Honorary Executive of IMANI Africa, Bright Simons has opined that the country may not realize the money it is expecting from the Agyapa Mineral Royalties Agreement.
According to Bright Simons, the choice of market for the transaction jeopardizes the realization of the amount of US$ 1 billion expected through the deal. Mr. Simons believes the country would have been in a better position of realizing same amount or more if it had opted for the private market instead of the public stock market.
He explained that investors at the public stock market are well positioned in terms of resources and avenues which are more beneficial that they are not enthused about investing in a less beneficial asset like that of the agreement signed with the Agyapa Royalties Limited.
“To give it away for $1 billion is problematic. First of all, we say that this one billion dollars is too little and at the same time, we made the argument that they may not even get the $1 billion,” he stated
He explained that “to choose to go to the public stock market as opposed to the private market for this transaction was the fundamental transactional flawed. The public market investors are the investors with the biggest pockets in the world. They have the best instruments available. They have so many avenues to expose themselves to the positives of gold that they are not enthused about investing in an asset like this.”
Describing the decision to opt for the public stock market as fundamentally flawed of the transactional agreement, he asserted that the country could have gained the upfront cash flow of half of a billion dollars if it opted to assign just 20 percent of the mineral royalties to the numerous gold streaming companies for a period of ten to 15 years.
Mr. Simons added that the valuation of 75 percent of the country’s mineral royalties for US$ 1 billion dollars is an undervaluation of the royalties. He said only 20 percent of the royalties could have fetched the country same amount of money with a deal spanning for a limited period of time as opposed to the seemingly limitless duration of the Agyapa Mineral Royalties Agreement.
The Agyapa Mineral Royalties Agreement has been a subject of controversies since the majority side of parliament approved the deal amidst protest from the minority side of the house.
Flagbearer of the main opposition party, John Dramani Mahama has vowed not to respect the deal should he win the December elections accusing the government of not being transparent with details of the deal.
Over fifteen Civil Society Organizations (CSOs) including Imani Africa have questioned the benefits of the deal to the country and demanded for it to be suspended for broader consultation citing lack of transparency as one of their concerns.
However, the government dismissed the concerns raised and insists that the deal would inure to the benefit of the country.
The agreement between government of Ghana and Agyapa Royalties Limited which acts as a Special Purpose Vehicle is to enable Ghana secure US$ 1 billion to finance large infrastructural projects.
The Agyapa Royalties Limited is expected to raise the money for Ghana from international and local stock markets.
