China Revives Faith in Ghana's Economy

China has pledged some $15 billion to fund the Ghana government's massive economic transformation agenda, with the likelihood that a further $4 billion would be committed for various development projects across the country.

The commitment by the Chinese is based on a financing module presented by the government of Ghana, seeking for partnerships to fund its development agenda, leveraging on the utilisation of a minute fraction of its untapped and proven mineral resources, instead of outright borrowing, which strangulates the economy.

Vice President Mahamudu Bawumia, at the head of a high-level government delegation to China, returned home on Sunday after a four-day official visit to that country, with an armful of new economic agreements that are expected to kick-start the New Patriotic Party government's ambitious plan to improve Ghana's economic performance and fortunes.

"We have had some good listening as far as our visit to China is concerned... and our efforts have begun to bear fruits. China, and its private sector, have committed to support the economic transformation agenda of President Nana Addo Dankwa Akufo-Addo," he said, when briefing the media on the outcome of the visit to China on his arrival in Accra.

"So far, the commitment that we got in China before leaving amounted to a total of $15 billion, and there is a possibility that within the next month, when some discussions are concluded, another $4 billion would be added to that."

Vice President Bawumia said the visit, an invitation by the Chinese government, was used to market Ghana and the vision of the President, to move the country away from aid to trade and partnerships that would lend support to his ambition to industrialise and improve the infrastructure of the country.

He said the delegation made a case for the enhancement of the development of partnership with China, based on trade investment and not aid; a partnership for shared prosperity for the benefit of both countries, which the Chinese government and that country's private sector found plausible.

The Vice President said that given Ghana's precarious economic situation, there was need for a paradigm shift in capital funding of developmental projects, thus the government is finding new ways to finance the country's development goal, and deviate from "borrowing ourselves out of space", and seek partnerships and financing modules that would not strangulate the economy.

"Going to China, we were well aware of Ghana's economic situation. We needed what really amounts to a big bang approach, and a marshal plan for Ghana... and the kind of needs we have in the areas of water, energy, railways, sanitation, road etc, are so massive that we needed a sort of marshal plan to be able to lay the foundation for the strategy of agricultural transformation, as well as industrialisation."

Thus, the delegation presented a credible economic programme of transformation, explaining the 'One District, One Factory, One Village, One Dam, the Planting for Food and Jobs, and a gamut of policies across various sectors, as well as a portfolio of priority projects, which the Chinese found credible, and one that they felt they could support as partners

The delegation also presented a financing module, based on the fact that Ghana would leverage on a minute fraction of its untapped and proven mineral resources, to fund its marshal plan of development and all capital-intensive projects.

Ghana has a proven reserve of about 2.8 billion metric tonnes of iron ore; 160 million metric tonnes of bauxite; 430 million metric tonnes of manganese, and 430 metric tonnes of limestone, excluding gold and oil.

The Vice President explained that Ghana's bauxite reserves alone would get the country about $460 billion at current market prices, and "Our case is that if we need just 20 billion dollars to do a major massive marshal plan, and we have 460 billion dollars sitting in the ground... what we really need is to develop a financing module that utilises a small fraction of those reserves to finance infrastructure."

He said the delegation was also successful at renegotiating the reactivation of the remainder of the entire $3 billion master facility that was given to Ghana under the previous administration.

One billion dollars was disbursed for the Atuabo gas plant, but the remaining two billion was frozen for certain reasons, and "we were able to successfully address some of the concerns and they agreed to unfreeze that amount," Dr Bawumia said.

The China Exim Bank also made a commitment to release $1 billion to support Ghana's infrastructure.

"We have come home, and we are going to prioritise those infrastructures that would be financed by the MoU; there are many priorities, and we would see which projects would go under the MoU.

"It's a massive show of confidence by the Chinese, and it has come about, because of the confidence in the President and his government, and also the module that we have designed for financing the projects," he said.

Additionally, the Chinese government, by way of grant, also agreed to provide $14 million to the government as grant, and an additional $7 million for the Ghana Army.

China also agreed to fund the construction of 90 bridges across the country, following a proposal presented by the delegation. That country would also make good on a previous commitment to supply the Ghana Navy with four patrol boats for coastal security.

They have also agreed to construct an interchange at "Point 7" in Tamale, the capital of the Northern Region.

Vice President Bawumia was confident that Ghana's ties with China could only be strengthened.

He was accompanied on the visit by some Ministers of State, including; Senior Minister, Mr Yaw Osafo Maafo; Trade Minister Alan Kwadwo Kyerematen; Mr Joseph Ghartey, Minister for Railways, and Kwaku Ofori Asiamah, Minister of Transport.

The rest were Mr Joseph Kofi Adda, Minister of Sanitation and Water Resources; Charles Adu Boahen, Deputy Minister for Finance; Mohammed Amin Adam, Deputy Minister of Energy; Mohammed Habib Tijani, Deputy Minister of Foreign Affairs; Mrs Gifty Ohene Konadu, Coordinator of the 'One District One Factory' initiative, and Reginald Yoofi Grant, Chief Executive of the Ghana Investment Promotion Centre.

Read Full Story