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This paper examines the impacts of mining-sector reform in Ghana at both the macroeconomic and microeconomic levels. Since the inception of the national Economic Recovery Program (ERP) in 1983, the Ghanaian government, under the guidance of the IMF and World Bank, has amended numerous policies to establish a more attractive investment climate for foreign mineral-exploration and extraction companies. The country's mining industry has since expanded rapidly, experiencing by 2004 a fivefold increase in annual gold output and big rises in bauxite, diamond, and manganese production; however, at the same time, the perpetual expansion of mining and allied activities has strained indigenous communities: some subsistence groups have been displaced outright, and/or have been victimized by excessive mine pollution.
Introduction
In 1983, following a period of lengthy consultation with the IMF and World Bank, Ghana became the first country in sub-Saharan Africa to undergo Structural Adjustment (SA). Throughout the country's SA campaign, which has been sub-Saharan Africa's largest and undoubtedly most ambitious, the government has worked diligently to improve the investment climate within all sectors of the economy. Its principal aim has been to attract foreign investment, which it viewed at the outset as a panacea for revitalizing the economy.
One industry that has featured prominently in Ghana's SA planning is mining. Long recognized as a world leader in the production of numerous industrial and precious minerals, the country has made considerable achievements in its mining economy under reform. By amending policies to establish a more favorable mineral investment climate for foreigners, the Ghanaian government has, since 1983, facilitated unprecedented increases in annual production of gold (500 percent), diamonds (300 percent) and bauxite (more than 600 percent). Whereas at the outset of SA, most of Ghana's mines were seriously underperforming and/or on the verge of economic collapse, today, an estimated 237 companies (154 Ghanaian and 83 foreign) are prospecting for gold alone, and an additional 18 companies have operating gold mines; more than US$4 billion has been invested in Ghana's mining sector under SA (Aryee 2001).
While there is little denying that considerable macroeconomic gains have occurred in Ghana's mining sector under reform, a burgeoning literature insinuates that associated growth has had detrimental impacts upon indigenous communities. Specifically, perpetual expansion of mining and mineral exploration activity...