The Executive Director of Kandifo Institute, Palgrave Boakye-Danquah, has described the Agyapa Gold Royalties transaction as financially innovative, with a great potential of reducing the country’s over-reliance on external and domestic borrowing.
He believes a transaction of this nature, when structured properly, could be a game changer for Ghana, attract capital to the Ghana Stock Exchange (GSE) and the Bank of Ghana (BoG) since it can provide significant long-term capital and also inject liquidity into the Exchange.
“In addition to raising permanent non-debt capital from international and domestic investors with no re-payment obligations, interest payments or the need for a guarantee, the Agyapa transaction will also enable Ghana to retain majority control of the royalties and continue to receive royalties on the portion of the royalties it continues to hold,” Mr Boakye-Danquah said.
The Executive Director of the African Centre for Energy Policy (ACEP), Ben Boakye, had said the Agyapa transaction is not a good deal to be reconsidered.
According to him, the deal, which seeks to sell future receipts on the stock market, hoping to raise money, has the likelihood of posing danger and uncertainty to the country’s mineral resources.
He further claimed that the decision to use the country’s minerals to settle debt is not the right way to go, but it should rather be the creation of a policy that will optimise the mineral sector to benefit the citizenry.
Getting it wrong
But in an interview with the Daily Statesman, the Kandifo Institute boss said such a narrative is misplaced.
He explained that when the transaction is approved and implemented, it will reduce Ghana’s heavy budgetary risk exposure to adverse movements in the gold price and fluctuations in mined gold production volumes.
“This will significantly change the dynamics and structure of the economy, if placed on the balance sheet of the Bank of Ghana. Agyapa will provide additional socio-economic benefits to the country as it will provide further funding to Minerals Income Investment Fund (MIIF) to develop mining sector and complement the infrastructural efforts of the country in areas of health, education, roads among others,” he said.
“It is in the interest of all Ghanaians to make constructive inputs into the transaction devoid of sentiments, especially when President Akufo-Addo has demonstrated good faith by accepting the recommendations reported by the Office of the Special Prosecutor,” Mr Boakye-Danquah further told this paper.
He added that it is appropriate for well-meaning Ghanaians to keep open minds to the changes the Ministry of Finance will make to the transaction before the re-submission to Parliament, instead of adopting a rigid position of inconsideration on the transaction.
“Such transparent engagements will calm nerves and enable the Ministry of Finance and MIIF to incorporate all relevant suggestions and amendments and to submit same to the parliament of Ghana. Agyapa is a good deal and the appropriate financial mechanisms and legal framework must be embraced or incorporated to achieve the intended objectives,” he said.