In August, Ghana’s parliament dominated by legislators loyal to President Nana Akufo-Addo passed an agreement that would see the West African nation sell most of its future gold royalties. Under the agreement, Africa’s largest producer of gold is seeking to monetize up to 75% future royalties from 16 big mines in a company registered in Jersey, a tax haven, called Agyapa Mineral Royalty Limited.
To do this, the government in 2018 established the Minerals Income Investment Fund (MIIF) to manage the equity interests of Ghana in mining companies, and receive royalties on behalf of the government. The fund is expected to manage and invest these royalties and revenue from equities for higher returns for the benefit of the country.
The law allows the fund to establish Special Purpose Vehicles (SPVs) to use for the appropriate investments. Pursuant to this, the MIIF set up an offshore limited liability company known as Agyapa Royalties Limited in Jersey. A Ghanaian subsidiary known as ARG Royalties Ghana Limited was also established. Per the agreement, Ghana will sell 49 percent of its shares in Agyapa to raise around $500 million on the London Stock Exchange.
It was the murky way the Agypa agreement was passed in Ghana’s parliament that brought about the controversy. On the last day MPs were set to go on recess, the government laid before the august house volumes of documents containing the agreement. The MPs hardly had time to peruse the specifics of the deal, nonetheless, it was passed by the house after minority MPs staged a walkout.
In her legal opinion regarding the deal, the country’s attorney general, Gloria Akuffo, described the deal as “unconscionable” and skewed against the interest of Ghana. She also questioned the lack of a fixed timeframe for the agreement.
The agreement has been described by government officials as an “innovative” way of raising money without increasing the country’s debt stock which is projected to hit 70% of Gross Domestic Product (GDP) this year. Just like any other country, COVID-19 has also burdened the Ghanaian economy which is projected to grow by 1.5%.
However, the agreement has generated some controversy for its ‘secrecy’ and the involvement of persons close to government officials. For instance, the Agyapa boss, who is the son of the Senior Minister, was recruited under secrecy. Also, one of the three law firms that acted as transaction advisors for the Agyapa deal belongs to Gabby Otchere-Darko, a cousin of President Akufo-Addo.
Sixteen Civil Society Organizations (CSOs) rejected the deal for its lack of transparency and called for its suspension. According to the Chairman of the Alliance of CSOs, Steve Manteaw, the agreement is opaque, lacks oversight arrangements, and places Agyapa Royalties above the country’s tax laws.
“The recent amendment of the Minerals Income Investment Fund creates more suspicion. The rushed amendment and inserting worrying clauses including clauses that leaves a special purpose vehicle; Agyapa Royalties above Ghanaian tax laws, outweighs Ghana’s immunity and by that, expose Ghana to the risk of damaging lawsuits should any future government seek to reverse this transaction,” he said.
“What we find even more repulsive about this whole transaction is the provision that permits Agyapa Royalties, a supposed company of the sovereign state, to register in tax payments to borrow money or raise equity in foreign currency from any source on the back of the gold royalties of Ghanaians without the requirement of any further approval, consent and administrative Act of the Government of Ghana. This provision takes Agyapa Royalties away from parliamentary oversight and control”, he added.
The opposition leader, John Mahama, also slammed the deal as not in the best interest of Ghana vowing not to respect the agreement if he wins back power in the country’s December polls. “[Agyapa] is a very shady deal and I’m saying, if I become president, I will not respect that agreement. It is a theft of Ghanaians’ royalties made to benefit just a few people,” Mahama, the presidential candidate for the National Democratic Congress, said.
Mahama further noted that the incorporation of Agyapa in Jersey, a tax haven, is an attempt to hide the identity of investors. “We will not accept that agreement, we will not accept that government of Ghana should invest our royalties in an offshore tax haven,” he said.
Other critics say the deal has no fixed time period nor the amount of gold to be sold. The agreement passed in parliament does not state when it will end.
The unpopularity of the Agyapa deal is not within the circles of CSOs and opposition politicians. The powerful National House of Chiefs, which rarely comments publicly on government policies, took issues with the registration of Agyapa in a tax haven.
The President of the prestigious body of eminent chiefs in Ghana, Togbe Afede XIV, remarked that: “Tax havens typically serve two purposes, helping you to avoid tax or ensure secrecy, I don’t see why a national transaction should be shrouded in secrecy in the first place.”
The Finance Minister, Ken Ofori-Atta, dispelled claims that the deal is shrouded in secrecy. He also downplayed Mahama’s threat not to respect the agreement if he wins back power in the December vote. “Similar comments were made in the past but after the politics is done, everyone knows what is good for Ghana,” he said. “We are a country that has high respect for the rule of law and successive governments respect the nation’s contractual obligations.”
A Deputy Minister, Charles Adu Boahen, who is in charge of the deal, insisted in a media interview that the deal was transparent. He further assured that there will be “total transparency” and the London flotation will help ensure that the company is valued properly by the market.
Despite the defense of the deal by government officials, the Finance Minister bowed to pressure to undertake broad consultations before going ahead with the deal.
A statement issued from Ofori-Atta’s office said: “The Ministry will in the coming days meet with various organized groups such as the faith-based organizations, chiefs and opinion leaders, organized labour and the academia in order to further deepen consultations and build unanimity around the transaction.”