Costs and benefits of mining

Mining in Africa is seen as creating jobs and increasing incomes for local people. However, there are also problems. NAI researcher George Adu explores how mining affects the environment, the economy and the health of those living nearby.

George Adu is an economist and looks in particular at gold and diamond mining in Ghana. He uses the last two series of the Ghana Living Standards Survey to identify the costs and benefits of mining and how these costs and benefits are distributed across different social classes: gender, age, income status, being a farmer, being a tenant versus being a landlord, etc. This exercise will also show him what kind of employment people have, whether working directly in the mines or as subcontractors – such as farmers selling agricultural products or women running canteens.

“But the survey also points out what will happen if farmers lose their land to mining companies. How will this affect food production in a country where farming is the backbone of the rural economy? It is true that those who lose their land will receive lump-sum compensation, but no one knows what will happen when that money runs out, these famers typically do not have the capacity to absorb and invest such lump-sum payments. They become very poor soon after,” Adu remarks.

Education may be at risk

Also, children’s education may be affected by mining. Increased incomes mean that families can afford to send their children to school. However, if the rise in incomes derives instead from children working in the informal mines that always exist near to larger projects, Adu argues, then the nation’s education level may be at risk in the long run.

“There are several possible negative effects from mining that we have to investigate further. Open-pit mines attract mosquitoes, so the risk of malaria increases. Rivers around the mines often become contaminated and people have to walk further to get clean water,” Adu says.

Royalties to the government

By law in Ghana, all mining companies are obliged to pay 5 per cent of profits as royalties to the government. Ten per cent of these royalties accrue to local authorities to cover the costs arising from damage by the mining sector to the community. However, according to Adu, there is no system of follow-up to see if these funds are invested appropriately.

“That is why this research is so important. When we know which groups are most affected, we can suggest how the money should be used. For example, farmers who lose their land can get support in the form of training for another occupation, or perhaps special support for the elderly is needed, since they have fewer chances to establish themselves elsewhere,” Adu concludes.

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