Improving the Monitoring of Quarry Production with Remote Monitoring Technologies

In most resource-rich countries, regulatory oversight and revenue mobilization efforts in the mining sector focus on precious minerals at the expense of industrial minerals such as quarry aggregates. This limited monitoring stimulates companies’ non-compliance behaviour, such as underreporting production outputs and sales, thereby short-changing governments’ tax revenue receipts from the sector. This policy paper proposes using remote monitoring technology to afford tax authorities in Ghana and other developing and middle-income countries the ability to monitor the production volumes and sales of quarry aggregates by quarrying companies off-site. The technology holds the potential to curb incidences of underreporting and empower governments to generate maximum revenue potential from the quarrying sector through optimal taxation. However, seamless implementation of the technology may require some legislative changes that enforce the use of the technology in the reporting regulations for mining companies. This policy paper further proposes some financing options for investment that are differentiated between existing and new companies and impose minimal shocks on governments’ annual budgets and companies’ finances.

Quarry aggregates, such as sand, gravel, and crushed stones, are industrial minerals that constitute an essential component of the modern, concrete-based built environment. They form part of the basic materials for constructing roads, housing, and rail infrastructure. The rising demand for housing and investment in infrastructure further contributes to the demand and consumption of quarry aggregates in Africa (Boakye et al., 2021). In addition, quarry aggregates are more locally traded and less exposed to global commodity market dynamics. Thus, the quarry industry is essential to smoothen revenue shortfalls from precious minerals.

Prior analysis of the quarry industry by the Africa Centre for Energy Policy (ACEP) indicates that the revenue mobilization potential of the quarry sector is hampered by inadequate regulation and monitoring (Boakye et al., 2021). Ghana’s monitoring in the mining sector primarily focuses on precious minerals such as gold, neglecting other essential industrial minerals. Furthermore, ACEP’s observations from field visits to quarry sites in Ghana did not show any evidence of operational visibility of the Ghana Revenue Authority (GRA), the authorized tax revenue mobilization institution. The analysis also shows the significance of the revenue potential of the quarry sector, which was estimated to be about 18 times more than actual receipts by the government. ACEP’s interaction with officials from the GRA revealed that inadequate records on quarries compound the difficulties in determining tax and royalty commitments by quarrying companies (see Box 1 for a summary of ACEP’s initial study of the revenue potential of the quarry sector).

The revenue potential of the quarry industry calls for a robust and cost-effective mechanism that monitors the operations of quarries in Ghana. ACEP’s study recommended using technology to enhance regulatory agencies’ monitoring potential. These technologies include real-time video surveillance tools that capture export volumes from the production sites and enterprise resource systems that coordinate information sharing among local authorities and government regulatory agencies.

The Government of Ghana has realized the importance of the quarry sector and the need for leveraging digitization for revenue mobilization. In April 2022, the Ministry of Finance indicated its readiness to partner with the private sector to introduce digital systems to monitor quarrying and other industrial mining activities to enhance revenue mobilization (Ministry of Finance, 2022). This commitment was part of the measures taken to restore the economy, given the global economic challenges. The Government of Ghana’s decision to consider using technology for revenue mobilization in the quarry industry suggests that ACEP’s ideas for deploying such technologies could be adopted in other countries.

This study provides a detailed description of the technologies that can be used for monitoring quarry production volumes in real time. It involves the technical components, functions of the technology, and investments required for its implementation. ACEP believes that this study could provide a valuable blueprint for the Government of Ghana and broadly for other economies that aspire to leverage technology to maximize their extractive sector revenue mobilization potential. In addition, many countries’ current pursuit of digitization provides a favourable environment for deploying digital technologies. Therefore, this idea lends itself to ongoing digitization schemes and complements ongoing efforts made by governments.

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The Africa Centre for Energy Policy (ACEP) was established in 2010 to contribute to development of alternative and innovative policy interventions through high-quality research, analysis and advocacy in the energy and extractives sector in Africa.

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