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September 14, 2018 | Business & Finance

Bauxite Deal ‘Old Fashioned’ Model Of Exporting Raw Materials

CitiNewsRoom
Bauxite Deal ‘Old Fashioned’ Model Of Exporting Raw Materials

The Coordinator of the Third World Network, Dr. Yao Graham, has cautioned government against rushing into agreements with powerful nations such as China, that will lead to Ghana's raw materials being exported.

He argued for example that, the model being adopted by the government in signing the two-billion-dollar bauxite deal with China is not new, but rather an old system that has allowed the country's natural resources to be exported in their raw state without adding value to them.

President Akufo Addo during a recent visit to China announced a number of deals signed between Ghana and China, including a two-billion bauxite barter deal to mine the commodity in Ghana.

But speaking at the Second Edition of the Citi Business Forum themed “After China What Next”?, Dr. Graham questioned how government could achieve a transformational agenda by using “old fashioned” model that has not worked.

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“That worries me. It worries me because in this discussion I don't get the sense of t nature of the transformation agenda that we have and how the Chinese connection fits in. I think we are too focused on only the commodity export in exchange for Chinese finance”.

“For example, take agriculture. If you are going to collect more tractors and come and use them in a certain agriculture system which in my view has a lot of problems that needs to be solved, the machinery may not be terribly useful. The framework that the minister set is an old fashioned development model,” he stressed.

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Dr. Graham stated that government's approach in dealing with the Chinese will face fundamental challenges if Ghana is going to export raw materials from the bauxite.

“So whichever way you twist it, it is very much based on a commodity export dependence framework. The agenda of transformation is also an agenda of diminishing your commodity export dependence. So let's take the example about bauxite. Several people have pointed out there is lack of details and also the contradictory thing”.

Making some recommendations, Dr. Graham advised government to first study how countries such as China learned from other countries to develop a unique economic model to propel economic development.

He stated for instance that it is important to understand how the state of China plays critical roles in the country's development drive.

He added that Ghana as a nation may not get the full benefit in the agreement with China since the Asian country is a sub-continental power.

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Oppong Nkrumah's view
On his part, the Minister for Information, Kojo Oppong Nkrumah, defended government's decision to partner with China in different economic agreements for national development.

According to him, the current global environment makes China one of the best partners to work with for economic gains.

“One of our biggest partners Nigeria doesn't seem interested in that enterprise. So what are your options? You now look at China where EPCs are coming, infrastructure is coming….financing that are not necessarily coming at some of these terms that are coming from other parts of the world. They are also looking at your resources that are sitting here literally untapped, undeveloped, while you are sitting on them poor. You can do business with the Chinese”.

Mr. Oppong Nkrumah maintained that the most important question is to negotiate properly to secure a better deal for the country, which the government is doing.

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“It is a logical decision to do business with the Chinese. The question really is what the risks in doing business with the Chinese are. If you scan the global landscape you will find out that China has some of the answers to the questions that we are looking for. Can you engage with China in a way that allows you to get these resources to answer your questions, mitigate your risk, and not leave yourself in a position where you are at their beck and call every day,” he said.

Citi Business Forum
The event was on the theme, “After China, What next?” and it will assemble academics, trade experts and government representatives to discuss the issues.

Panel members for the event included; Dr. Lloyd Amoah of the Centre for Asian Studies at the University of Ghana, Dr. Yao Graham of the Third World Network, Dr. Glenn Gyimah – a Ghana/China expert as well as the Information Minister Designate, Kojo Oppong Nkrumah.

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