withholding tax imposed on gold sales of small-scale miners, causing an abrupt shift among small-scale miners to export their output through unofficial channels to circumvent the tax. The withholding tax rate has been revised downward to 1.5% to reverse the trend. The country’s manganese and diamond production saw increases of 41.52% and 114.2% in 2021 from 2.4 million tonnes and 25,292 carats respectively in 2020.

What are some of the investment trends in the exploration sector?

Aside from gold, lithium exploration is receiving some attention in Ghana following recent discoveries in the country. Ghana’s first lithium-producing mine is expected to come onstream within two years. Additional iron ore deposits have also been discovered in the Oti region of Ghana. On the capital market, Asante Gold Corporation got listed on the Ghana Stock Exchange on 29 June 2022. Some significant acquisitions during the year include the acquisition of Golden Star Resources Limited by Chifeng Jilong Gold Mining.

Could you summarize the key fiscal changes relevant to the mining sector in Ghana?

Some measures introduced in the 2022 mid-year budget include the extension of penalty and interest waiver to December 2022 for tax debts accrued up to 2020. This is expected to lessen the burden on taxpayers. An electronic invoicing system (e-VAT) is also expected to come on stream in the fourth quarter of 2022; this policy is to ensure the revenue authority has a real-time view of VAT-related transactions for tax collection. To promote compliance, Government seeks to impose a “recoverable penalty” equivalent to the VAT non-registered persons are required to charge on their goods, payable at the ports of entry. The implementation of this policy is expected to commence in October 2022. Discussions are also ongoing for the government to set up an independent tax appeals board to resolve tax disputes.