The Gold Rush in Ghana and Myth of Sustainable Economic Development
May 30, 2008
For Immediate Release
Contact Eric Holt-Giménez at 510-654-4400, ext 227 or e-mail eholtgim
The stated goals of the World Bank are to eliminate poverty and promote sustainable development. Since the early 1980s, the World Bank policies have directed countries in sub-Saharan Africa to make economic structural adjustments and to shift their economies increasingly to extractive industries. The World Bank promised that restructuring would result in sustainable economic growth, development, jobs, and higher incomes. The reality, however, is quite different. Countries in the region have been trapped by structural adjustments in a “race to the bottom” as they compete to lower labor, social, and environmental costs for transnational corporate buyers, while the region’s poor majority has been forced to endure a devastating downward spiral of underdevelopment—persistent and growing poverty, inequality, hunger, disease, economic stagnation or decline, indebtedness, falling real wages, unemployment, and ecological degradation. Ghana is a prime example of this trend where 50 years after political independence, 40% of Ghana’s 22 million citizens still live in poverty despite the fact that the country is the second-largest gold producer on the African continent.
A report just released by Food First/The Institute for Food & Development Policy, based in Oakland, California, explores the grave threat to rural livelihoods and indigenous survival in Ghana from the rapid expansion of World Bank-financed surface gold mining operations by foreign transnational corporations. The report, entitled, “Gold Strike in the Breadbasket: Indigenous Livelihoods, the World Bank, and Territorial Restructuring in Western Ghana” by Albert T. Armstrong, documents how two decades of neo-liberal reform and a surge of foreign direct investment in Ghana’s mining sector have generated tremendous gains for transnational corporations, but have delivered comparatively few benefits to neither the national economy nor mine-affected communities.
The debt crisis and near collapse of Ghana’s economy in the early 1980s led the government to adopt the first and most ambitious economic adjustment in Africa. Under the adjustment program, changes to the mining code facilitated the privatization of all mines and extended a number of very generous fiscal incentives to prospective investors, including drastic cuts in corporate income tax and royalty rates. These changes coupled with the extraordinary rise in gold prices since 2001 has generated a tremendous boom in mining activity in the country. Gold now accounts for about 40% of total exports and 96% of all mineral exports.
However, the gold sector only contributes about 5% to Ghana’s gross domestic product, and surface gold mining operations have devastated many peasant and indigenous communities located in and around project areas by appropriating and destroying the very land, forest, and water resources they depend on for their survival. This process has involved forced dislocation of indigenous communities from their land and exclusion of the poor to public lands. Apart from drastically reducing the land available for farming, undermining the income and food security of peasant communities and causing environmental degradation, the rapid influx of large-scale mining activities into Ghana has also contributed to an increased incidence of unemployment, family disorganization, higher costs of living, prostitution and drug use, and the systematic use of intimidation and violence by mining company and state security.
The report explains how the World Bank’s development strategy has only exacerbated socioeconomic inequality and deprived local people of their rights to food, a healthy environment, and equitable access to and democratic control over the land and resources needed for sustainable livelihoods—a result which is blatantly inconsistent with the World Bank’s stated mission of reducing global poverty.
To obtain a copy of Food First Development Report #18, go to http://www.foodfirst.org/en/publications/devreports
