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The National Assayer – PMMC’s role in providing revenue assurance to government on gold exports

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Nana Awuah,MD (PMMC)

On 26th January, 2022, www.myjoyonline.com published a story captioned “Ghana loses over $2bn in taxes to undervaluation of gold exports”. According to the story, these losses were identified through a research by a consortium including the Institute for Statistical, Social and Economic Research (ISSER). It is observed that the research, which covered 2011 to 2017, does not disclose which sector it focused on – large scale or small scale. This distinction is important because the two have separate tax regimes.

Undervaluation of Gold

Upon reading the news story, the press release by the research team and the presentation of the research findings, it is difficult to ascertain the basis for the claim of undervaluation.

Undervaluation of a commodity such as gold presupposes that there is a true standard value against which the commodity can be measured. The standard value of gold is easily verifiable. Within the international market, bodies such as the London Metal Exchange (LME) are reputed indicators of the global market price for gold. It is important to mention that the prices as set by the LME on a daily basis are for refined gold of 99.99 per cent 24 karats purity. Gold exported from Ghana are unrefined and hence would not attract the same price as set by the LME.

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Within the precious minerals industry, it is trite knowledge that gold values are dependent on weight and purity. Hence, a kilo of unrefined gold would not have the same price as a kilo of refined gold. Similarly, two kilos of 14karats gold could be less expensive than a kilo of 22 karats gold. Given that gold exported from Ghana are in unrefined doré form with a purity range of about 21 carats to 22.5 karats, without an independent valuation exercise, it will be misleading to say that such gold doré has been undervalued using the prevailing world market price as benchmark.

Valuation of Gold

As earlier indicated, two variables go into the determination of the value of gold – weight and purity. Measuring the weight, which is done with a scale, is quite easy and straightforward. Determining the purity of gold is through a scientific process known as assay.

There are various methods of assay – non-destructive methods such as X-ray Fluorescence (XRF), Specific Gravity or Density, and Ultrasonic Testing; and the destructive method which includes the Cupellation (Fire Assay).

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Once the weight and purity are identified, a calculation is done using the world market price to ascertain the true estimated value of the gold doré.

From the foregoing, therefore, it is deductible that to substantiate a claim of undervaluation, it is important to know the weight and purity of what was exported as well as the then prevailing world market price of gold. Undervaluation may arise where there is a false declaration of the weight and purity of the gold doré which is being exported. The report, however, does not indicate whether there were any such findings of false declarations of weight and purity.

As earlier mentioned the research fails to disclose which sector of the gold mining industry it focused on – small scale or large scale. This is important because the two have distinct tax regimes. Whereas the large scale sector has a tax regime which includes royalties and corporate tax, the small scale sector presently attracts a withholding tax of 1.5 per cent on gold exports.

PMMC’s Mandate as National Assayer

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In 2017, President Akufo-Addo directed that government identifies a way to independently verify gold exports in order to ensure that the country is obtaining maximum revenue for this precious mineral resource. Consequently, under the leadership of Hon. Kiston Akomeng Kissi, PMMC Board Chairman and driven by Hon. Kwadjo Opare-Hammond (may his soul rest in peace), then Managing Director of PMMC, stakeholder engagements began towards the implementation of this directive. There were several engagements with the Ghana Chamber of Mines and the Association of Gold Exporters, now Chamber of Bullion Traders, Ghana to agree on modalities for the smooth take-off of the National Assay Programme. Eventually, with the support of the Vice President and the then Sector Minister, in February 2018, PMMC officially commenced operations as the National Assayer with the mandate to assay all gold earmarked for export from Ghana.

The National Assay Laboratory located at the Kotoka International Airport, from where PMMC carries on its operations was set up through the support of the Minerals Commission with funding from the World Bank. The Assay Lab is fitted with three non-destructive assay equipment – an XRF Machine, a Specific Gravity equipment and Ultrasonic Testing device.

PMMC’s mandate as National Assayer covers both the small scale and large scale mining sectors. As National Assayer, PMMC independently verifies the weight and purity of the gold doré being exported in order to ascertain its value. The value as determined by PMMC enables the Ghana Revenue Authority (GRA) to exact the requisite taxes such as the 1.5 per cent withholding tax on the gold doré before export.

For the small scale sector, after the assay analysis by PMMC, the export is managed through the ICUMS systems with close supervision by the Central Bank. Exports are done by duly licensed export companies who are required to repatriate 80 per cent of the proceeds back to Ghana within thirty (30) days. Failure to show proof of repatriation of export proceeds comes with sanctions such as prevention from doing further exports and upon persistent breach, revocation of export licence and possible prosecution.

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For the large scale sector, whose tax regime is entirely different from that of the small scale, PMMC has field officers who observe the smelting of gold in their gold rooms. From the gold room, the weight of the bars are recorded and samples taken. The samples are transported via helicopter to the National Assay Lab where PMMC conducts the assay analysis to determine the purity and by extension the values of the gold doré which are to be exported. This provides an independent verification of the export values thereby providing revenue assurance to government. Periodic reconciliations are carried out between PMMC and the large scale mining companies represented by the Ghana Chamber of Mines.

It is worth mentioning that since the commencement of the Domestic Gold Purchase Programme by the Bank of Ghana in June 2021, PMMC as National Assayer has been providing this essential service to the Central Bank by independently verifying the weight, purity and by extension value of gold supplied for purchase.

Digitalisation of National Assay Laboratory

Since the commencement of the National Assay Programme in 2018, there have been consistent efforts to make improvements so as to ensure maximum efficiency of the programme. In 2021, again under the leadership of Hon. Kissi, with support from the Sector Minister, Hon. Samuel A. Jinapor and driven by the present author, the National Assay Programme was digitalised. Digitalisation now made it possible to generate assay certificates which bore unique security features making it difficult to forge to facilitate the dubious elaborate schemes of gold scammers.

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Digitalisation has also now made it possible to monitor in real time, gold exports passing through the National Assay Laboratory. It has improved collation of timely data on export figures and revenues in order to aid effective national economic planning.

The digitalised National Assay Lab, which will be officially launched this month, will be open and accessible to key stakeholders including the President as the Constitutional Trustee of Ghana’s mineral resources, the Vice President as Head of Economic Management Team, the Minister of Lands and Natural Resources, the Minister of Finance, the Governor of the Bank of Ghana, and the Commissioner General of the Ghana Revenue Authority. 

PMMC continues to find ways to improve upon the execution of this important mandate which is critical for securing the much-needed revenue from the precious minerals industry for national development.

By Nana Akwasi Awuah, Managing Director, Precious Minerals Marketing Company (PMMC)

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Cry my beloved Ghana

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Someone said, if we cannot plan for an occurrence as predictable as the annual rains, then what else can we plan for as a country?  God has caused nature to schedule rains for specific periods or months within the year and everybody knows this. 

One need not be a meteorologist to tell that the rains will fall in May and June every year.  Any serious person who has something that the rains can affect, would therefore plan taking into consideration the likelihood of the rains falling.  Therefore to find out that a whole country like ours, had not planned effectively, is mind-boggling. 

The report by the World Bank that fiscal policy measures by the Finance Minister has led to no money being released for the World Bank sponsored project to deal with the perennial flooding situation in Accra, is so disappointing.  The fact that this contributed immensely to the flooding in Accra, is an understatement.

There have been fires in our markets, but who is checking the wiring on a regular basis as a system designed to prevent future outbreaks?  The occurrence of fires in our markets is something that must engage the attention of government and all the stakeholders.

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The causes may be several but if a system of proper fire prevention is in place, l believe the number of occurrences will be drastically minimised.  Electrical wiring for instance has been found to be one of the causes of market fires.  Fire as we know from the experts, can only happen if these three things are present, namely source of heat, combustible material and oxygen i.e. air. 

lf any one of these is missing, there will be no fire.  It has been realised that heat generated in wires have caused fires in the past and therefore, an effective system must be put in place to ensure that, only certain approved qualified electricians, can execute wiring jobs in our markets instead of the current situation where different electricians execute wiring with different types of wires, of different quality, dimensions etc. 

Preventive inspections schedule must also be put in place to endure compliance with uniform wiring standard, as well as adherence to expiry dates of the wires.

What baffles me is why some MCEs and DCEs are still at post while things are deteriorating in their areas of influence and yet the President or the Minister for Local Government seems to be unwilling to relieve them of their positions.  People have lost their lives, official count is about 37 lives, properties worth millions of Ghana Cedis have been destroyed, people’s livelihoods have been destroyed and they are at ground zero.

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We can go on and on and on about the devastating impact of the recent floods.  Suddenly, we have these local authority heads, all over the place, demolishing buildings after the flood.  Is this not insanity?  Where were the LUPSA Engineers who issue permits at the local assemblies? 

If they were doing their jobs, for which they are paid every month, they would have seen people constructing structures at Ramseyer sites.  They would have seen people putting up structures very close to the bank of streams or rivers and could have enforced the regulations, which could have averted the level of impact on lives and property.

One particular issue which drives me crazy is the Kasoa to Mallam Junction stretch of the N1.  The traffic jam between West Hills Mall and Weija Junction is due to the flooding of a place called Ataala.  Anytime it rains heavily, the area floods and vehicles moving from West Hills towards Weija cannot use their normal lane but are forced to switch to the inner lane of those headed towards West Hills Mall from Weija and it did not start yesterday.  I am so, so disappointed. God Bless.

By Laud Kissi-Mensah

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The palaver of daily chop money

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The romance between man and wife ends where chopmoney palaver begins. When the man is leaving for work and the woman’s face looks like a rainy day, anyone can guess that the chop money delivered is quite below sea level.

But when she smiles too broadly for comfort and waves her husband goodbye zealously, it means the man did not only perform well under the cover of darkness but also dished out the correct amount of chop money.

The typical matrimonial home is a complex one. Many factors contribute to fuelling or preventing occasional civil wars. When Pyram became a household word, some husbands and wives put heads together, went borrowing, sold their belongings and invested in the sham scheme.

When Pyram collapsed, many marriages got shattered beyond repair. Wives blamed their husbands and husbands complained about nagging wives. In a few instances, punches were traded. Crises could not be managed as debts soared and creditors wanted back their money.

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Chop money grew slim. Only Mr Kofi Annan could negotiate a truce between warring partners as daggers were drawn. The Pyram palaver brought more woes to Sikaman than the joy it was supposed to bring.

Many women have died from distress and frustration. All their resources which were joyfully invested in the scheme cannot be retrieved.

“Today, the Government says it cannot use taxpayers’ money to pay those who lost various sums of money to the two money-doubling banks Pyram and Resource 5000 Ltd. “We told you not to take your monies there and you didn’t listen. Paddle your own canoe, or canoe your own paddle,’ says the Sikaman government.”

The chop money palaver in Sikaman is getting heady. People are citing chop money problems for their offences. The newspapers report of a man who allegedly injected his three-week-old daughter with DDT because the wife was disturbing him with chop money matters too much. He is being tried by the courts.

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Some women claim they abandoned their babies because their fathers refused to offer chop money. So when they dump the babies in the latrine, they are relieved of any burden. Looks like maternal instincts are withering out of mothers. These are indeed times when mothers no longer love their children because of chop money palaver.

Stomach capacity

The amount of chop money a father gives out each day, week or month depends on the family size and the stomach capacity of each family stomach. Members of some families are very light eaters and little is spent on food. But for other families where some members have ‘double chambers’ the food budget requires additional funds.

Indeed, in some families, members have natural appetite for food whether or not they take peters (bitters). And when food isn’t enough, there can be an uprising against constituted domestic authority, the family equivalent of the Guinea Bissau rebellion.

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Yes, where one person can eat four balls of kenkey and cry for more, but is given only two balls, he can get angry and start breaking louvres.

The chop money size also depends on the level of nutrition typical of each family. Some families believe in the third world theory that QUANTITY is better than QUALITY. The bigger the banku and the smaller the fish, all the better for Ghanaians. Yes quantity, not quality. Such families stock maize in bags.

Those who believe in quality spend much on vegetables, meat and fish and therefore spend more, but it is worth it because they are healthier and stronger. They also spend on fruits and are averse to the “quantity supremacy” theory.

The problem with chop money issues is that when the correct amount is not flowing, the women think the men are misapplying their salaries in overt pleasures. They accuse their husbands of drinking too much bitters and burukutu, and they can prove the accusation using a formula. They only have to smell the breath of their partners. The fuse can be great!

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One woman told her neighbour when her husband comes back home drunk, he behaves like a walking distillery, swaggering like a drunken sailor. You’d think he has been baptised with raw akpeteshie or immersed in the stuff. Her only compliment was that in spite of his alcoholic status, the guy could perform. That is Viagra or no Viagra.

Women also accuse men of chasing other women in the same manner as a he-goat does. Half their salaries cannot be accounted for as a result, they claim. So when the chop money isn’t at least at sea-level, they must protest either noisily or stage a sit-down strike.

Domestic sit-down strikes by wives can cause problems. When a man takes full quarter and is expecting a wonderful dinner with soup and its accompaniments and comes to meet an empty table and a brooding woman, he can go berserk. The clash can be worse than a plane crash.

As it were, it all requires patience to make a marriage last, chop money or not.

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This article was first published on Saturday, July 11, 1998

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