The pace of infrastructure spending in Ghana is likely to slow down precipitously for the next three years as Beijing announced a lower investment package ($40 billion) for the continent in the recent Forum of China-Africa Cooperation (FOCAC) meeting earlier this month.
The last six years has seen major infrastructure investment commitments from China to Africa, a total of $120 billion with $60 billion each announced in 2015 and 2018 FOCAC meetings for new projects and Ghana has been one of the major beneficiaries of these deals.
Affirming the country’s desire to explore new ways of attracting finance for its infrastructure development, H.E. President Akufo-Addo’s address at the 73rd UN Assembly in 2018, highlighted the country and Africa’s readiness for support through China’s infrastructure deals as a means to address its infrastructure deficit and propel the desired rate of growth the country needs.
On his visit to China, that same year, the President witnessed the signing of eight agreements. Principal amongst the agreements included a $2 billion Sino-Sure Framework Agreement, for infrastructure, road, and railway construction projects, enabled by the Sino-Hydro Corporation, a deal which has been slow in progress and covered in controversies that has attracted backlash from environmental groups, CSOs, NGOs, etc.
Another $30 million in grant was committed by President Xi Jinping to support the secure implementation of the president Akufo-Addo’s economic policies. Furthermore, infrastructural projects such as Cape Coast Sports Stadium expansion, Jamestown Fishing Port Complex, and the expansion project of the University of Health and Allied Sciences in Ho were all part of China’s commitment to Ghana to finance construction to address the country’s infrastructure deficit.
Deafening Silence on Infrastructure Development
The declarations made in the 2021 FOCAC meeting by Beijing indicates a slightly negative outlook both from a quantitative and qualitative perspective. Quantitatively, China is significantly scaling back its planned activities in Africa.
According to Yun Sun, a Nonresident Fellow, Global Economy and Development, Africa Growth Initiative, from a continent-wide outlook, the number of committed projects including agricultural assistance, climate and environment, health, peace and security, and trade promotion, for each category dropped from 50 projects in 2018 to 10 projects this year.
Also, capacity building, the educational and training opportunities offered decreased from 50,000 government scholarships and 50,000 training opportunities three years ago to 10,000 training and seminar opportunities for high-end talents this time. These are drops of 80 and 90 percent, respectively.
Qualitatively, “the content of each category also shrank”. For instance, under climate and environment, the 2018 commitment included items from maritime cooperation to wildlife protection, from policy dialogues to joint studies and professional training.
The most striking element of China’s FOCAC commitment this year is the complete silence on infrastructure from the discussions that ensued at the forum.
Indeed, in his virtual address, Xi Jinping never alluded nor said a word about infrastructure, even once— a sharp contrast to the four direct references to infrastructure in his 2018 keynote.
Compared to the 2018 FOCAC commitment, connectivity infrastructure was highlighted as the number two (2) priority among Beijing’s eight action plans for the continent, focused mostly on hard infrastructure projects on the ground.
China has a long history of infrastructure development in Ghana and this omission of infrastructure is not surprising, as no one expects china’s investment on the continent to continue rising perpetually.
“The lack of reference to infrastructure in China’s FOCAC commitment does not suggest that China will exit the African continent”, Yun Sun noted.
In fact, China has cemented its presence in Ghana and the continent in terms of accumulated infrastructure projects like the Sino-Hydro bauxite deal which is still ongoing, and other projects extending far into the future.
In addition, Chinese contractors are still a preferred choice on the continent’s market, pertaining to cost effectiveness in projects, which enable them to continue to play their role in the future of the country and the continent’s infrastructure development market.
However, the frozen progress in Beijing’s investment flow towards infrastructure development in Africa, if continued, could be the most significant change in China’s engagement with Africa in recent years, Yun Sun said.
This is where the government of Ghana should strategise to see ways to ensure sustained infrastructure development in the near future from its own resources, as well as explore green financing available to reduce its infrastructure deficit.
The narrative about China-Africa investment climate is changing and Ghana should be able to read in between the lines to make informed decisions for its infrastructure development going forward.
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