management accounting and regimes of … · management accounting and regimes of control in ashanti...
TRANSCRIPT
1
MANAGEMENT ACCOUNTING AND REGIMES OF CONTROL IN ASHANTI GOLD FROM COLONIAL TIMES1
Mathew Tsamenyi University of Birmingham,
Trevor Hopper University of Sussex,
and
Shahzad Uddin University of Essex, UK
Address for correspondence: Mathew Tsamenyi Birmingham Business School University of Birmingham University House Birmingham, B15 2TT UK Tel: +441214158439 Email: [email protected]
1 The authors wish to thank the CIMA Research Foundation for supporting this research
2
MANAGEMENT ACCOUNTING AND REGIMES OF CONTROL IN ASHANTI GOLDFIELDS FROM COLONIAL TIMES
ABSTRACT
This paper examines the evolution of management accounting control systems (MACS) in a large gold mining company in Ghana, namely Ashanti Goldfields Corporation (AGC). The paper is informed by a cultural political economy of management accounting summarised in Hopper et al. (2009), which stems from Burawoy’s (1979, 1985) notions of ‘factory regimes’ applied to MACSs in LDCs in Uddin and Hopper (2001), and the ‘cultural political economy’ in Wickramasinghe and Hopper (2005) and Wickramasinghe et al. (2004). The paper identifies how accounting and control systems in AGC are shaped by different regimes of control. Under colonial despotism, control was personal and coercive, with physical controls that exploited ethnic divisions amongst indigenous miners. During the state and politicised state capitalism regime of AGC, the state intervened into operational controls for political advantage, culminating in deteriorating productivity and finances. After a ‘privatisation’ financial controls remained centralised and focussed on head office reporting and production orientations predominated management. It was not until the financial crisis that major MACS changes occurred, namely decentralised management accounting, tight budgetary control, and cost-oriented management. Viewed from the miners’ perspective, market capitalism has brought little improvement: controls may have changed but remain essentially despotic: politicised market capitalism (or neo-colonialism) has arguably replaced colonialism. Thus, the paper argues, a cultural political economy of management accounting is particularly useful to provide us an understanding of the evolution of controls in AGC. Key Words: Accounting, Management Control Systems, Less Developed Countries, Ghana, Labour Process Theory
3
1. INTRODUCTION
This paper examines the evolution of management accounting control systems (MACS)
in a large gold mining company in Ghana, namely Ashanti Goldfields Corporation
(AGC). Several reasons motivated the study. First, more individual country studies from
less developed countries (LDCs) are necessary to trace patterns and exceptions of MACS
development. Second, the study focuses on Ghana, an early Sub-Sahara African adopter
of IMF and World Bank reforms to privatise state-owned enterprises (SOEs) and
deregulate markets. Ghana, like many LDCs, being dependent upon external capital, must
heed IMF and World Bank economic advice, and the latter often cite Ghana as a success
story.2 Whatever, the reforms changed the institutional environment - accountability and
efficiency are now important parts of organisational vocabularies following capital
shifting from public to foreign-private hands. Third, the findings test and develop a
framework for tracing the evolution of MACSs in poor ex-colonies summarised in
Hopper et al. (2009), which stems from Burawoy’s (1979, 1985)3 notions of ‘factory
regimes’ applied to MACSs in LDCs in Uddin and Hopper (2001), and the ‘cultural
political economy’ in Wickramasinghe and Hopper (2005) and Wickramasinghe et al.
(2004). Its fundamental premise is that MACSs practiced in LDCs are not merely a
consequence of efficiency and market pressures but also other factors like political
instability, trade union struggles and economic uncertainties over time.
We observed that MACSs were not initially instrumental in production control and
decisions. This was partly attributable to: the previous dominance of foreign capital -
which resulted management ‘at a distance’ during colonialism; politicisation when the
mine was nationalised and controlled by the Ghana government after independence;
employee beliefs that they were exploited; lax operational controls; miners’ militancy and
2 Fortune Magazine (2001: s9) observed that: ‘’Ghana, and former President Rawlings in particular, were hailed as examples to be emulated across the continent”. 3 Burawoy (1985) offers a coherent analysis of production, management controls and state politics based on research on mines in Zambia, which shares with Ghana a legacy of British colonialism. He criticises economists and sociologists for neglecting LDCs - ‘the hidden abode of production’ - and, when they do, their over-emphasis on market relations and neglect of labour processes, class struggles, and state politics.
4
resistance; and racial/ethnic divisions between Europeans and Africans, and Southern and
Northern Ghanaians. It was not until the company was ‘privatised’ following a flotation
of government shares and a subsequent collapse of the gold market that it significantly
changed its MACS, with limited success due to the historical legacy of controls bearing
on employee reactions.
The paper proceeds as follows. The next section describes the theoretical model
governing the subsequent analysis. Then it discusses the methods used to collect and
analyse data. Next, the empirical findings are analysed drawing on our theoretical model
and the final section provides conclusions.
2. A CULTURAL POLITICAL ECONOMY OF MANAGEMENT ACCOUNTING
MACS research from West Africa is sparse but that which exists emphasises how socio-
political and economic context shapes practices (e.g. Rahaman and Lawrence, 2001a, b;
Tsamenyi and Mills, 2003; Olowo-Okere and Tomkins, 1998). Moreover, as Uddin and
Tsamenyi (2005) argue, reforms like those in Ghana may not serve the public interest as
expected by the World Bank and other Western donors for the ensuing regulators lack
resources, become politicised and act largely to maintain external legitimacy. These are
useful studies but, apart from Olowo-Okere and Tomkins (1998), they are essentially
historical fragments lacking an overall theoretical analysis - hence our pursuit of a
‘cultural political economy’ to examine control transformations at different stages of
development. This portrays issues as complex, interrelated, and chronological, though
neither deterministic nor inevitable – MACS developments are a product of the interplay
of politics, culture, state actions, bureaucracy, and mode of production (MOP). We
sympathise with allegations that this carries the danger of meta-analyses relying on
overly general and deterministic analytical categories doomed to empirical failure
(Thompson, 1993), for outcomes of struggles are indeterminate. Nevertheless, that they
can fall into patterns, and micro-analyses of controls must iterate with macro-
theorisations of context for theoretical insight, and the framework’s constructs helped
identify factors impinging on the transformation of controls at AGC.
5
[Insert Figure 1 and Table 1 near here]
Our cultural political framework provides a dialectic explanation of MAS transformation
due to changing social, economic, and political factors. It identifies five regimes of
control: colonial despotism, state capitalism, politicised state capitalism, market
capitalism, and politicised market capitalism (see Figure 1). Each regime is rendered
unstable by contradictions and conflicts that fuel political struggles nationally and within
production that lay the basis for new regimes (see Figure 1). State and market capitalism
represent ‘idealised’ regimes of control, being dominant espoused ideologies that
underpin socio-economic reforms commended by mainly external agencies, whereas
colonial despotism, and politicised state and market capitalisms represent actual
outcomes. Each regime is brought about by force, manipulation, persuasion, and
authority in political and economic struggles. Controls veer between coercion and
consent following interactions between key dimensions of each regime - MOP, culture,
ethnicity and race, the state, regulation and the law, political parties, industrial relations,
and international finance. MACS practices in each regime reflect prevailing managerial
strategies of control. Features of each regime are summarised in Table 1, and explained
more fully in Hopper et al. (2009) and, to a limited degree, the subsequent analysis.
Colonial Despotism is despotic for force prevails over consent: it is colonial because one
racial group dominates through political, legal and economic rights denied to others.
Traditional non-capitalist agricultural and domestic MOP within traditional, ethnocentric
cultures tended to be left intact. Rather colonial rulers fostered capitalist enterprises
financed by colonial capital to exploit primary sectors of the economy. Although a small
indigenous capitalist merchant/landowner class often existed prior to colonisation this
tended to remain underfinanced, family-based, and operating outside capital markets.
Politics based on imperialism often employed divide and rule tactics based on ethnicity to
weaken domestic resistance and create indigenous ruling agents. State regulation was
minimal, enabling company states to flourish and control their employees at work and in
their surrounding communities. Trade unions were initially illegal though nascent
6
unionism brought some state regulation of industrial relations. The arbitrary power of the
colonial boss (usually white) to exercise coercive controls based on physical and financial
penalties, and often overt and explicit racism and exploitation of ethnic differences, was a
principle of organizing production (Spearpoint, 1937). Accounting was rudimentary and
insignificant for control, confined largely to financial accounting for stewardship and
tracking remittances to head offices in the imperial power: a MACS for local control was
largely absent: controls were direct and physical – labour was cheap and lacked power in
company states. Not surprisingly, this helped precipitate independence struggles by trade
unions and intellectual elites.
Following independence, many LDCs adopted central state planning to further
industrialisation and modernity, often at the behest of external financiers and
development experts. Such state capitalism resonated with the socialist ideals espoused
by many post-independence leaders, who created large-scale bureaucratically rational
organisations, often state-owned. Accounting was central, as it can provide a rational
calculus to inform planning decisions, and rule-based hierarchical controls to co-ordinate
accountability from enterprises to state central planners, and ultimately the Minister in
Parliament.
However, in practice, such controls withered in significance (though not presence) being
superseded by politicised state capitalism. Multi-party unions within enterprises became
conduits of inter-party struggles and their leaders combined with middle class educated
politicians. Rather than the body politic establishing broad structures of planning, control
and strategic direction and granting discretion to operational managers to execute them,
they used their bureaucratic powers to intervene into operations to secure patronage and
political favours. Commercial rationality exercised by managers and government officials
diminished in the face of political rationalities. This had ramifications for accounting
systems: they did not whither but often became dualistic. Formal bureaucratic systems
remained but were subservient to political interventions. Moreover, given the MACSs’
operational unreality and the dominance of political criteria in decisions, they often
became irrelevant for meaningful operations management and accountability, leading
7
managers to devise local unofficial MACSs based on operational and political realities.
Formal accounting, including MACSs, became loosely or de-coupled from operations,
maintained ceremonially to gain legitimacy from the general populace and external
financial institutions.
Politicised state capitalism brought a cocktail of poor governance, economic grievances,
turbulent industrial relations, and ethnic tensions that fuelled popular protest. Policy
failures resulted in loss making state enterprises and repeated fiscal crises (Uddin and
Hopper, 2001). External donors advocated policies of market capitalism based on
privatisations of state organisations, more open markets, and abandonment of state
central planning to remedy this. Proponents presumed that private ownership would
diminish political interference, increase profitability and tax revenues, promote economic
growth, and improve accountability (World Bank, 1993, 1995a, 1996; Cook and
Kirkpatrick, 1995). The belief was that competition would induce contemporary Western
financial and managerial practices and better governance, and lead inefficient enterprises
to go bankrupt or be taken over by efficient ones (Adam et al., 1992; Hanke, 1986; Rees,
1985; Furubotn and Pejovich, 1972). Politicians were in a quandary: to go down this
avenue would impair the benefits of office; not doing so would diminish external sources
of finance upon which they relied. They shifted, albeit sometimes reluctantly, to market
capitalism policies emphasising market exchanges, private ownership of enterprises,
external labour markets, and free trade and export zones (sometimes accompanied by
weakened trade unions, less industry-wide collective bargaining, and lower employee
protection). The presumption was that this would lessen state power and political
interventions, with the state adopting an economic supply role to attract multinational and
international capital, facilitate stronger capital markets, provide an effective
infrastructure, and enforce greater financial regulation. Democratic, transparent
governance and ‘new public sector management’ within state organisations were
encouraged. Accounting is central here, especially MACSs that enhance market-based
planning, controls and rewards; and effective financial reporting and auditing to lubricate
the functioning of capital markets.
8
Burawoy predicted a gloomier outcome, arguing that relatively powerless workers would
suffer a re-imposition of coercive regimes of production to attract capital from rich
countries (ibid, 1985 p. 262). Uddin and Hopper, (2001, 2003) confirmed this, with respect
to privatisations in Bangladesh. Imposing market capitalism in societies with a small
capitalist class, inclined to familial transactions, patronage, and irregular means, can
facilitate crony capitalism. Capital comes to dominate labour, privatisations transfer assets
to political elites, large income differentials are exacerbated, and private ownership
becomes more concentrated in well-connected often family-based elites and multinational
capital. Moreover, when democratic parties have charismatic leaders from socio-
economic elites, and there is considerable factionalism based on regions, religion, and
ethnicity, regulatory capture and weak regulation often occurs. This, and the need for
politicians to mediate ‘modern’ market-based policies with traditional religious and
cultural expectations of constituents, can perpetuate decisions following political rather
than commercial considerations. Thus, market capitalism may evolve into politicised
market capitalism, with enterprises’ accounts becoming private rather than transparent,
meaningful sources of information for capital markets and other constituencies; budgets
being top-down, pressured and physical rather than means of delegated responsibility;
and weak compliance with external regulation – i.e. coercive despotic control returns.
3. RESEARCH METHODS
The research reported here examines whether the cultural political framework associating
MACS changes with transformations in regimes of control, derived from studies in
Bangladesh and Sri Lanka, was valid in a Ghanaian enterprise, AGC. The study adopted
a case study approach. It focussed on MACSs but also explored industrial relations,
incentive schemes, production and marketing strategies, and organisation structures. The
initial contact with AGC was with its Financial Controller in March 1999. The Obuasi
Mine’s Financial Controller and the Group Management Accountant at head office
helped identify suitable interviewees. The study had four stages. The first, conducted at
the head office in Accra, identified, inter alia, head office influence over the mines and
corporate policies. The Group’s management accountant, human resource manager,
9
assistant company secretary, and the treasury manager were interviewed for
approximately two hours each, in an informal and semi-structured manner.
The second stage was in the Obuasi Mine, the original and oldest mine of the group. It
was the largest division with 80% of the group’s employees and most of its production.
Its importance made it appropriate for the second research phase. Here the investigator
interacted with employees at diverse levels. Formal interviews of approximately two
hours were conducted with the Financial Controller; General Managers for Mining,
Mining Exploration, Human Resources; Underground Management Accountant, Surface
Mining and Processing Management Accountant, Purchasing and Supplies Manager, 3
underground managers, 4 mine captains, Maintenance Manager, and the maintenance
administrator. In addition, informal discussions were held with 5 miners, 2 drivers, and 2
administrative assistants. An underground mine visit with the general manager for mining
and a Canadian expatriate manager responsible for inspection, facilitated observations of
the underground production process and thence an understanding of its operation be
gleaned. The visit to the different underground mine levels lasted five hours and the
investigator could engage miners in conversation and even operate equipment. Several
visits to the processing plants, the maintenance unit, and the surface mine were
undertaken, and some management meetings observed.
Planned visits to three other mines were abandoned after discussions with their financial
controllers: they were small compared to Obuasi, had a similar management structure,
and were considered less significant. Constraints of time and funds limited the field study
to two months, but subsequently the investigator returned to the Obuasi mine in early
2003 for further discussions and follow up interviews with people interviewed earlier,
and then to head office to explore emergent issues.
The third research stage involved interviews of three hours each with officials from the
Bank of Ghana and the Ministry of Finance to discuss the government’s economic
recovery programme, and with World Bank consultants closely involved in Ghana’s
10
economic recovery programme to discuss World Bank and IMF policies and assistance,
accountability and transparency issues, and privatisations in Ghana.
The fourth and final stage of the study involved searching through AGC archives at the
Guildhall Library in London and the library of the University of Birmingham. The
archives contain information about the structure, operations and financial performance of
the company, including its memorandum and articles of association, board and annual
general meetings minute books and confidential inwards and outwards mines
correspondence.
The data was initially analysed by preparing tables listing issues frequently raised in the
interviews and the informal discussions (Potter and Wetherell, 1995; Yin, 2008).
Evidence gathered from documents (such as the archives) and the observations at the
research site were subsequently matched with these themes. The next stage was to
establish links between the themes and our political economy theoretical framework. This
enabled us to iterate how MACS operated under the different regimes.
4. MACS AND REGIMES OF CONTROL
4.1. Colonial Despotism
Ancient Ghana derived power and wealth from gold. The introduction of camel and trade
routes increased the quantity of goods transported across the Sahara, sometimes as far as
Europe. Modern day Ghana constitutes much of the region often known as the Gold
Coast, which has a long history of settlement and wealth. Successive wars brought
vacillating but organised states amongst diverse traditional tribes but an Ashanti
confederacy governed much of the region by the nineteenth century.
The first European traders were the Portuguese in 1471. The Dutch arrived in 1595 and
drove the Portuguese away by 1642. The British arrived shortly after and started trading
gold mined by the indigenous people. The Dutch were unsuccessful in expelling the
11
British and after hostilities a peace treaty was signed both parties in 1667. By 1750 three
European countries traded gold on the Gold Coast – the British, the Danes and the Dutch,
but the latter two left in 1850 and 1872 respectively leaving the British with control. The
British colonised coastal towns with minimal resistance but the Ashanti people fiercely
opposed them in the hinterland. Following several wars, the Ashanti were defeated and
the Ashanti Kingdom came within the British Empire in 1900.
Early Europeans observed women and children panning for gold along riverbanks and
coastal shorelines and perceived indigenous mining techniques as crude. However, initial
European attempts to impose Western mining methods and controls failed (Ayensu,
1997). Three Ghanaian entrepreneurs established the Ashanti mine after buying mining
concessions from Ashanti Chiefs.4 The British defeat of the Ashanti and the exile of their
king paved the way for a London Stock Exchange listing (Ayensu, 1997) but it failed to
attract European capital (Dumett, 1998). They continued labour intensive mining,
employing by 1894 200 miners working four shafts. However, insufficient resources for
large-scale mechanised mining induced the owners to sell their interest to a British firm,
Ashanti Goldfields Corporation (AGC), which immediately monopolised mining in the
area by persuading the chiefs to transfer the concession to them, and the Colonial
Administration to ratify this (Dumett, 1998). The subsequent expansion of operations
owed much to major investments in railway and harbours and the defeat and annexation
of the Ashanti kingdom by the British (Dumett, 1998).
4.1.1. MACS during Colonial Despotism
The Company did not employ formal controls, including MACSs, to control labour in the
mines. Industrial relations were not a problem, as the colonial authorities prohibited trade
unions and ignored harsh treatment of African miners and their deplorable living
conditions (Silver, 1978). The colonial state intervened little, enabling local colonial
company states to emerge. As long as companies produced returns for the colonial state,
4 The Ashantis, a major tribe in Ghana, were its most adventurous warriors and they strongly opposed British colonial rule.
12
the state tolerated despotic company controls that maximised surpluses and regulated
labour processes, as in Zambia (Burawoy, 1985).
The limited documentary evidence available on management controls during colonialism5
indicates that coercion, not consent, prevailed in AGC, "...floggings, beatings, cuffs about
the head and body, not to mention verbal abuse, were administered as a matter of course
for "slow work", tardiness, malingering, or failure to carry out assigned tasks" (Dumett,
1998, p.180). However, miners initially offered little resistance to the harsh capitalist
MOP, partly because they had no organised labour unions, which were illegal (Crisp,
1984). Moreover, the colonial administration offered no regulation to protect miners.
However, during later colonisation, the emergence of independence movements created
the platform for organised resistance by miners.
Although formal MACSs were not used during early colonialism, accounting was not
absent. Dummett (1988, p.509) studied correspondence between the London headquarters
and the mines from 1904-1949, and concluded that:
Considering the value of its properties and the volume of its annual gold output, the AGC did not have a particularly elaborate or specialized administrative system. In its first two decades the corporation’s central administration of Ashanti consisted of a five-man board of directors … supported by a small London office staff. The twin functions of managing director and consulting or chief engineer were combined in one man, who divided his time between the London office and Obuasi. There was little in the way of middle level management. The chief engineer’s orders were carried out at the mines by two assistant managers who in turn controlled the shift bosses and foreman, who supervised three separate underground work crews, totalling 1,596 people by 1911. Neither forward centralised planning nor accounting procedures were very effective during the first ten years. Detailed knowledge of the local geology, complex methods for chemical treatment of ore and experience in how to superintend a large indigenous work force in a West African country were rudimentary. The records reveal a kind of rough-hewn management exercised by the directors, most of whom lacked any experience in mining, and the London office staff, which constantly harped about increasing profits and reducing costs, but relied on local engineers for conduct of month-by-month operations.
No formal cost accounting system or cost accountants are apparent then but
correspondence between AGC mine managers and head office in London reveal that
mining engineers constantly assessed and monitored costs (Dumett, 1988). Moreover, 5 AGC was owned by foreign owners and listed on the London Stock Exchange after independence until 1972. As Burawoy (1985) argued, independence did not necessarily end colonialism and company states.
13
accounting reports enabled head office in London to control remittances and compute
dividends, which had consequences, for example in the early 1900s, shareholders
recommended a major management restructuring following low dividends (AGC, 1897-
1934).
Neither MACSs nor indeed any bureaucratic controls regulated operations, including the
control of labour. In Ghana, like Zambia, village life was tribal and devoted primarily to
subsistence agriculture. From inception, the mine predominantly recruited from rural
areas. Miners maintained their tribal and village culture and moving to a capitalist MOP
created problems. Miners perceived the tight physical targets and working conditions as
inhumane - they had no influence on production targets, methods, or working conditions -
and their indigenous cultural values received scant attention. Most miners’ families
remained in their villages, which compounded problems. As a manager noted, “Most
miners felt very lonely at the mine because that was the first time they had left their
family. In fact, for most this was the first time they had travelled outside the community.
It was a long time before they were able to come and take the family to join them in the
mine’’.
Despite no recognised trade unions, miners started to resist by refusing to work for low
pay or sign six and nine month contracts tying them to one company, or perform tasks
like going underground (Crisp, 1984). Miners increasingly turned to collective action and
foiling management: reduced wages and the introduction of full-day Saturday shifts
brought a strike in 1905. To counter this, the mine’s British management started to
forcefully recruit miners from the predominantly Moslem North (Ayensu, 1997).
Previously miners had come mainly from the Christian South but now, especially
underground jobs, were filled by Northerners partly because they were cheaper and
Southerners filled supervisory positions, which precipitated ethnic conflicts that still
persist. Despite Financial Times reports of coercive recruitment in 1922, the colonial
authority colluded. For example, in 1922 the colonial administration in Accra sent a
message to political officers in the North that stated, “Strict orders have arrived from His
Excellency the Governor that 1,000 labourers are to reach the mines by Christmas at
14
least … Do your utmost to get them down on time” (Crisp, 1984, p.47). However, miners’
resistance continued (Crisp, 1984) and, as in Zambia,6 workers' strikes in Ghanaian
mines, including AGC, ended company state supremacy and forced the state to enter
industrial relations.
Initially, the state used tribal structures (Robotham, 1989). From 1938, employees had to
bring labour disputes with management initially to their tribal headman. Subsequently,
the colonial state encouraged miners to form official trade unions, which became
permissible from 1941. This brought more formalised labour controls7, e.g. the ID system
to track maintenance boys (Crisp, 1984). The trade union became an intermediary
between mining companies and workers, and helped contain resistance within a
rudimentary bureaucratic industrial relations structure, as in Zambia (Burawoy, 1985).
This diminished arbitrary ‘hire and fire’ powers and coercive controls of managers but
restricted trade union officials’ activities and shifted power to higher echelons.
Nevertheless, the presence and the potential power of trade unions deterred managers from
restoring colonial production relations. However, the stability gained from recognising
trade unions soon degenerated and miners constantly confronted management and the
government (Crisp, 1984). Silver attributed “the increasing militancy of rank and file
mineworkers, as expressed both by strikes and by workplace-level struggles; … [to] the
widening gap between these workers and their union; the co-optation of the union by
mining capital and the state, thus creating a capital-state-union alliance against the
workers; and the increasing necessity for the state to intervene, often in its most
repressive form, to put down the insistent revolt of the mineworkers” (ibid, 1978, p. 67).
The Ashanti employees’ union struck in 1945 and 1946 over abolished deferred
payments; wages; working hours; more jobs; better machinery; and lower rents and better
housing. However, the union lost control of strikes in the late 1940s and mid-1950s as,
“workers made the running and the union officials became the reluctant articulators of
their grievances” (Crisp, 1984, p. xvi-xvii). The strikes followed ethnic or occupational
6 Workers' strikes of 1935 and 1940 eroded company state supremacy, forcing the state into industrial relations (Burawoy, 1985). 7 This differed from mining companies in Southern Africa where no unionization was permitted.
15
divisions (Robotham, 1989). The state often intervened by getting the police to crush the
revolt or using tribal headmen to organise unskilled labour against skilled labour. Capital
shortages during World War II affected production resulting in some mine closures
(Crisp, 1984) and some black miners replaced white headmen who had returned home to
enlist. Though black headmen were paid less than their white counterparts, this era saw
the enskilling of black miners and the birth of the ‘black bossman’ (Robotham, 1989).
The all-mines strike action of 1947 stopped management trying to reverse this when
white people returned from the war.
However, management began to exercise new controls. In 1950, South African consultants
began implementing Scientific Management. Robotham (1989, p.43) comments; “an
entire reorganisation of the managing system now took place starting with the
establishment of Planning Department. Time and motion studies soon followed and
standard complements for each job were devised and rigidly adhered to". Systematic
work routines were established, e.g. standardised stoping and workplace conditions;
planned equipment, material usage, and maintenance; and productivity bonuses. AGC
used Taylorism continuously, like Zambian mines (Burawoy, 1985).
It is not clear whether MACS changes accompanied this. Some material8 refers fleetingly
to budgets during the 1930s and later, but searches of company records at the Guildhall
and University of Birmingham libraries could not corroborate this. Moreover, Dumett,
(2000, p. 587) argues that whilst rudimentary management functions evolved
continuously from the 1920s it was not until the 1960s (when Lonrho took over AGC)
that ‘the modern organisational structure of gold mining emerges’. The tentative
suggestion is that crude MACSs for management purposes existed, maintained by
engineers in the field and head office officials.
So, in summary, accounting during colonialism was important, for mine engineers at
AGC and managers in London constantly needed to swap cost calculations. However,
8 Anglo Gold Ashanti’s history at http://www.ashantigold.com/NR/rdonlyres/BDB5B570-C236-4C5B-9F53-1B5ED83F7E0C/0/Ashanti_CompanyHistory.pdf, December 2009.
16
possibly partly due to the inherent uncertainty of mine operations and the simple
organisation structure of the mine, no formal MACS to compute costs or for control was
apparent, as the management structure was simple and slight, and labour was controlled
by despotic means, often exploiting ethnic divisions. Nevertheless, financial accounting
enabled mine managers and head office to communicate, and London officials to exert
some control at a distance. For much of the time AGC operated as a local company state
with the colonial state playing little part. However, growing labour militancy forced the
state to lay the basis of an internal state to govern industrial relations. However, this did
not eradicate despotic controls or racial employment policies, and towards the end of
colonialism miners’ unions colluded with independence movements.9
4.2. State Capitalism and Politicised State Capitalism
The 1940s to 1950s saw an upsurge in the nationalist movement agitating for
independence. The Trade Union Congress (TUC), which the Ghana mineworkers’ union
(GMWU) had joined, was instrumental in this struggle (Crisp, 1984). The British granted
independence in 1957. The fight to overthrow colonialism wrought strong links between
politicians and trade union leaders that continued when they assumed leadership of the
new state. They shaped state capitalism and eventually politicised its ostensibly rational
bureaucratic controls.
Dr. Nkrumah’s government assumed power. It was associated with grandiose socialist
planning, direct political interventions, and nationalisation of foreign owned companies.
The state made massive investments in state owned manufacturing industries to create an
infrastructure, mainly in major cities, for industrialisation. Most Ghanaian state enterprises
operating today are legacies of this policy: the public sector share of total formal sector
employment rose from 55.3% in 1960 to 70.2% in 1965 (Boateng, 1997).
9 Independence struggles brought conflicts in and around the mines but AGC’s employees were often protective of European managers affected.
17
The 1958 Industrial Relations Act legally recognised trade unions and made collective
bargaining binding on employers and employees. Trade unions had to register with the
government to gain political rights, which linked political activities to the official
machinery. The TUC gained a monopoly of trade union activities and membership was
compulsory for civil servants. Trade union activities deemed contrary to the
government’s interest were illegal and banned. Dr. Nkrumah used his powers to intervene
in large state organisations, granting employment to political loyalists and annexing
popular movements (including the TUC). For example, he made the loyal General
President of the GMWU a director of the newly created Ghana State Mining Company in
1961, and in 1963, Chairman and Managing Director. He pursued government interests
by hiring and rewarding employees loyal to Nkrumah and dismissing those not (Silver,
1978).
Regulation of industrial relations, trade union recognition, and the protection of miners
from arbitrary hire and fire changed controls at the point of production at AGC, for
example, floggings, beatings, cuffs about the head and body, not to mention verbal abuse
were eradicated. The arbitrary power of colonial bosses (usually white) to control miners’
life outside work diminished. The internal state (formal collective bargaining) was
strengthened during state capitalism, as Burawoy (1985) noted in Zambian mines, and
Uddin and Hopper (2001) found in Bangladesh. Miners enjoyed a relatively stable
environment during this period and their living standards rose constantly (Silver, 1978).
The next two governments - the military National Liberation Council (NLC) of General
Ankrah and the civilian Progress Party (PP) government of Dr. Busia - held power from
1966 to 1972. Their economic policies favoured private sector participation (Boateng,
1997). By 1966 all Ghana’s gold mines except AGC had been nationalised within the
State Mining Corporation. This did little to revive production, which progressively
declined, partly because of ‘excessive state control’ (Hilson, 2002, p.22). AGC was not
nationalised despite its strategic importance, possibly because of the relationship between
its European owners and Nkrumah’s government (Ayensu, 1997). However, after the
1966 coup, the new military government sought new investors for AGC, after an
18
argument with its European owners led AGC’s Chairman to threaten to flood the mine. In
1968 it was acquired by the controversial10 Lonrho company, headed by ‘Tiny’ Rowlands
- a perceived champion of independence movements in British colonies (Ayensu, 1997).
The government gained 20% of its equity with an option to purchase 20% more at a
nominal price.
4.2.1. MACS during Politicised State Capitalism
As Dumett (1988) notes, Lonhro’s ownership brought contemporary organisation
structures and controls. It progressively adopted management and financial control
procedures recommended by Peat Marwick, Mitchell and Co (UK Competition
Commission report, 1979). AGC, one of 21 management regions within Lonrho, had
several profit centres. A Finance Committee chaired by the finance director reviewed
their performance using quarterly and summary monthly financial reports. Subject to
meeting budget, reporting and control requirements, AGC could determine its internal
controls and exercise considerable operational autonomy.
Accounting controls were integral for the mine’s management. Managers from the pre-
1972 period recalled a centralised organisation structure where head office in London
made most planning and control decisions. A senior manager observed, “The head office
in London designed all controls including budgets. Budget figures were agreed in
London and sent to Ghana for implementation”. Similarly, financial statements were
prepared in London - managers in Ghana had little input. A senior manager commented:
“We were not directly involved in decision-making. Someone sits in London and decides
on what you have to do miles away in Ghana. Emphasis was heavily placed on
production and therefore what concerned them was for us to meet production targets”.
Financial matters were the prerogative of managers in London where the accounting
department resided: they prepared financial reports and set production targets. Physical
10 The British Prime Minister, Ted Heath, described it in the House of Commons as “an unpleasant and unacceptable face of capitalism”. The London Stock Exchange de-listed the company. In May 1973 the Secretary for Trade and Industry appointed inspectors to investigate the affairs of Lonrho. Their report was highly critical but the Director of Public Prosecutions decided further action was not justified.
19
budgets, with output the main consideration, were emphasised, alongside cost reduction
driven by direct controls over labour at the point of production (Robotham, 1989).
However, hostilities between management and miners from the end of Nkrumah’s
administration escalated during the NLC and PP governments. When, in the early 1970s,
government and management rejected miners’ demands11 for the same severance pay as
their counterparts in a nationalised mine, and for the first time, removal of certain
managers, the miners went on the rampage. The company’s attempts to control them
failed: as Silver observed (1978, p.73), "Capital attempted to resist these labour
encroachments, but being repeatedly unable to carry out its labour control function, was
increasingly forced to turn to the state for overt assistance, in the form first of police, and
finally, of the military". The military quelled the strike, killing four miners and injuring
others.
In 1972, Col. Acheampong overthrew the PP government and assumed power, supported
by the GMWU. The new military government refused to comply with the IMF and World
Bank policies and established a quasi-socialist policy (Economist Intelligence Unit,
2002)12 based on central planning. In 1972, the government acquired a 55% interest in
AGC by decree, and made it a Ghanaian company with its head office in Accra. Whilst
the government used its controlling interest to influence decisions and appoint the
deputy-managing director (a Ghanaian mining expert who acted as the government’s
representative on AGC’s board), Lonhro’s expertise and substantial investment enabled it
to appoint the Managing Director. The government ordered AGC’s miners to rejoin the
GMWU and within 2½ years miners’ wages increased by 300% (Silver, 1978). The
government helped indigenous Ghanaians become managers in AGC for the first time:
11 In the early 1970s, workers of AGC temporarily split from the GMWU and formed their own union in the belief that it could negotiate higher wages with AGC which was more profitable than the state mines (Silver, 1978) Moreover, the Busia government’s abolition of the TUC rendered miners’ strikes less effective. 12 The Acheampong regime initially refused to repay loans taken by the PP regime. When the IMF, World Bank, and other aid agencies took retaliatory measures (Petchenkine, 1993), it had to honour its commitment (Payer, 1982, p.47).
20
several young Ghanaians received further education overseas to prepare them to assume
some expatriate positions (Ayensu, 1997).
However, political turbulence and economic problems affected internal controls. Gold
production peaked at 533,000 ounces in 1972 but output declined rapidly over the
following decade to 232,000 ounces. Several sites were exhausted and high taxes, a lack
of foreign exchange, a tightly controlled economy, and an overvalued currency made
buying spare parts or investing in new plant difficult for AGC. The government meddled
in decisions, especially management appointments. The head office move to Accra
brought management control closer to the mine but head office was still divorced from
operations, being 200 kilometres away. Head office centralisation frustrated operations,
for example, delays in getting urgent replacements for broken equipment.
Budgeting was production oriented as the market could absorb any output. Each mine
manager ascertained ore reserves: head office then derived each mine’s production target.
A manager described the system as “crazy”. Another noted, “Then somebody sits in
Accra and says produce one million ounces of gold, at a particular grade and cost
without actually consulting people working at the mine. … If we did not achieve this, the
market is disappointed”. Mine managers had little control over financial decisions and
ambitious production targets: budgets bore little relation to past operations. One
commented that: “When they come out with the figures, you get so frightened because
they are usually high. Having done this it is great but you have ‘killed’ somebody.”
Robotham, (1989, p.67) observed that; “The structure of authority in the mine was
extremely authoritarian, the general principle governing operations being that the
essence of management is control.” and “The mines resorted to ineffectual cost-cutting,
exercises which were often counterproductive. Equipment was run down and the whole
programme of maintenance and tight management control established in the fifties was
allowed to fall into abeyance” (ibid, p.52). Physical production targets set at head office
dominated and rendered cost planning and control marginal within the mine. The over-
reliance on labour-intensive production and cutting labour to save costs proved disastrous
as production fell and targets went unmet.
21
The military government violently destroyed the internal state at AGC. When miners
organised a twenty-five minute sit-down strike in 1972, the Minister for Labour ordered
miners to turnover strike organisers, and threatened to charge future organisers with
economic crimes and trial by military court (Silver, 1978). Miners perceived the
government’s appointment of a conservative opponent of the miners’ strike as General
Secretary of the GMWU with suspicion. Miner’s resistance was subdued but worsening
economic conditions in the mid-1970s intensified conflicts. Strikes occurred in 1977 over
wage increases, payment of bonuses and demands for removal of some managers.
Management granted a substantial wage increase but used covert actions using
informants to garner information about imminent strikes. Consequently, when the
government heard about a planned strike in December 1977 they quickly dispatched
soldiers to the town.
Although this strike never occurred, management realised the difficulty of controlling
miners with the GMWU weakened and the internal state destroyed. Silver (1978)
summarised the dilemma of management and the military government thus; “Capital
needs a union strong enough to be able to control labour, but not so strong as to threaten
capital. The military wants the mineworkers sufficiently happy that they do not join the
professionals and students in opposing the regime, but fears the inflationary
consequences of paying the wages which alone would keep them happy”.
Mounting company debts led management to tighten controls over labour to reduce costs
and militancy (Silver, 1978) but this failed because miners resisted: “68% of the time no
work was done … largely due to the labour arriving late for work and closing early”
(Silver, 1978, p.80). Theft of gold, commonplace for a long time and institutionalised into
miners’ culture, was rampant - estimated at 25% of output. The appointment of ex army
and police personnel to head security and using informants proved unsuccessful as
security personnel collaborated with miners to perpetuate thefts. Management then
employed 12 to 15 year old boys to wash gold naked to prevent them pocketing it but
theft continued in a mill that washed pure gold. Management argued that thefts were
22
immoral but some miners claimed it was a reaction to inhumane working conditions -
working 7 days a week - and low pay (Silver, 1978). Further measures to halt thefts such
as using aggressive supervisors provoked violent responses: miners sabotaged mining
equipment, mixed waste with ore, fiddled supervisor’s production figures, and even used
physical violence. A European supervisor who tried to halt a theft was severely beaten
and lost an eye. Consequently, supervisors often ignored thefts (Silver, 1978).
Officially, management controls were as prior to ‘nationalisation’ but in practice they
were marked by corruption, ethnicity and personalised relations. Supervisors had
problems controlling subordinates with close relationships with higher management
(Robotham, 1989). Miners complained they had to bribe officials such as the Shift Bosses
for promotion, the medical officer for sick leave, and the welfare officer for
accommodation. Robotham (1989, p.71) comments: “the crucial difference was that
during the colonial period, rigid control and depersonalisation (at least between Seniors
who were Europeans and workers who were Africans) was maintained by the entire
system of colonial domination in the mines and in the wider society. With the dismantling
of that system a new approach had not been developed and there was little real
accountability in the ‘Ghana time’ system.
European supervisors found exerting tight labour controls used in other African mines
difficult in Ghanaian mines (including AGC) (Silver, 1978). Miners often resisted and
consequently, “a ‘technical’ management problem having to do with efficiency and
technique, is in reality a struggle over control of the workplace” (Silver 1978, p.82).
Previously management sacked strike leaders instantly but increasing militancy meant
this might provoke violent clashes. Silver (1978, p.82) illustrates the severity of the
problem: “one expatriate manager … reported that he no longer sends the department
vehicles to the Transport Department to be serviced, since the Transport Department has
become a ‘black power shop’, effectively taken over by workers who defy management’s
control, and laugh at their fulminations”. Management attempts to infiltrate the miners
and buy some off failed, partly because it weakened labour unions and thence their
control of members.
23
To summarise, management controls in AGC during state capitalism became less harsh
as managers needed the consent and cooperation of black miners to maintain production,
especially when managers had little influence externally. Initially a strengthened internal
state emerged and secured some control but controls became politicised. The post 1972
military government destroyed the internal state rather than using it to coordinate the
interests of capital and labour - and interventions based on ethnicity became important.
Accounting’s role was marginal in a highly politicised context, especially after
‘nationalisation’, when control resided primarily in the political arena of trade unions,
ethnic divisions, military governments and their respective agents. The domain of the state
grew during Acheampong’s regime, employing 86.4% of those formally employed by
1978. However, the economy entered dire straights: export earnings fell by 52% and
domestic savings and investment by 12% (World Bank Report, 1995; Ho Won, 1993);
cocoa sales - a major export earner – declined and its contribution to GDP fell by 11%;
manufacturing declined by 6%; and mining production declined from 710,000 oz to 285.3
oz. (see Appendix 1). Between 1970 and 1983, inflation rose from 3.7% to 123% and GDP
declined on average 2% annually (World Bank, 1995b quoted in Hilson, 2002). Political
violence, economic problems, and pressure from international aid agencies, especially the
IMF and World Bank, forced the government to institute policies based on market
capitalism (Ray, 1986; Pelow and Chazan, 1986; Gyima-Boadi, 1993).
INSERT TABLE 2 NEAR HERE
4.3. Market Capitalism and the Politicised Market Capitalism
Flight Lieutenant Jerry Rawling’s Provisional National Defence Council (NDC) military
government assumed power in 1982. Rawlings ruled Ghana for nearly 20 years, first as
military leader and then as civilian president. His initial socialist and centralised economic
policies faltered during 1982-83 when Ghana experienced a severe drought and export
revenues fell significantly. The administration turned to international aid agencies for
assistance. The IMF and World Bank responded but any financial aid and technical
24
expertise carried conditions, such as removing price and exchange rate controls, and
government subsidies; and introducing structural adjustment policies based on market
capitalism.
Reforms began in 1983 with the Economic Recovery Plan. The first phase focused on
eliminating price distortions, ensuring a balanced economy, reversing agricultural sector
decline, curbing inflation, enhancing exports, and improving social infrastructure and living
standards of the average Ghanaian. The second phase relaxed and liberalised price controls
and stimulated direct foreign investment. Government investment plans provided tax
incentives for foreigners that invested directly, or bought shares in some state enterprises.
Privatisation was encouraged, especially in key sectors like mining and banking. The third
phase focused on minimising and eliminating government interventions into markets,
encouraging domestic savings and foreign investment, privatisation, and improving the
balance of payments. Significant financial sector decisions included abolishing interest rate
controls, making the banking sector more secure, and reducing government’s interest in
major state banks. The recovery programme had favourable outcomes: by 1992, GDP
growth averaged 5% per annum and gross national savings rose to 6.6% of GDP by 1994.
After the reforms US$5 billion flowed into mining. The IMF and World Bank believed
mining could boost export revenues and AGC got a loan of £159 million in 1985 from a
consortium of banks led by the International Finance Corporation (IFC)13 for
improvement and mechanisation programmes. A manager noted its high interest but as it
“was the only source of funding available at the time, the company had no other choice”.
Foreign exchange earnings from mining increased from US$108 million in 1985 to
US$710 million in 1999.14 Predictions that miners would oppose IMF/World Bank
intervention did not materialise15 (Robotham, 1989, p.59). New mining and investment
13 An affiliate of World Bank that supports viable companies in developing countries. 14 http://www.unctad.org/infocomm/diversification/cape/pdf/barning.pdf 15 Subsequently the government was accused of bowing to international capital. For example, a Canadian Council for International Co-operation report (2003) notes how Ghana’s weak regulatory environment makes mining attractive to foreign investors and enables the government and mining companies to ignore pollution, land degradation and health issues. AGC shifted from underground to cheaper but more environmentally damaging open mining. Resistance by some local people and NGOs has largely been unsuccessful because of government support for mining companies.
25
laws in 1986 let AGC retain 45% of export earnings, which released funds to repay loans
and invest, for instance in sixty scrapers. In 1995, AGC received another IFC loan to
open up new workings at Ashanti. Gold production increased, especially from surface
mining, rising sevenfold from 1980 to 1999, despite a decline from 1980 to 1986 to
287,124 oz. (see Appendix 2). In 1993, output was 1261,424 oz. and in 1998 exceeded 2
million oz., accounting for 38% of Ghana’s exports. AGC’s mines accounted for over
50% of production (Hilson, 2002) (see Appendix 2). Increased gold prices and the
expansion programme improved financial performance. Operating profits increased from
1991 to 1995, and dividends were paid until the late 1990s (see Appendix 3).
In 1994, AGC floated its shares on the London and the newly created Ghana Stock
Exchanges. The government became a minority (20%) shareholder16 by reducing its
shareholding by 25%. Overseas investors became majority shareholders but the
government could still appoint AGC’s Chairman and veto major decisions like potential
mergers.17 In 1996 AGC’s shares were listed on the New York Stock Exchange - its first
African company. In 1998 Lonrho was demerged: AGC went into Lonhro plc,
subsequently renamed Lonmin plc in 1999.18
4.3.1. MACS during Politicised Market Capitalism: a New Despotism?
Government interference in AGC’s activities continued during the initial Economic
Recovery Programme. For example, in the early 1990s the mine’s European General
Manager was deported and replaced by the Deputy Managing Director, a Ghanaian.
16 Since 2001 AGC has sought government relinquishment of its 20% ‘golden shares’. The debate has economic and political overtones. Ellison (2002) argues that: “For a country like Ghana that has a rather weak regulatory regime, the golden share provides a tough oversight on the predatory behavior of international business”, whereas others (including the management of AGC) believe it has negative impacts including stopping a takeover by a foreign investor. 18 In April 2004, the South African mining giant - AngloGold took over AGC for USD1.55b with the government of Ghana’s backing. The merged company, now called AngloGold Ashanti Limited, is listed on the New York, Johannesburg, Ghanaian, London and Australian stock exchanges, and the Paris and Brussels bourses. Its head office was transferred to South Africa though the new group maintains an office in Ghana.
26
Furthermore, the government appointed union leaders and members of workers’ defence
committees, and informants’ alerts of union activities and strikes often brought military
intervention. Politicisation, nepotism, ethnicity and covert economic relationships often
permeated labour controls but vestiges of the internal state remained.
Stealing gold persisted. A manager recalled how, “Some miners went to the extent of
swallowing the gold and getting it out when they go to the toilet. Sometimes we had to
take suspected miners to the hospital. They would then be forced to go the toilet and the
gold retrieved.” Security increased in the late 1980s but introducing metal detectors
precipitated a strike. A miner observed that, “Before this time, no one really cares about
his salary because once you go underground you are sure you can come out with some
gold to sell. There was a ready market for it, so we made so much money. Then,
management introduced these metal detectors. We demonstrated that we do not want
‘pim pim’” (the sound of the detectors). In hindsight, some interviewees accused
employees and management of complacency in the belief that the company’s wealth was
everlasting. A manager recalled how, “Controls were there on paper but were very often
relaxed as money was no problem”. However, industrial relations and pay became more
prominent as controls tightened and diminished miners’ illegal supplementation of
income.
Trade union activities, and the influence of the GMWU declined following the sale of
Government shares in 1994. Workers recognised their dependence upon international
capital and the union became less confrontational. Management tried to facilitate
negotiation, transparency, and cordial relations by co-opting the unions, granting them two
representatives on the board. Nevertheless, management used covert actions such as
infiltrating the union. An industrial relations unit in each mine monitored miners’
behaviour and discipline, and reported imminent strikes. Miners viewed industrial
relations officers with suspicion, seeing them as spies and controllers. The miners’ union
fight for improved conditions after flotation had little success - the final offer of salaries
indexed to the US dollar fell short of their demands. Miners believed that union leaders
had ‘sold them out’, and they voted to remove them. A miner at this meeting recollected
27
that, “It was a hostile environment. Some of the miners threatened that if the existing
leadership is re-elected they will beat them up and burn things in the mine. We all knew
that top management is supporting these leaders and we made sure they were booted out
of office. Everybody thinks they have betrayed us and about 90% voted for a new
leadership.” The mistrust between miners and their leaders, and redundancies in 1998 &
1999 in AGC and mining companies elsewhere weakened miners’ power and collective
bargaining at AGC.
As Appendix 2 reveals, AGC reported increased profits after the flotation. However, due
to the shift from underground to surface mining and poor cost control operating costs rose
from USD241 to USD336 per ounce from 1994 to 1997. Nevertheless, gold prices were
high enough to generate profits and in 1996 AGC’s dividend peaked at 65%. However,
gold prices fell drastically (from US$359 in January 1997 to US$283 by December 1997)
when several European Central Banks (including the Bank of England) reduced their gold
reserves. At the end of 1997, operating costs per ounce exceeded the average gold price,
with obvious negative effects on profits (see Appendix 2). This called for drastic
measures, and the financial orientation and budgeting changes post flotation became
more pronounced. Falling gold prices exposed the lax financial controls and poor
financial decisions: margin calls on a hedging programme ‘backfired’ bringing significant
losses.19 AGC’s net profit declined from 1996, and 1999 to 2001 saw massive losses. The
company’s shares that had traded at USD16 on the New York Stock Exchange fell
sharply and international stock markets suspended trading of them for several months in
late 1999. Large lay-offs of miners helped reduce financial losses (see Appendix 4). AGC
could not fund creditors’ demands for payment, which precipitated attempts to takeover
the company. The government, holding 20% of AGC shares used its veto powers to
19 Following falling gold prices, AGC’s management gambled and hedged a substantial proportion of its gold reserves in anticipation that gold prices would fall. By 1999, 38 % of its gold reserves were hedged at $300 per ounce. However, gold prices suddenly started rising and on October 2 1999, hit a two-year high of $337/oz. The 17 banks with which AGC conducted its derivatives business made margin calls for USD570m. AGC’s hedge fund created a liability which could not be met - the gold sold was buried underground. Consequently AGC breached other loans and conditions, including revolving credit facilities. AGCS’s CEO admitted that: “I am prepared to concede that we were reckless. We took a bet on the price of gold. We thought it would go down and we took a position.” http://www.ghanaweb.com/GhanaHomePage/features/artikel.php?ID=21933
28
scupper a bid of USD665m by Lonmin, which held 32% of the company’s shares.
Moreover, Goldman Sachs, the largest hedge fund creditor of AGC, opposed a quick sell-
off. In February 2000, AGC arranged interim finance of USD100m with Barclays Bank
until a $326m refinancing package was finalised.20 This renewed a US$270 m. revolving
credit facility and retained hedge protection without potential cash calls for three years.
[INSERT FIGURE 2 NEAR HERE]
The 1994 ownership change brought a new organisation structure, partially depicted in
Figure Two. The chief executive, a Ghanaian, was supported by expatriate finance and
operating managers. AGC was organised into seven autonomous operating mines, each
with its own board of directors, with two representatives of senior staff and three from the
union (miners and junior staff), reporting to the chief executive at head office in Accra.
Newly appointed financial controllers reported to a new head office position - Chief
Operating Officer. Mines gained more autonomy: although the executive board still set
output targets, each mine now controlled the means of achieving them.
The economic crises brought further delegation and decentralisation of internal controls.
Management accountants responsible for the main operations (underground mining,
surface mining, and processing) moved from the Finance Department to their respective
operating departments. Previously, as an underground miner commented, “We hardly go
to the finance office. We do not feel comfortable going there since it looks like a place for
the big men.” Workers came to recognise the management accountants as they interacted
with them daily. A miner commented: “The management accountant is closer to us hence
we call him by his first name. We think he is part of us and understands our problem
more than those in the Finance Department. On the other hand, we call the chief finance
officer by his last name because he is far above us. He is on a different level and we do
not necessarily speak the same language. He deals with top management while the
management accountant deals with us”.
20 http://www.businessinafrica.net/leisure/books/175440.htm
29
Relocating the management accountants improved their understanding of the mining
process and the language of miners, which they believed improved budgetary control.
The management accountant for processing commented, “I am not a technical person but
I go to the plants every day just to see what they are doing. My mere presence there tells
them we care about what they are doing.” Accounting and accountants became
significant for miners, engineers and other personnel. Mining engineers had to master
‘costing’, now the dominant business language: even mine captains (the lowest
supervisory level) became accountable through monthly performance reports revealing
the units, total cost, and cost per unit of their operation. The cost accountants now
interpreted performance reports for them and compared their results with those of other
mine captains. A management accountant observed how, “Most managers are now
accepting responsibility for budgeting for their operations and top management is
emphasising cost control”. Previously, budget proposals only required limited
justification – now cost control was a major managerial preoccupation. AGC’s weekly
newsletter (July 27, 1999) exclaimed, ‘’Fighting cost at all cost is a duty of all employees
… Fight it till the last drop’’.
Cost consciousness rose amongst senior ranks. Mine managers started to demand reasons
for variances, which increased the power of the finance department. A manager remarked
that, “The Chief Finance Officer is now very influential in every decision. Even the
Managing Director comes to consult him almost every day.” A management accountant
remarked, “Now at every meeting, they want the accountants to be there. If you are not
there they start panicking. The gold price has given us power and made us important.” A
senior account manager observed how, “In the past the mine captains and managers did
not pay much attention to cost and other accounting reports. Now they run to the
accountants for explanation for figures.” This brought cost cutting initiatives to reduce
bureaucracy, streamline operations, and remove or reform activities perceived as non-
value adding such as procurement. An annual report commented that, “Improvement in
cost at the mine was achieved through closure of the high cost surface operations as well
as effective cost control measures” (2002, p.13).
30
Others were not as enthusiastic. The new financial controls created confusion and
conflicts between staff departments and miners used to physical production targets
dominating operations. Budgetary involvement and effective use of budgets was hindered
by lower level, often indigenous, employees’ lack of accounting knowledge. A
management accountant commented how, “Whites historically dominated the company at
the top and senior management level, with Ghanaians mostly in positions of very junior
employees. Most of these locals had little or no formal education and now occupy some
positions in middle and senior management. Most therefore lack managerial knowledge
and skills, especially in planning and control, and this is reflected strongly in the
preparation of budget proposals”. Insufficient accounting training increased the pressure
on local managers, produced confusion and misunderstanding, and eventually led many
to treat the budgeting process ceremonially.
Moreover, many lower level employee and miners believed that tight controls fell only on
them, gold mines had ample resources, and top managers were plundering gold mines.
This impeded securing realistic financial budgets for, as a manager commented, “Their
budget proposals are ‘wish lists’ based on the premise that the Company can afford
anything they demand”. However, cost reduction strategies brought redundancies
amongst miners and lower level employees (AGC’s employees declined from 12,850 in
1998 to 9,841 by 2001 – see Appendix 4), as in other privatised mines like Tarkwa,
Prestea and Nsuta (Akabza and Darimani, 2001). This aggravated workers’ relationship
with management (especially top management), whose attribution of frequent budget cuts
to market conditions were not universally accepted. A manager remarked how, “The
budget department and top management justify budget cuts [by blaming] low budgeting
skill levels, negative employee attitudes towards budgets, rapidly increasing costs, and
the declining gold prices. Most managers believe they are not given the opportunity to
defend their budget proposals and those in support areas think their activities are not
considered important enough to warrant detailed scrutiny … by top management and the
budget department, hence some cuts are clearly unjustifiable.” However, fears of job
insecurity, a weakened union, and ethnic divisions going back to the colonial regime
muted miners’ resistance. Controls remained highly disciplinary, especially for unskilled
31
Northern black workers, and their differential application across ethnic groups engendered
conflicts amongst workers, which weakened any remaining solidarity.
To summarise, management controls and controls at the point of production underwent
major transformations following the flotation. Politicised controls and interventions
diminished but did not disappear, especially before the financial crisis. Increased foreign
private ownership brought major managerial changes: more delegated financial control
enabled senior management to control at a distance, consistent with expectations in the
market-based structural adjustment programme imposed by international agencies.
Accounting, especially costs, came to dominate the language and preoccupations of
managers, especially European ones trained and habituated in such a discourse. Initially
this had commercial success in a previously rapidly deteriorating sector and the cost
orientation increased following the financial crises engendered by falling gold prices and
financial engineering errors by senior managers.
The new accounting regime’s financial discipline and espoused logic of the necessity of
cost savings and increased productivity justified intensifying miners’ work and lay offs.
Trade unions, weakened by management backed by the state, left workers bereft of ways
to express their resistance collectively. The internal state became relatively inactive with
only a passive co-opted trade union presence remaining. Collective bargaining diminished:
consent came via the external labour market and fear of redundancies. Ethnic divisions
further weakened resistance. Nevertheless, unlike managers and some supervisors,
accounting targets did not directly motivate miners but accounting influenced their
language and actions. Arguably, from the miners’ perspective, market policies exposed
them to a new form of despotism.
5. CONCLUSION
Figure 1, framed the basic research question, namely why and how management controls
in a Ghanaian gold mine transformed over a century. Table 1 framed the social, economic
32
and political factors believed to impact on regimes of control at various stages of
development. The empirical evidence from Ghana was consistent with this framework.
Over time, colonialism and foreign capital transformed indigenous, non-capitalist gold
production into a large-scale industrialised capitalist mode. The European owners’
management controls reflecting Western models and culture were alien to miners
recruited primarily from diverse rural traditional communities. White ‘Europeans’
dominated management, although indigenisation gradually occurred under post-
independence governments. Throughout, ethnic differences, sometimes deliberately
fostered within management controls, created tensions. Resistance caused the colonial
company state to whither and an internal state that governed industrial relations to
emerge.
AGC was never fully nationalised within a programme of state capitalism after
independence, although other gold mines were. Independence brought greater
indigenisation of supervisory and managerial positions, and brought AGC under
Ghanaian company law. In 1972, the government assumed a large stake and exercised
considerable control. As elsewhere, political interventions for party advantage and
patronage within a turbulent and factional political arena overrode legal-rational
accountability and controls, e.g. the military government destroyed the internal state.
The dominance of political considerations eventually precipitated fiscal crises. Ghana’s
economy deteriorated rapidly making it one of the most heavily indebted and lowest per
capita-income countries in the world. The government had to turn to international
financial institutions like the World Bank, IMF and commercial banks. Ghana’s adoption
of a structural adjustment programme based on market capitalism became a condition of
aid. Under IMF and World Bank auspices, Ghana implemented economic reforms,
including some divestment of government shares in AGC - a quasi-privatisation.
Nevertheless, whether market reforms improved enterprise efficiency is debatable -
AGC’s operational performance arguably deteriorated but high gold prices masked this
and enabled profitability to increase. However, when gold prices sharply declined and
33
hedging strategies failed, AGC made acute losses. Although it subsequently became
profitable, no dividends were paid and it was sold to a South African mining company in
2004, with control operating outside Ghana. Throughout, development was at the behest
of foreign capital.
Accounting and control systems varied under different regimes of control (Uddin and
Hopper, 2001; Hopper et al., 2009). Under colonialism, accounting was largely for
stewardship - supplying economic performance reports for head office in London to make
financing, dividend, and planning and control decisions. Minimal formal accounting
occurred at the enterprise, though engineers constantly estimated and discussed costs with
head office. A simple hierarchy of European managers emerged at the mine. Control was
personal, physical and direct, with coercive and physical controls that exploited ethnic
divisions amongst indigenous miners. This largely continued after independence due to
the continuing private ownership of AGC.21 However, an internal state emerged to
control labour relations during late colonialism and beyond; operations management
became more formal and systematised with the application of Scientific Management;
and Lonrho’s ownership brought divisional profit centre management, and improved
financial reporting to head office. When the state assumed more control, they forcefully
diminished the internal state and intervened into operational controls for political
advantage, culminating in deteriorating productivity and finances. After a ‘privatisation’
whereby the state relinquished most of its shares in AGC, financial controls remained
centralised and focussed on head office reporting and production orientations
predominated management. Miners, fearing for their jobs in the face of layoffs were less
militant and management co-opted their unions within a weakened internal state. It was
not until the financial crisis that major MACS changes occurred, namely decentralised
management accounting, tight budgetary control, and cost-oriented management.
21 Other mines were nationalised and made subject to bureaucratic-rational structures of control and accountability within state central planning. These became politicised as noted elsewhere.
34
As Dumett (1985) suggests,22 the evolution of controls at AGC is broadly consistent with
Chandler’s (1975) thesis of corporate development, whereby organisational growth relies
on the adoption of budgets and accounting performance measurements culminating in
divisional structures. And from inception, cost calculations were a primary concern of
managers at AGC. Initially these derived from engineers’ experiential judgements but
gradually more formal, conventional cost estimation systems supplemented these. Hence
the evolution of MACSs at AGC can be seen as a consequence of increasing size and
complexity in the face of market forces. However, reliance on such Western centric,
market-based explanations is partial. It masks ideological issues, promotes
managerialism, legitimates past and present practices as inevitable, and diverts attention
from disenfranchisement of employees and civil society.23 Of course, markets are
important: as the case notes, MACSs were most powerful when gold prices and hence
profits were low. Indeed, from inception, profit for private foreign owners predicated
controls, except for an interlude with a harsh, often venal, and ineffective military
government that partially ‘nationalised’ AGC. Today markets and private ownership are
cornerstones of policies determined by international financial institutions. Being poor,
Ghana relies on foreign capital and exports of a few key commodities with volatile prices
that quickly have socio-economic impacts.
But markets and thence controls did not evolve naturally. Throughout, despotic controls
upon employees, relied on state interventions, which in the last resort violently quelled
resistance. Thus, physical direct controls that exploited indigenous ethnic differences
administered by a hierarchy based on racial divides became possible during colonialism.
Within operations, MACSs were unimportant for control, i.e. they were substitutable.
Poor education and training, their powerlessness, and divisions of labour promoting
deskilling and skilling based on colonial beliefs in racial superiority disenfranchised
labour. Resistance brought more formalised controls, especially an internal state and
22 Dumett made these comments in the context of arguing that African business history is over-concentrated on early colonialism, national developments, and labour relations rather than corporate investigations. Similarly, Chandler explicitly stated that his thesis neglects labour history which he recognised as important to corporate development but beyond his immediate research aims. 23 Civil society and social and environmental issues and reporting are not studied here. This does not mean that they are not important.
35
Taylorism, but these waxed and waned with as the power of labour changed.
Independence and state capitalism brought the promise of reforms. Sometimes miners’
and political leaders’ interests overlapped resulting in a modicum of reform, other times
national governments repressed miners with violence, removed internal states, exercised
rapaciousness, and exploited the industry for political ends regardless of commercial
consequences. Restoration of private ownership and market forces brought budgets and
segmental reporting but these only involved senior, largely expatriate managers. Not until
declining gold prices wrought a crisis in profitability did lower level employees become
directly involved in MACS processes. However, the legacy of ethnic divisions, harsh
controls, distrust of official explanations, and uneven exposure to redundancies frustrated
their adoption. Viewed from the miners’ perspective, market reforms have brought little
improvement: controls may have changed but remain essentially despotic: neo-
colonialism has arguably replaced colonialism. Overall, the paper argues that operation of
the MACS in AGC was shaped by the different regimes of control.
Bibliography
Adam, C., Cavendish, W., and Mistry, P. S. (1992), Adjusting Privatisation – vase studies from LDCs. London: Ian Randle Publishers Ltd.
AGC (Ashanti Goldfields Corporation) (1897-1934). Board and annual general meetings minute books, 1897-1934, (Archives of the Guildhall, Library London: Manuscript Number Ms 14164: Control Number: y9034035)
Akabzaa, T and Darimani, A (2001), “Impact of mining sector investment in Ghana: A study of the Tarkwa mining region”, A Report prepared for SAPRI, (http://www.saprin.org/ghana/research/gha_mining.pdf)
Ayensu, E. S. (1997), The African Legacy of the World’s Most Precious Metal: Ashanti Gold, Marshall Edition Developments ltd, London. Boateng, K. (1997), "Institutional determinants of labour market performance in Ghana",
research paper, March, Centre for Economic Policy Analysis, Accra. Burawoy, M. (1979), Manufacturing Consent, University of Chicago Press Burawoy, M. (1984), The Contours of Production Politics. In Bergquist, C (Ed.) Labor in
the Capitalist World Economy, Beverly Hills, Sage. Burawoy, (1985), The Politics of Production, London: Verso. Chandler, Jr., A. D. (1975), The Visible Hand: The Managerial Revolution in American
Business. Cambridge, MA: Harvard Belknap, xvi + 608 pp. Cook, P. and Kirkpatrick, C. (Eds.) (1995), Privatization Policy and Performance:
International Perspectives. Prentice Hall: Harvester Wheatsheaf. Crisp, J. (1984), The story of African working class: Ghanaian miners struggles, 1870-
36
1980, Zed Books, London. Dumett R. E (1985), “Africa’s Strategic Minerals during the Second World War" Journal
of African History, Vol. 26, pp. 381-408. Dumett R. E (1988), “Sources for Mining Company History in Africa: The History and
Records of the Ashanti Goldfields Corporation (Ghana) Ltd." The Business History Review, Vol. 62 No. 3 pp. 502-515.
Dumett, R. E. (1998), El Dorado in West Africa: The Gold Mining Frontier, African Labor, and Colonial Capitalism in Gold Coast, 1875-1900, Ohio University Press
Dumett, R.E. (2000), Gold: Mining Industry of Ghana, 1800 to present, in Encyclopedia of African History: Volume 1 A–G, K. Shillington (ed.),Mobipocket, pp. 586-7
(The) Economist Intelligence Unit (2002), Country Profile 2002, The Economist Intelligence Unit, London.
Ellison, K (2002), “In the Matter of the Golden Share”, January 25, Profile on Africa (http://profileafrica.com)
Fortune Magazine (2001), Ghana Overview: political ‘model’ tackles economy, December, No.26, pp.s9 Furubotn, E. G., and Pejovich, S. (1972), “Property Rights and Economic Theory: A
Survey of Recent Literature”, Journal of Economic Literature, Vol.10, No.4, pp. 1134-1162.
Gyima-Boadi, E. (1993), The Search for Economic Development and Democracy in Ghana: From Limann to Rawlings, in Ghana Under P.N.D.C Rule, Codesria Book Series.
Hanke, S. H (1986), “The Privatization Option: An Analysis”, Economic Impact, Vol.3, No.55, pp. 14-20. Hilson, G (2002), Harvesting mineral riches: 1000 years of gold mining in Ghana Resources Policy, Vol. 28, No. 1–2, pp. 13–26. Hopper, T., Tsamenyi, M., Uddin, S. and Wickramasinghe, D. (2009) "Management
accounting in less developed countries: what is known and needs knowing." Accounting Auditing and Accountability Journal, Vol. 22, No. 3, pp. 469-514
Ho-Won, J. (1993), The Impact of the World Bank and the IMF on the Political Economy in Ghana, Unpublished A Ph.D. Dissertation, The Ohio State University
Olowo-Okere, E., and Tomkins, C. (1998), “Understanding the evolution of government financial control systems’’, Accounting, Auditing and Accountability Journal, Vol.11, No.3, pp. 309-331.
Payer, C. (1982), World Bank: A Critical Analysis, Monthly Review Press, New York, NY.
Pelow D. and Chazan N. (1986), “Ghana Coping with Uncertainty, Westview Press, London.
Petchenkine, Y. (1993), Ghana In Search of stability, 1957-1992, Praeger, London. Potter, J., Wetherell, M., 1995. Discourse analysis. In: Smith, J.A., Harre, R.,
Langenhove, L. (Eds.), Rethinking Methods in Psychology. Sage, London. Rahaman, A. S. and Lawrence, S. (2001a) "Public sector accounting and financial
management in developing country organisational contexts: a three dimensional view." Accounting Forum, Vol. 25, No. 2, pp. 189-210
37
Rahaman, A. S., & Lawrence, S. (2001b), “A negotiated order perspective on public sector accounting and financial control”, Accounting, Auditing and Accountability Journal, Vol.14, No. 2, pp.147-165.
Ray, D. I. (1986), Politics, Economics and Society, Frances Pinter (Publishers), London Rees, R. (1985), “The Theory of Principal and Agents”, Bulletin of Economic Research,
Vol.37, No.1, pp3-26 Robotham, D. (1989), Militants or proletarians? The economic culture of underground
gold miners in southern Ghana, 1906-1976, Cambridge African Monographs, Cambridge African Studies Centre.
Silver, J. (1978), “Class Struggles in Ghana’s Mining Industry”, Review of African Political Economy, vol.5, no.12, pp.67-86
Spearpoint, F. (1937), “The African native and the Rhodesian copper mines”, Journal of the Royal African Society, Vol.36, No. 1, pp. 1-56.
The Canadian Council for International Cooperation (2003), “Crossroads at Cancun: What Direction for Development? Focus on: Saying No to the New Singapore Issues”, www.ccic.ca
Thompson, W S (1993), Foreword to Ghana In Search of Stability, 1957-1992, Praeger London. Tsamenyi, M., and Mills, J. (2003), “A Survey of Perceived Environmental Uncertainty,
Organizational Culture, Budget Participation and Managerial Performance.” Journal of Transnational Management, Vol. 8, No 1 & 2, pp.17-52.
Uddin, S., and Hopper, T. (2001), “A Bangladesh soap opera: privatization, accounting, and regimes of control in a less developed country”, Accounting, Organisations and Society, Vol.26, pp. 643-672.
Uddin, S., and Hopper, T. (2003) “Accounting for privatisation in Bangladesh: testing world bank claims”, Critical Perspectives on Accounting, Vol.14, No. 7 , pp.739–774.
Uddin, S. and Tsamenyi, M. (2005) "Public sector reforms and the public interest." Accounting, Auditing and Accountability Journal, 18(5): 648-674.
UK Competition Commission Report (1979), Lonrho Limited and Scottish and Universal Investments Limited and House of Fraser Limited: A report on the proposed merger of Lonrho and Scottish and Universal Investments and on the resulting merger situation between Lonrho and House of Fraser. Competition Commission, HC 261, London.
Wickramasinghe, D. and Hopper, T. (2005) "A cultural political economy of management accounting controls: a case a study of textile mill in a traditional Sinhalese village." Critical perspectives on accounting, Vol. 16, pp. 473-503.
Wickramasinghe, D., Hopper, T. and Chandana, R. (2004) "Japanese cost management meets Sri Lankan politics: disappearance and reappearance of bureaucratic management controls in a privatised utility." Accounting Auditing and Accountability Journal, Vol. 17, No.1, pp. 85-120.
World Bank, (1993), Bangladesh Implementing Structural Reform (World Bank, Report No-11569-BD, March 24).
World Bank (1995a), Bangladesh: Privatization and Adjustment (World Bank). World Bank (1995b), Staff Appraisal Report, Republic of Ghana, Mining Sector
Development and Environmental Project. World Bank Report No. 13881-GH, Industry and Energy Operations, West Central Africa Department, Africa Region, World Bank, Africa.
38
World Bank Report (1995), Trends in Developing Economies, The World Bank, Washington, D.C.
World Bank Report (1996), Annual Economic Update: Recent economic developments and medium-term reform agenda, World Bank Country Development I, Washington, D.C, Oxford University Press.
Yin, R. K. (2008) Case study research design and methods, (Applied Social Research Methods) London: Sage Publication, 4th edition.
39
Figure 1
Transition of Regimes of Control in Less Developed Ex-colonial Countries
Pre-colonialism (traditional indigenous mgt a/c?)
Colonial Despotism Govt a/c A/c for foreign cos. Physical coercion
Independence (revolution) State Capitalism Mgt a/c for central planning & control
Politicised State Capitalism Loosely/decoupled mgt a/c Political control
Market Capitalism Structural adjustment programmes Mgt a/c for control & efficiency
Politicised Market Capitalism? Privatisations – varied results
Profit criteria not congruent with development aims New avenues of politic control, e.g. regulation
Reproduced from Hopper et al. (2009)
40
Financial A/c
Figure 2
Partial Organizational Structure
Group Board of Directors
CEO
Group Human Group Operations Group Financial Resource Mgr Director Controller
Mine Board of Directors
Mine Managing Director
GM GM GM GM GM Engineering Processing Mining Human Resource Finance
Senior manager Senior manager Senior manager Senior manager Management North South Central Technical A/c
Underground Underground Mgt Accountant Mgt Accountant Manager -1 Manager –2 Underground Processing/Surface Mine Captains Mine Captains Cost Accountants Cost Accountants
41
Table 1
Regimes of control in ex-colonial LDCs: contextual factors and MASs
Mode of Production
Culture
Ethnicity & race:
State, Regulation & Law
Politics
TU & labour markets
International Finance & capital market
MASs
Colonial Despotism (Actual Regime)
Non-capitalist Agricultural & domestic production. Small capitalist merchant/ & owner class. Colonial capitalist enterprises in primary sector
Mainly traditional, ethnocentric. Closed & stable communities.
Divide & rule tactics based on ethnicity
Company states. Minimal state regulation
Imperialism TUs illegal & weak. Weak labour markets. Nascent unionism & state regulation of industrial relations.
Colonial capital. Otherwise minimal capital. No capital market.
Coercive control based on racial & ethnic differences involving physical violence Accounting for HQ regulations & control
State Capitalism (Ideal Regime)
Industrialisation Capitalist accumulation by SOEs. Fair distribution Continuation of small merchants & traditional agricultural production. Closed economy
Growth of modernistic, urban cultures incorporating rational progress, science & education, meritocracy, individualism & nuclear family.
Nation- alism emphasised not ethnicity
Bureaucratic state central planning. Legal-rational authority. Intervention & welfare oriented. Strong regulation & account-ability to Parliament.
Economic development based on industrialisation.
TUs recognised. Growth of collective bargaining on industry basis
State banking, Central bank regulation Emerging but weak capital market Deficit financing for development.
Bureaucratic rational-legal accounting Enterprise budgeting within national central state planning Creation of formal wage bargaining & internal labour markets
Politicised State Capitalism
(Actual Regime)
State extraction of surplus. Hegemony of political criteria in commercial & production decisions. Power with political elite linked to trade unions. Distribution follows power & patronage
Cultural fragmentation & diversity. More open & less stable sub-cultures. Increased urbanisation alongside strong traditional cultures
Divisions heightened. Ethnicity partly basis of party & political organisation
Legal-rational structures of regulation maintained but captured or ignored by politicians. State patronage, often for party advantage. Weak enforcement
Factional & volatile. Often charismatic/ dynastic leaders of parties rather than ideological. Sometimes non-democratic. Production & state politics often converge
Powerful political party unions. Multi-unionism. Top down leadership. Leaders from political elite. TU membership & power in public enterprises.
Weak politicised, & poorly regulated capital markets, Bank failures Fiscal crises of state lead to aid dependency & reliance on IMF/WB. External financing often for Cold War reasons
Accounting for external legitimacy. Ritual ceremonial practices only MAS irrelevant for internal controls Decisions for day-to-day activities captured by political players
Market Capitalism (Ideal Regime)
Market-based exchange relations & distribution Private ownership of enterprises. New public sector management
Greater individualism & individual economic self-betterment. Consumerism & materialistic choice
Considered irrelevant.
Reduced state power, supply side economic role. Oriented to attract multinational & international capital. Stronger capital market & regulation, especially of
Democratic & transparent government
Strong external labour markets. Weakened Trade Unions. Decline in industry-wide collective bargaining. Lowered employee
Globalised capital Export zones Stronger capital markets Greater financial regulation & enforcement.
Market based controls Contemporary Western best practice Tight production targets Economic performance measurement
42
utilities protection. Lessened political intervention
External reporting for capital markets
Politicised Market Capitalism (Actual Regime)
Domination of capital over labour Wider income differentials Fractions of capital, ownership diffuse/financial institutions/multinationals/local families. Crony capitalism.
Mediation of ‘modern’ market cultures with traditional & political
Often the basis of political & social decisions
Regulatory capture by political-economic elites Weak enforcement Decisions politicised
Democratic parties based on charismatic leaders from socio-economic elites Faction-alism based on regions , religion & ethnicity
Segmented labour markets between core & periphery, Trade unions co-opted into political parties. Lower labour protection a power.
External financial agents especially IMF/WB strong influences on policy. Family/crony capitalism alongside more multinational capital. Politicised regulation & privatisation.
Private accounts, top-down physical budgets Return of coercive control but no physical violence Weak compliance of external regulations – financial & non-financial Toothless trade unions with low bargaining power Internal sub-contracting
Reproduced from Hopper et al. (2009)
43
Appendix 1 Ghana Gold Production Year Gold production (‘000 ounces) 1970 714.4 1971 693.8 1972 710 1973 731.7 1974 709.6 1975 583.1 1976 515.7 1977 531.1 1978 465.7 1979 387.7 1980 342.9 1981 338 1982 337.7 1983 285.3 1984 282.3 1985 299.6 1986 287.1 1987 328.9 1988 373.9 1989 429.5 1990 541.2 1991 847.6 1992 1,004.6 1993 1,261.9 1994 1,438.5 1995 1,715.9 1996 1,583.8 1997 1,7525 1998 2,371.1 1999 2,608.1 2000 2,457.2 2001 2,381.4 2002 2,235.6
(Source: Minerals Commission, Accra, Ghana)
Appendix 2
AGC Gold production (in ounces) 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Total 580,000 650,000 785,000 823,000 937,000 1,029,000 1,169,000 1,500,000 1,560,000 1,740,000Obuasi Mine 580,000 650,000 785,000 823,000 937,000 860,000 858,000 885,000 743,000 640,000Other Mines - - - - - 169,000 311,000 615,000 817,000 1,100,000
44
Appendix 3
Financial performance of AGC 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Turnover (US$ million)
210.6 238.6 275.1 319.2 405.6 458.7 531.3 600.3 582.1 582.2 554.4
Operating profit (US$ millions)
70.7 81.6 96.5 119.9 105.9 81.4 83.6 99.5 96.3 89.1 76.6
Operating profit %
34 34 35 38 26 18 16 17 17 15 14
EPS (US$) 0.69 0.72 1.08 1.33 1.17 0.64 0.54 0.68 0.59 0.27 0.56 Profit attributable to shareholders (US$ millions)
57.9 60.6 90.2 97.8 101.6 60 53.7 40.7 (183.9) (141.1) (62.7)
Dividend payout (%)
19 32 16 21 32 65 41 27 - - -
Current ratio 1.43:1 1.28:1 1.38:1 1.53:1 2.66:1 1.53:1 1.25:1 0.98:1 0.58:1 0.95:1 0.80:1 Gearing ratio (%) 53 36 54 29 34 88 118 115 148 166 104 Gold price per ounce (US$)
362.10 343.86 360 384.12 384.05 387.82 330.98 294.12 278.55 279.10 272.67
Operating cost per ounce (US$)
N/A N/A N/A 241 295 332 336 294 285 284 276
Tax to government (US4 million)
3.9 15.8 0.3 0.5 0.9 0.1 2.4 - 2.7 8.8 6.8
Royalties to government
N/A N/A N/A 9.5 11.5 10.5 10.6 12.6 12.2 13.7 13
Appendix 4
Employees in the mining sector and AGC
Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 AGC employees
9,946 10,499 12,199 12,010 12,850 11,200 10,429 10,189 9941
Mining sector employees
21,268 22,515 21,017 20,336 21,252 17,848 16,524 16,344 14,299
AGC % of mining sector employees
47% 47% 58% 59% 60% 63% 63% 62% 70%