Ghana Loses $6.56bn in Potential Mining Revenue Annually, IFS Says

Ghana forfeits an estimated $6.56 billion in potential revenue from its mining sector every year because the state remains a passive bystander in mineral extraction rather than an active participant, the Institute for Fiscal Studies (IFS) has revealed, urging the government to use the upcoming 2027 Budget to correct the leakage.

The institute's Executive Director, Dr. Said Boakye, made the disclosure at a policy briefing on low government revenue mobilisation in Accra, comparing Ghana's mining revenue performance unfavourably with Botswana's and arguing that the shortfall reflects a fundamental flaw in how the country structures its relationship with mining companies.

The Botswana Benchmark

The figures are stark. In 2025, Ghana generated just $1.6 billion in revenue from mining, representing 11.9 per cent of the sector's $13.4 billion value added. Botswana, by contrast, captures an average of 60.9 per cent of mining value added as government revenue. Had Ghana matched that ratio, it would have collected $8.16 billion—a shortfall of $6.56 billion in a single year .

The disparity persists even though Ghana's mining sector is larger in absolute terms. Between 2019 and 2023, Ghana's average mining value added stood at $5.03 billion, compared with Botswana's $2.81 billion. Yet Botswana generated average annual mining revenue of $1.72 billion over the same period, while Ghana collected just $729.61 million—meaning Botswana earned 135.7 per cent more from a smaller sector .

Dr. Boakye attributed Botswana's outperformance to the government's active involvement in mining through partnerships with private companies. "The government of Botswana does not only earn large corporate income tax revenue from mining because it has an insider knowledge of mining operations and profitability, it earns even larger revenue from dividend payments and royalties," he said . In 2022, dividends and royalties accounted for $1.86 billion of Botswana's $2.74 billion total mining revenue—68.9 per cent of the total .

Ghana's concession-based system, by contrast, leaves private companies largely in control of extraction, with the state having limited access to information about their operations and profitability. The government collects royalties and taxes but misses out on equity dividends and the deeper financial insight that comes from being a partner rather than merely a regulator.

A Broader Revenue Crisis

The mining shortfall is symptomatic of a wider malaise. Ghana's total revenue and grants-to-GDP ratio stood at 15.7 per cent in 2022, against an average of 20.1 per cent for 25 sub-Saharan African countries examined in the IFS report. That placed Ghana 18th out of 25—a relatively poor performance for a country of its economic size .

The IFS estimated that had Ghana mobilised revenue at the regional average in 2025, it would have collected GH¢288.26 billion instead of the actual GH¢224.88 billion—an additional GH¢63.38 billion . At Botswana's rate of 29.5 per cent, revenue could have reached GH¢423.06 billion, an additional GH¢198.18 billion .

Dr. Boakye identified revenue leakages—tax evasion, underreporting, tax avoidance, and collusion involving revenue administrators—as major factors undermining domestic revenue mobilisation. He cited revelations by Ghana Revenue Authority Commissioner-General Anthony Sarpong in April 2026 that the country had lost more than GH¢11 billion at its ports through incorrect declarations involving country of origin, classification, and valuation of imported goods .

Excessive tax exemptions granted to businesses were another drain. The report cited incentives under the Free Zones regime and the automotive industry development policy, which offer tax holidays, import duty exemptions, and other fiscal concessions. The Ghana Investment Promotion Centre's incentives inventory lists 31 income tax, customs, and financial incentive packages available across various sectors .

The Cost of Under-Mobilisation

The consequences of weak revenue mobilisation are direct and compounding. "The low government revenue mobilisation usually leads to shortage of money to fund the government's developmental projects, making it resort to borrowing," Dr. Boakye said. "This has led to frequent large debt build-ups, high debt service costs, and fiscal or debt crisis" .

The fiscal pressure is visible in the 2025 public accounts. Government collected GH¢224.88 billion in revenue and grants but spent GH¢233.78 billion, running a deficit of GH¢8.90 billion. Compensation of employees (GH¢78.97 billion), grants to other government units (GH¢57.72 billion), and interest payments (GH¢49.89 billion) together absorbed roughly 80 per cent of total expenditure, leaving precious little fiscal space for capital investment .

Recommendations for the 2027 Budget

The IFS is calling on the government to use the 2027 Budget to address the structural weaknesses. Its primary recommendation is greater government participation in the extractive sector through direct investment and partnerships with private companies, modelled on Botswana's approach. It also proposed production-sharing agreements as an alternative to the existing concession arrangements, arguing that such agreements would provide the state with better returns from the exploitation of its natural resources .

Beyond mining, the institute urged an intensified fight against corruption within tax and non-tax revenue collection agencies, alongside a comprehensive review of existing tax incentive packages. Dr. Boakye said the government should discontinue exemptions that did not make economic sense in relation to the revenue being forfeited, and rely more on improvements in the macroeconomic and political environment to attract investment .

The IFS 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—demonstrating that the sector's reform is not a peripheral concern but a central pillar of any credible fiscal consolidation strategy .

For a country that has repeatedly turned to the International Monetary Fund and external creditors for fiscal support, the message is pointed: the revenue is there, buried beneath the ground and locked in the structure of mining contracts. Whether the 2027 Budget will change that calculus remains to be seen.