News Politics

Bawumia Defends $15bn Chinese Cash

Vice President Dr Mahamudu Bawumia yesterday made a full disclosure of what went into the $15 billion agreement between the Government of Ghana (GoG) and the Chinese government, which the opposition National Democratic Congress (NDC) wants Ghanaians to believe is a loan.

The four-day visit to China, which was at the invitation of the Chinese Government, was the first visit by a Ghanaian government official since the New Patriotic Party (NPP) assumed office on January 7, 2017.

Approximately 50 businessmen and women flew to China at their own costs to look for business opportunities, altogether meeting about 250 business counterparts in that country.

At the end of the day, it turned out to be a partnership agreement between the two countries, with the government of Ghana having to leverage less than 5% of the country’s bauxite deposits.

Deal
Speaking at a conference dubbed, ‘Building resilient industries and infrastructure for economic transformation in Africa: the role of China,’ under the auspices of the Institute for Democratic Governance (IDEG) in Accra yesterday, Dr Bawumia disclosed that “This new model means that we are not borrowing money from China. We are proposing a joint venture with China where we bring less than 5% of our bauxite reserves and they bring up to $15-20 billion.

“If another investor from another country is interested, we can leverage another 5% of our bauxite in such a joint venture. This is a new model that does not add to our debt stock. It is a win-win situation for all. But we must negotiate well and eventually the agreement will be put before Parliament for approval.”

He further explained, “I should add that because as a country, we have been so used to the old model of borrowing from China, many analysts have not understood this new paradigm. They therefore keep referring erroneously to the ‘$15 billion Chinese loan.”

The Veep therefore insisted, “What we are proposing and the agreements we have reached so far, are not new loans but rather joint venture proposals using less than 5% of our refined bauxite reserves. We are using this small fraction of our bauxite reserves not for the benefit of one individual or company, but for the benefit of the entire nation.”

Terms
Under the terms of the agreement, Dr Bawumia revealed, “The China National Building Materials and Equipment Import and Export Corporation (CNBM) signed a $2 billion facility with the private sector – led by the Association of Ghana Industries (AGI) – to provide funding for the ‘one district, one factory’ programme.”

The China Development Bank (CDB), he said, also agreed to unfreeze $2 billion loan and signaled its willingness to re-negotiate it into a concessionary facility with a grant element, an extended maturity and at a much lower interest rate, while the China EXIM Bank pledged its commitment to provide about $1 billion to EXIM Bank Ghana to support infrastructure and business development.

The vice president further revealed that China Railway International Group Limited signed a Memorandum of Understanding (MoU) to provide $10 billion to support the components of a massive infrastructure development programme spanning the mining, industrial and railway sectors.

In addition to that, he indicated, “The Chinese government has provided Ghana the following grants: a grant of about RMB 100 million (Chinese Yuan Renminbi) for infrastructure development – we will use this to acquire about 500 vehicles for the police; about RMB 50 million for the Ghana Armed Forces; 4 patrol boats for the Ghana Navy; fund construction of 90 bridges across the country; fund construction of interchange at ‘Point 7’ in Tamale – this would be the first ever interchange in northern Ghana, and build a new Accra psychiatric hospital.”

That aside, he revealed that “a major part of our conversation in China was the Integrated Aluminum Industry development. This involves development of the Nyinahin and Kyebi bauxite mines and an aluminum refinery, construction of the  Eastern and Central Rail Lines – including its extension to Paga in the north of the country, the Boankra and Buipe inland ports and Paga inland terminal, 910 km of road network, four interchanges (Sofoline, Oforikrom, PTC Takoradi, Danquah Circle),10 industrial parks in 10 regions, 25,000 houses for the security services, 100,000 social housing units, 25 district hospitals, Western Regional Hospital, reconstruction and rehabilitation of 8,286 collapsing classrooms, upgrading 42 SHSs into model schools, teaching and learning materials, 228 buses and 198 pickup trucks for schools irrigation and water transmission systems in northern Ghana.”

In view of these, Dr Bawumuia noted, “We are under no illusion that we need to chart a new course if we are to transform this country for the benefit of our young and future generations. Ghanaians are responsible for our growth and development and we cannot build the Ghana we want out of cynicism and indiscipline.”

Facts
Ghana is believed to be one of the most endowed countries in Africa in terms of natural resources such as oil, gold, bauxite, manganese, diamonds, iron ore, gas, cocoa and fertile land.

The country’s untapped and proven mineral resources include about 2.8 billion metric tonnes of iron ore, 960 million metric tonnes of bauxite, 430 million metric tonnes of manganese and 430 million metric tonnes of limestone.

It produces some 160,000 barrels of oil and 120 million standard cubic feet of gas per day.

Goal
The current Akufo-Addo administration, therefore, intends to leverage part of these natural resources for economic transformation.

Currently, it is estimated that the country has some 460 million metric tonnes of alumina at Nyinahin and Kyebi which is trading at $400 per tonne, giving the country’s reserves the value of $184 billion.

“If we refine it into alumina ingots we will have $460 billion worth of alumina ingots at current world market prices. This is only for our proven bauxite reserves,” he added.

By Charles Takyi-Boadu, Presidential Correspondent