China supports Sinohydro projects in Ghana in exchange for bauxite supply

Parliamentary approval of agreement, an indicator of Ghana‘s readiness to shift economic alliances away from traditional European partners

Photo by John Jones


In a move that clearly signals China's growing clout on the African continent, the Ghanian parliament has voted in favour of an agreement with China under which Chinese financial institutions will provide US$2 billion worth of debt for the construction of infrastructure projects by SinoHydro. In return the Chinese will get access to bauxite supplies.

The facility will be repaid via alumina processed from bauxite deposits in Ghana, in a deal announced by Finance Minister Ken Ofori Atta in the mid-year Budget Review.

The Sinohydro infrastructure deal is a Master Project Support Agreement (MPSA) between the government of Ghana and Sinohydro Corporation for the construction of priority infrastructure projects within a period of three years.

According to local press reports, under the MPSA, Sinohydro agrees to arrange for one or more loan facilities for payment of 85% of the construction and project costs of the assigned priority projects. These projects are chosen by the government.

In return Ghana will establish a bauxite processing facility within the next three years, and select its own partner to undertake the refining of the bauxite.

The project forms part of the government's agenda to bridge the country's infrastructure gap. A better functioning road transport sector is viewed as critical to economic growth.

The government has already allocated US$500 million out of the US$2 billion debt finance on offer, and this has been earmarked for the reconstruction of key roads connecting various regions in the country.

The construction of intra-urban and national roads forms the first phase of the MPSA, which will commence before the end of this year. A second phase will cost US$1.5 billion and will include the building of hospitals, schools, bridges and roads in rural communities, which are essential to support Ghana's 28 million inhabitants.

Ghana's President Nana Akufo-Addo has made it clear that he is open to new sources of funding beyond the traditional dependence on Europe, and this includes the China-backed Belt & Road Initiative; plus he also seeks better intra-African economic co-operation.

This desire to shift economic focus away from traditional allies was made plain last December, when the President made headlines for saying that it was "not right" for Ghana to depend so heavily on French or European financing. These comments were uttered during a joint press conference in Accra with visiting French President Emmanuel Macron.

Macron looked uncomfortable as Akufo-Addo said that it was time to move away from a mindset of dependency, waiting for aid from France or the EU. Akufo-Addo has also publicly praised China's economic development story.


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8 Aug 2018



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