04 July 2017

$19bn China deal: Joint venture, not loan – Bawumia

Vice President Dr Mahamadu Bawumia has dimissed claims that Ghana has secured a US$19bn loan from China, insisting that it is a joint venture between the two countries.

According to him, the country is using about 5% of its bauxite reserves for the China facility.

Members of the opposition National Democratic Congress (NDC) and some analysts have strongly criticized the Akufo Addo led-government for going in for such a whopping amount of loan, claiming the deal will benefit China more.

But Veep Bawumia who was speaking at the China-Africa joint research and Exchange conference in Accra Tuesday said, the proposals and the agreements reached so far, are not new loans but rather joint venture proposals using less than 5% of the country’s refined bauxite reserves.

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”.  Let me state again that 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.

He said their trip was purposeful as they came back from China with some leading Chinese companies and agencies of the Chinese government signaling their interest in our agenda and with agreements totaling  $15 billion.

Here are some additional details: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. China Development Bank (CDB) agreed to unfreeze $2bn loan and signaled their willingness to re-negotiate it into a concessionary facility with a grant element, an extended maturity  and at a much lower interest rate.
The China Exim bank is committed to providing about $1 billion to Exim Bank Ghana to support infrastructure and business development.

China Railway International Group Limited signed a Memorandum of Understanding to provide $10 billion to support the components of a massive infrastructure development programme spanning the mining, industrial and railway fields. In addition, the Chinese government has provided Ghana the following grants: A grant of about RMB100 million 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. Build a new Accra Psychiatric hospital. Dr Bawumia noted.

He added that as a major part of their conversation in China was the Integrated Aluminum Industry development which 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 rest are the Boankra, 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.

We are undertaking all of these projects, not by borrowing but with less than 5% of our refined bauxite reserves.” Dr Bawumia said.

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