Accounting for the Effects of Institutional Changes on Ghana’s Small-Scale Gold Mining Sector, Pre-colonial to the Post-Structural Adjustment Programme Eras

Ghana’s gold mining industry is mainly owned by multinational enterprises and indigenous small-scale operators. The latter, though significantly informalised, contributes a third of the about five million ounces of gold produced annually. Its informalisation is characterised by labour intensity and poor regulation. Due to ineffective regulation and its resultant effects on the environment, health and other social menaces, the sector has attracted attention in recent times. This study is aimed at deepening the understanding of the informalisation of the small-scale gold mining sector through the lens of historical ownership policies. The key institutions which have influenced the ownership policy of the mining industry in Ghana are the traditional Chiefs; colonial government; post-independent government; the International Monetary Fund and the World Bank. First, the industry was controlled by the chieftaincy institution prior to Ghana’s colonisation by Britain. Through the 1932 Mercury Ordinance, the colonial government banned the indigenous people from engaging in gold mining. Also, the post-independent government nationalised the industry and continued with the 1932 policy that marginalised the small-scale gold mining sector. Meanwhile, in the 1980s, the Government of Ghana introduced the Economic Recovery Programme to liberalise the economy. This economic reform was implemented through the Bretton Wood institutions’ flagship policy – the Structural Adjustment Programme. In 1989, as part of the government’s privatisation policy, small-scale gold mining was legitimised and reserved for Ghanaians only. This study ascertains the motivation for the ban of small-scale gold mining and how the changing ownership policies have contributed to the current state of the sector’s informalisation. To achieve the study’s aim, thirty-one industry actors were engaged in a face-to-face and focus groups semi-structured interviews. These actors were drawn from public and private institutions in Accra and three District Assemblies which host mining enterprises. The informants represent central and local government officials, traditional Chiefs and opinion leaders in mining communities, mining associations and practitioners and officials of policy think tanks. The interviews were corroborated by archival documents including, mining policies, minutes of meetings, letters and other publications of mining institutions from the colonial period to contemporary times. The study found that the colonial government banned small-scale gold mining to weaken the chieftaincy institution and to make available local labour to address the acute labour shortage in the large-scale mining sector. Meanwhile, the post-independent government continued to marginalise the small-scale sector with the aim of stabilising the State-dominated economy. In 1989, legitimisation of the small-scale sector became possible through the coalition of smaller interest groups which opposed the government’s economic liberalisation programme. The sector’s legitimisation was to make room for the retrenched employees from the state-owned mining enterprises to operate. Through this, the study contributes to institutional change theory by concluding that when smaller actors with low political power join their resources, they can effect significant changes. In addition, this study asserts that the continuous informalisation of the small-scale gold mining sector is partly caused by government’s discriminatory policies in favour of the large-scale enterprises. For example, registration processes for small-scale operators are bureaucratic and costly. Moreover, the usage of security personnel to combat illegal mining activities significantly affects legitimate small-scale miners. The study therefore recommends that the government decentralises the licensing regime and provides financial and technical support to the sector to encourage more registration that would be easy to monitor and control.