China’s ability to move faster with the infrastructure deals gives the country an edge in African infrastructure investment over the U.S., European and Japanese rivals. As the first installment of US$649 million financing has arrived, Ghana is moving fast to build the infrastructure projects promised as part of the bauxite deal with Chinese construction conglomerate Sinohydro.
According to the agreement Ghana would sell 5% of its bauxite reserves in exchange for US$2 billion fund for infrastructure development. Beijing will finance $2 billion worth of rail, road and bridge networks in Ghana. Within 18 months of the beginning of negotiation process for this bauxite deal, road construction process has begun for nationwide road construction projects.
Projects under phase one have been sanctioned by China Export and Credit Insurance Corporation, known as Sinosure, with six further projects to be confirmed by year-end.
Ghanaian President Nana Akufo-Addo is under pressure to prove that the Sinohydro deal is worth the huge environmental and financial risks the government has taken despite protests from all quarters. If the government is able to show people the benefits in the forms of roads, ports and other infrastructure development, it will alleviate the strong criticism from media, environmentalists and international financial community.
China is able to move this fast because it brings African leaders a turn-key approach to development that most other countries are incapable of matching. The country has been able to form a winning combination of finance, construction development and resource-extraction. China also does not have to follow strict regulations regarding transparency or environmental impact.
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