Ghana holds large mineral reserves and its extractives sector has been dominated for centuries by mining. Gold, diamonds, bauxite, manganese and salt are commercially exploited, along with substantial reserves of iron ore. Gold is currently the most important of these, accounting for over 90 percent of mining sector revenue while the mining industry as a whole contributes about 47 percent of total exports (Ghana EITI reports summary), and up to 40 percent of revenue in some mining areas.

Following the historic 2007 offshore discovery now known as the Jubilee Field, oil production began in December 2010. Estimates of total oil reserves range from 800 million to 1.8 billion barrels. Commercial extraction is expected to generate (pdf) over $1 billion per year in export revenue over the next 20 years. Tullow Oil, Kosmos and Anadarko are the main interested parties in the field, alongside the state-owned GNPC. Production as of the end of 2011 was expected to hit 24.78 million bbls.Several other companies hold licenses for further exploration. As a result, servicing outfits, oil companies and workers have flooded Ghana's coastline. The new oil wealth could represent a boom that provides Ghana with the revenue needed to drive development and reduce poverty.

Annual real GDP growth rates have ranged between four and 5.4 percent over the last decade. GDP grew by 7.3 percent in 2008, and despite the global downturn, the economy has remained largely resilient, growing by around four percent in 2009 and at an estimated 7.7 percent in 2010. With World Bank figures of GDP per capita at about $1,100 in 2009 (up from $650 in 2007), Ghana was upgraded to a lower middle-income country. And with the new oil production, GDP per capita is projected to exceed $1,400, but the impact on household income and non-oil sectors will be modest.

Overall real GDP growth in Ghana is projected at 13.2 percent for 2011, accounted for mainly by oil activity (although non-oil sectors also performed well, with a projected 8.2 percent growth rate). Continued expansion in the oil sector, combined with robust non-oil activity is projected to support overall real GDP growth of 7.6 percent in 2012 (EIU, 2011).

Despite the productivity of its gold mines, Ghana's overall mineral industry was stagnant until the comprehensive Economic Recovery Program (ERP) of macroeconomic and structural policies was instituted in 1983. Supported further by the Minerals and Mining Law of 1986, mining has become an important sector of the Ghanaian economy, as demonstrated by its contribution to direct taxation and GDP.

In response to fluctuating inflation rates and growing national debt, the government of John Atta Mills introduced several austerity measures in 2009, including a change from the flexible royalty regime under which companies paid the minimum rate of three percent, to a flat rate of five percent in 2010. As a result of government measures, the fiscal deficit has fallen to single digits, and the growth of debt stock has been slowed with July 2011 reports citing the stock  at 40 percent of the economy.

The country still faces major challenges in the distribution of resource revenues for the public good. Ghana ranked 130th on the UN Human Development Index for 2010, and 53.6 percent of its population lives on less than $2 a day (World Bank, 2006). In recent years the country has slipped on numerous critical Millennium Development Goals (MDG) targets, such as halving poverty, reducing child mortality, and ensuring gender parity in school enrollment and completion.

The relative strength of Ghana's institutions compared to other resource-rich countries and the prospects for avoiding the usual pitfalls of oil dependency have generated significant enthusiasm from international partners. The World Bank, as one example, approved a $38 million Gas and Oil Technical Assistance Credit in December 2010, to help strengthen the institutions supporting the new oil and gas sector and to provide training for government officials and university students (World Bank country brief for Ghana).

Revenue Transparency

In 2003, Ghana signed on to the Extractive Industries Transparency Initiative (EITI), an indicator of the country's commitment to growth through transparent development of its resource sectors. While EITI initially applied only to the mining sector, the Mills government has stated an interest in extending the process to the oil sector and preparations are underway for this expansion. Although Ghana missed the initial March 2010 validation deadline, following the extension granted by the EITI Board, Ghana was declared an EITI compliant country at the October 2010 meeting in Dar es Salaam, Tanzania.

Ghana's first audited EITI report, covering mining revenue from January to June 2004, was published in February 2007 and included subnational reporting from district assemblies. Although no significant discrepancies were identified between company payments and government receipts, the report raised serious concerns over royalty computations and the transparency of subnational disbursements, as well as issues with contract transparency and the uses of royalties by authorities. Further reports published in 2008 and 2010 covered the second half of 2004 and all of 2005 through 2008. The reports reflected some improvements in the sector, for example in the tracking of disbursements to the subnational level, although the three-year time lapses diminished the relevance of the reports.

The latest report, published in September 2011, covers payments and receipts from 2009 and was reviewed using a more thorough reconciliation process.The report shows that the government received around $79 million in 2009, with almost 80 percent from mineral royalty payments. Looking ahead, it will be important for Ghana to publish EITI reports on a more timely and regular basis for increased transparency in the sector, especially as oil revenues come under scrutiny.

The Ghanaian government is considering the introduction of a fiscal responsibility law to expand the existing Financial Administration Act of 2003. This would anchor fiscal expectations by crafting long-term strategic plans for resource usage regardless of short-term political changes.

Expenditure Transparency

Ghanaian authorities are making progress in improving expenditure transparency, and the country has introduced targeted legislation in recent years that is designed to ensure accountability, transparency and efficiency in public resource management, including:

• The Financial Management Act of 2003, which regulates the public sector to ensure transparent and effective management of state revenues and expenditures
• The Public Procurement Act of 2003, which aims to foster competition, efficiency, transparency and accountability in procurements

Further efforts toward expenditure transparency include the 2007 launch of Public Expenditure Tracking Surveys (PETS) for education and health, and the inclusion of local level royalty and related spending reports in its EITI framework. Ghana's Publish What You Pay (PWYP) coalition is supporting ongoing capacity-building exercises to help communities track these disbursements.

A 2006 evaluation conducted under the auspices of the World Bank and the UK Department for International Development (DFID) concluded that the Public Financial Management (PFM) system in Ghana “is based upon a solid legal and regulatory framework." Nevertheless, the report also identified critical weaknesses in budget documentation and in the transparency of inter-governmental fiscal relations. It also illustrated the need for effective internal audit systems. Civic engagement on the budget process has increased, and Ghana has climbed higher on the Open Budget Survey in recent years, moving from 49 in 2008 to 54 in 2010. However, room for improvement with respect to public involvement in monitoring and auditing processes remains, as illustrated by Ghana's low rating in the 2010 Revenue Watch Index.

A key challenge for the Ghanaian government is to carry forward the transparency gains made through the EITI process for minerals amid the euphoria surrounding the Jubilee Field discovery. Following months of debate, leaders passed the Petroleum Revenue Management Act in April 2011, with commercial oil production already underway. The new legislation, which is supported by Petroleum Exploration and Production Act, will govern the use of oil revenues. It provides for the creation of oil funds to guard against economic volatility and save for future generations.The law also establishes a Public Interest and Accountability Committee, launched in September 2011, to introduce an additional layer of public oversight in petroleum revenue management.

Contract Transparency

As in many countries, secrecy surrounding mining and oil contracts is a challenge in Ghana. Before Ghana endorsed the EITI in 2003, all discussion of contract transparency was branded as anti-business. The first EITI report, however, recommended that all of Ghana's mining contracts, including investment agreements, be made public.

In May 2011, several companies' oil contracts were published on the U.S. Securities and Exchange Commission website as part of the company listing process. Soon after, the Ghanaian Minister of Energy ordered the publication of those oil contracts, and at the time of writing, these could be found on the ministry website.

Nevertheless, obstacles to transparency remain. There is no clear legal requirement for petroleum or mining contracts to be published, and the Ghana National Petroleum Corporation does not provide any information on contracts it enters into on behalf of the state. A model oil contract (drafted in 1980) and related laws can be obtained, but they do not address the fundamental problem that actual contracts remain unavailable for comparison.

Freedom of Information

There have been widespread calls for Ghana to enact a Freedom of Information (FOI) Law and affirm the public's right to information. The issue remains in the public and media discourse, and public discussion of oil and mining has increased overall since the launch of the EITI and the Jubilee discovery. The government submitted a FOI bill to parliament in 2010 but it has yet to be debated or passed. Without continued pressure, it is unlikely the bill will be passed before the end of the current term in 2012.