Ghana Relations With China Raise The Emotional Heat
Funds for infrastructure projects are welcome but many high-profile ventures have become headaches for Accra
Dam: in Chinese terms, the Bui hydropower project symbolises the China-Ghana partnership © Shao Haijun/Xinhua/eyevine
There are an estimated 6,500 Ghanaians studying in China, making Ghana, with its population of 28m, Africa’s number one supplier of students to the country.
China has surged from almost nowhere to become Ghana’s top trading partner, with bilateral trade rising from less than $100m in 2000 to $6.7bn in 2017. In describing the closeness of relations between the two countries, Chinese state newspaper the People’s Daily highlights China’s construction of the Bui hydropower station by Sinohydro Corporation and the 200MW Sunon Asogli thermal plant, which is operated by Shenzhen Energy Group.
It also mentions Chinese involvement in gas infrastructure, telecommunication networks, distance education learning, water supply projects and Africa World Airlines, a Ghanaian joint venture, which involves Hainan Airlines and the China-Africa Development Fund.
China, the Communist party mouthpiece concludes, has “propelled Ghana’s economic and social growth and brought tangible benefits to the people of both countries”. As a result, the Chinese are winning a “high reputation from the Ghanaian government and people”.
That's not how everyone in Ghana sees it. “When the Chinese come to Africa, most [of] the projects are Chinese-built with Chinese labour and materials,” says Kwasi Prempeh, executive director of the Ghana Center for Democratic Development in Accra. While Ghanaian elites have responded enthusiastically to China’s growing influence, he says, “it doesn’t resonate well with the average African. I don’t think there’s a lot of love lost at the popular level.”
One Ghanaian banker is blunter still. “I don’t trust the Chinese. All their deals in Africa have been a rip-off,” he says.
Hainan Airlines is part of one venture
Relations reached a nadir in 2014 when Chinese wildcat miners were widely condemned for causing environmental destruction in the north of the country. Ghanaian media coverage verged on the xenophobic and a subsequent crackdown by Ghana’s authorities — described as anti-Chinese in Beijing — inflamed tensions further. Antagonism has eased along with the decrease(sic) in illegal mining activity.
Nana Akufo-Addo, Ghana’s president, has sought to take the sting out of the controversy by portraying the crackdown as mere law enforcement. “We are not acting against Chinese,” he said in September during a meeting with the Ghanaian community in China, where he was attending the Forum on Africa-China Co-operation. “There is no anti-Chinese policy in Ghana. But we do have a quarrel with those who will get involved in this illegal mining.”
[The elite is enthusiastic but] it doesn’t resonate well with the average African
Mr Akufo-Addo said Xi Jinping, China’s president, fully understood that Ghana needed to enforce its laws. The relationship was extremely valuable, he said in a statement after a meeting Mr Xi. “Ghana has been a firm friend of China,” he said. “Chinese co-operation and investment in our economy are extremely essential.”
The latest big venture to come out of the relationship is a controversial $2bn barter deal with Sinohydro. Under the terms, the Chinese state-owned construction company agreed to build roads and bridges as well as housing, hospitals and schools. It will be paid back in refined bauxite — the material used to make aluminium — to be produced by a yet-to-be-commissioned refinery.
Mahamudu Bawumia, Ghana’s vice-president, has called the deal a product of innovative thinking that will help the state both to construct the infrastructure it needs now, as well as to move production of raw materials up the value chain. Ghana, he said, had $50bn worth of raw bauxite, but that would be worth $400bn in its refined state. Payments are to be deferred for three years, leading some members of the opposition to accuse the government of using an opaque structure to add to the country’s already high debt.
The controversy over the deal comes amid accusations, particularly from Washington, that Beijing is using what it calls “debt trap diplomacy” to exert political influence over those countries to whom it lends.
“We don’t want to put $2bn on Ghana’s books to increase our debt,” Mark Assibey-Yeboah, chairman of the parliamentary finance committee, told Bloomberg. “So it is Sinohydro that is contracting the entire $2bn loan.”
After initially questioning the deal, the IMF ruled provisionally that it need not be considered as a loan, and therefore did not add directly to the country’s debt. Rating agency Fitch, however, has warned that the terms of the agreement might worsen if bauxite prices fell. Daniel Domelevo, the auditor-general, does not like the terms either. Barter deals tend to be murky, he says, because it is difficult to establish the correct price for the goods being traded.
Others have questioned whether Ghana, which has a high unit cost of electricity, can efficiently refine bauxite in what is an energy-intensive process. There is a precedent. Part of the Bui dam, which started operations on the Black Volta River in 2013, was paid for by pledging future cocoa revenue. Last year, the Ghana Cocoa Board received a $1.3bn loan from parliament. It needed help, it said, partly because of difficulties in servicing its Bui dam loans. *
This article has been amended since original publication to correct the title of Daniel Domelevo
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