The Africa Centre for Energy Policy (ACEP) has raised concerns that Ghana’s decision to increase the Growth and Sustainability Levy (GSL) on mining firms from 1% to 3% of gross production could trigger strong resistance from industry players, potentially jeopardising investments and fiscal stability.
The GSL was introduced in 2023 as a revenue-generating measure to support Ghana’s economic recovery. For most businesses, the levy is calculated as a percentage of profit before tax. However, in the extractive sector, it is applied to gross production, effectively functioning as an additional royalty payment. With the recent increase, mining companies will now face an effective royalty rate of approximately 8%, up from the standard 5%.
The Ghanaian government projects that the revised GSL will generate GHS4.6 billion in 2025, marking a significant revenue boost. However, ACEP warns that the added financial burden on mining firms could lead to negative consequences for the sector.
The think tank cautioned that such a move could increase political and fiscal risks, prompting mining companies to demand stronger stability clauses in future agreements to protect themselves from sudden tax hikes. Furthermore, a high political risk could lead to divestment, as major firms might offload assets to less capable operators, potentially undermining efficiency and compliance in the industry.
Beyond the potential resistance, ACEP criticised the government’s approach to revenue collection from the mining sector. The organisation argued that Ghana could have chosen a more strategic fiscal tool rather than implementing a levy that could be perceived as arbitrary and unpredictable.
The think tank stressed that Ghana’s extractive industry taxation policy should balance revenue generation with investment incentives. It also urged the Ministry of Finance to take a more nuanced approach to taxation, considering both gold production costs and market prices, rather than focusing only on revenue collection.
As Ghana faces a GHS35 billion energy sector funding gap, the government is looking to the mining industry as a key revenue source. However, ACEP’s warning suggests that aggressively increasing tax rates could backfire if mining firms push back, potentially creating long-term instability in the sector.
