98.3 percent of Ghana’s gold remains in the hands of multinational corporations

by CELINA DELLA CROCE

“It is transnational corporations, the stand-ins of yesterday’s British empire—often aided by an enthusiastic national bourgeoisie—that have robbed the Ghanaian people of sovereignty over their resources, their wealth, and their future,” writes Celina della Croce. IMAGE/Anastasya Eliseeva/New Frame

Every year, the vast majority of Ghana’s natural wealth is stolen. The country is among the largest exporters of gold in the world, yet—according to a study by the Bank of Ghana—less than 1.7 percent of global returns from its gold make their way back to the Ghanaian government. This means that the remaining 98.3 percent is managed by outside entities—mainly multinational corporations, who keep the lion’s share of the profits. In other words, of the US$5.2 billion of gold produced from 1990 to 2002, the government received only US$87.3 million in corporate income taxes and royalty payments.

The dominant discourse propagated by institutions like the International Monetary Fund (IMF) that control the levers of global finance blames the bad governance of local officials for the consequences of this plunder, citing corruption scandals as the main reason for a lack of resources. However, the discourse around bad governance—the idea that corrupt local officials are to blame for endemic poverty, low health indicators, education, and other measures of national well-being—focuses on what happens with the 1.7 percent of the returns that Ghana receives. Sarah Bracking points out that “the company would argue that the market value of output is not synonymous with their surplus, or profits, as working capital, wages, depreciation of machines and so forth must be paid from this. However, the figures do act as a good illustration of the low returns to the sovereign owners of sub-soil resources, as a proportion of their final market value, which, in Africa, can be estimated as typically in the region of between three and five percent, but which in this case is lower (about 1.7 per cent).” Holding officials accountable for their use of public funds should be a given, but what about the remaining 98.3 percent of the returns generated by Ghana’s gold exports?

Individuals are blamed, fingers angrily pointed at corrupt governments, while the nations they govern are robbed blind by transnational corporations. It is these corporations, working with institutions like the IMF and the World Bank, that define the terms of this conversation. These international lenders bury borrowing countries with steep interest rates and terms that grant lending institutions the power to determine and approve national policies.

National leaders of countries that fall into the debt trap are forced to forfeit the right to create their own policies for access to loans. These leaders are then blamed for the consequences of policies and terms crafted by lending institutions (a key form of neocolonialism). They are also blamed for the vestiges of hundreds of years of colonialism that came before.

In some cases, it is true that national leaders are involved in corruption scandals. In others, corruption scandals are fabricated, relying on a deeply embedded narrative and lack of faith in national leadership in the Global South, despite a lack of evidence (seen recently in Brazil with the imprisonment of leading presidential candidate Lula da Silva).

Even in cases where the corruption of local governments does exist, the amount of money pilfered pales in comparison to the wealth extracted by transnational corporations. In other words, robber barons are blaming petty thieves for the consequences of their large-scale robbery schemes. According to the United Nations Conference on Trade and Development (UNCTAD), multinational corporations’ offshore tax hubs result in an estimated US$100 billion in annual tax revenue losses for developing countries. Vijay Prashad of Tricontinental: Institute for Social Research calls this phenomenon “tax strikes,” or the idea that “those who hold capital, who are the masters of property, have been—essentially—on strike against regimes of taxation. They use their vast wealth to either hide their money or change tax laws to offer them increasing protections.” Rather than using this money for the social good—to invest in public services, infrastructure, health, or education—they use it to increase their own wealth, often by “inflat[ing] the stock market and various asset bubbles.”

Comparatively, during a 2013 keynote address, World Bank President Jim Yong Kim cited that corruption in the form of bribery and theft by government officials costs developing countries between US$20 billion and US$40 billion each year. In other words, by a rough calculation, the amount that corrupt government officials cost developing countries is anywhere from 40 to 80 percent less than half of the amount that these nations lose in offshore tax havens.

The real power, then, remains in the hands of multinational corporations, which not only make off with vast sums of wealth belonging to the “darker nations,” but also continue to exercise control over nations in the Global South, where they use access to finance as a lever to impose policies that benefit themselves at the expense of the people who live there.

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