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Testing the necessary conditions for sustainability in the mining sector in Burkina Faso

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  • Youmanli Ouoba

    (University of Thomas Sankara)

Abstract

The mining sector in Burkina Faso has grown since 2009 but revenue mobilization remains an important issue for the country. The purpose of this study is to test the necessary conditions for the economic sustainability of gold mining in Burkina Faso. This condition requires that the royalties collected by the government (institutional royalties) equal the economic depreciation of gold stock (economic royalties). The Hotelling rent approach is used to determine the economic depreciation of gold stock. The results are twofold. First, the results show a strong level of the economic depreciation of gold stock with an average scarcity index of 0.68. Second, the royalties collected by the government represent approximately 18% of the economic depreciation of gold stock meaning that the tax system is neutral. Therefore, the necessary condition of sustainability is not satisfied. This study is the first one concerning Burkina Faso to provide the empirical proof that the contribution of gold mining to economic sustainability is jeopardized by the insufficient collection of royalties from mining companies. Revising the institutional royalty rate by increasing its level is required to generate more revenue from the mining sector and reach sustainable management goals.

Suggested Citation

  • Youmanli Ouoba, 2023. "Testing the necessary conditions for sustainability in the mining sector in Burkina Faso," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(1), pages 1-12, January.
    • Handle: RePEc:spr:minecn:v:36:y:2023:i:1:d:10.1007_s13563-021-00281-4
    DOI: 10.1007/s13563-021-00281-4
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