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Resources-for-Infrastructure (RFI) deals between China and African countries are not always win-win as advertised. For example, the Angola-China deal trading oil for infrastructure spending did not pan out as conceived. However, this new RFI deal between China and Ghana should pan out differently because Ghana has negotiated a more favorable deal than other African countries have in the past.

In sum, Ghana has negotiated a deal with Sinohydro under which Ghana will receive $2 billion in financing for infrastructure—roads, railways, and bridges—in exchange for access to 5 percent of Ghana’s bauxite reserve. The deal, which is part of a $19 billion credit facility between both countries, also includes 100 vehicles to be donated to Ghana’s Police Service, $43 million in grants, and $37 million in debt waivers.

This deal has stirred controversy and debate within Ghana and across Africa concerning debt sustainability and the environmental degradation that could result from mining bauxite in the Atiwa forest. But considering the summary of the deal and information available in the public domain, Ghana appears to have negotiated a favorable deal with Sinohydro for three reasons.

First, this deal will not cause Ghana’s public debt to increase because China’s claim for repayment is not secured by Ghana’s general revenue. Rather, it is secured by revenues from aluminum sales. This distinction is important because it has implications for public expenditures. When loan repayment claims are against the general revenue, governments cannot prioritize other expenditures over the repayments. That is, if the indebted government desired to spend $1 million on building a new clinic, the government could not choose the clinic over repayment because that would lead to a default and higher borrowing costs in the future. But when a repayment claim is tied to a specific revenue stream, such as aluminum sales, the government is not obligated to use revenues from other sources to repay the debt. In this case, Ghana can spend the entire $1 million on building the hospital and not worry about debt repayment. This deal is similar to the revenue bonds that American and European municipalities issue to build toll roads and bridges; the repayments are tied to the tolls collected, not the general revenue. Thus, because Ghana’s obligation to repay the $2 billion is tied to aluminum revenues, Ghana will not face the dilemma of choosing between repayment and building schools or hospitals.

Second, Ghana remains in charge under this deal. Other RFI deals have made the Chinese responsible for both extracting and exporting the resources. Here, by contrast, Ghana remains responsible for extracting the bauxite, setting up the refinery to process the aluminum, and then exporting and selling the aluminum. Furthermore, this deal allows Ghana to build-up its industrial capacity through the value-added processing of bauxite to aluminum. In short, this will be a process setup by Ghanaians, run by Ghanaians, and owned by Ghanaians. China will simply receive its share of the sales.

Third, this deal will contribute to Ghana’s infrastructure. Specifically, Ghana negotiated the deal so that it will receive the $2 billion in infrastructure financing before it must begin mining bauxite or processing the aluminum. This will give Ghana the space to design an environmentally responsible bauxite mining process. Furthermore, these newly built roads, rails, and bridges will contribute to closing Ghana’s infrastructure gap. A recent World Bank report shows that Ghana needs to spend $2.3 billion per year over the next decade to close its infrastructure gap. This level of infrastructure spending will have the additional benefit of adding 2.7 percentage points to the GDP per year.

Despite these favorable points, mining for bauxite in the Atiwa Forest comes with serious risks to the environment. Atiwa is home to the sources for three rivers that supply drinking water to five million residents in Accra. It is also the habitat for rare and endangered species such as the West African White-naped Mangabey monkey, Mylothris atewa, and Anthene helpsi – the latter two being rare butterfly species found only in the Atiwa forest. The government, in consultation with environmental groups and stakeholders, therefore needs to formulate an effective environmental pollution mitigation plan to protect the forest ecosystem.

In conclusion, Ghana has negotiated well and received a better RFI deal that ensures it will develop necessary infrastructure, maintain control of the bauxite extraction process, and add value to the bauxite before selling it on the international market. For African countries to transition from being mere exporters of raw materials to also being value-added processors, they must trade the resources they have to acquire the infrastructure upon which a new economic model can be built. This deal accomplishes precisely this feat.

Francis Kiazolu is a Senior Derivatives and Securities Analyst at PRA Group, Inc.

Wine Awards 2020
South African Wines Did Well At The Decanter World Wine Awards which were held under strict COVID-19 prevention protocols.

 

South African wines won multiple awards at the Decanter World Wine Awards which were held this past week under strict COVID-19 preventative measures. South Africa’s wine industry provides  roughly 290,000 jobs directly and indirectly to South Africa's economy. The $2.6 billion dollar industry contributed some $400 million excise and VAT tax revenue to the South African Revenue Service in 2019.

Now in its 17th year, the 2020 competition saw South Africa performing well against classic wine producing regions Classic regions in France, Italy, Spain, California, and Australia once again performed well.

South African winemakers have much to drink to given the results. South Africa improved its medal haul 16% compared to 2019. The Rainbow Nation's vineyards took home one "Best in Show" award, as well as four Platinum, 31 Gold, 364 Silver and 136 Bronze awards. 

Rustenberg Five Soldiers Chardonnay 2018, hailing from South Africa’s well-known Simonsberg-Stellenbosch wine producing region won "Best in Show". Indeed a third of the wines that won medals in 2020 hailed from this region.

However, other wine producing region in South Africa won accolades in 2020 as well. Cape Agulhas, a small wine-producing region on the southern tip of South Africa was also well represented. All seven of its entries won medals including one Platinum for the Ghost Corner Wild Ferment Sauvignon Blanc 2018. This quiet coastal region is located roughly 170km from Cape Town.

South Africa’s other three Platinum medals came from a variety of different regions across South Africa’s Western Cape region. Notably Klein Constantia Vin de Constance 2016, a 100% Muscat de Frontignan, won one of only 22 Platinum medals given to sweet wines in 2020.

The event was also notable for the very strict measures to prevent the spread of COVID-19 put in by the hosts. All staffs and judges wore Personal Protective Equipment (PPE). All visitors had their temperatures checked at the door, and even disposable spittoons with antibacterial powder that solidifies with liquid were deployed. Attendees were also wore proximity tags worn on lanyards that vibrate when they came within 2 meters of another attendees.

“The Decanter World Wine Awards really helps producers to raise their profile internationally. It can do the same for wine-producing regions and nations, too. Our judging system - including re-tasting of all Golds, with possible promotion to Platinum - is something we are very proud of. We explain it as often as we can. So, when consumers see a DWWA sticker on a bottle, be it Platinum, Gold, Silver or Bronze, they can be reassured that the wine in question has been judged by regional experts and specialists before receiving its medal. We discuss, we argue, we fight it out...that's all part of the judging fun. Even with social distancing! But that's also how you get the results which have made the DWWA an international wine benchmark,” said Andrew Jefford the events co-chair in a media statement.

South Africa's wine know how is spreading across the continent as well.  Last year a Western Cape wine company, La RicMal, announced plans to open a bottling plant for wine in Ghana.

A worker at Thuru Lodge in the semi-arid Kalahari Desert inspects a carcass in January 2020. Even the desert-adapted endemic species are dying after several years of extreme drought in the region.
A worker at Thuru Lodge in the semi-arid Kalahari Desert inspects a carcass in January 2020. Even the desert-adapted endemic species are dying after several years of extreme drought in the region. (Photo by Guillem Sartorio/via AFP)

A study published in the latest issue of the journal Nature Climate Change found that global efforts to track and research heat waves have largely ignored sub-Saharan Africa, and that they’re biased in favor of developed countries. This scientific blind spot is all the more egregious considering that Africa is the hottest continent, with millions of people facing growing dangers from heat waves and rising temperatures.

Climate models project temperature increases higher than the global mean temperature increase for sub-Saharan Africa, as well as longer and more frequent heat waves.

 

The Need to Adapt

A 2014 report by the United Nations’ Intergovernmental Panel on Climate Change acknowledged that heat waves and heat-related health effects were only beginning to attract attention in Africa. One of the conclusions was that data and research gaps hamper decision making in processes to reduce vulnerability, build resilience, and plan and implement adaptation strategies.

Correcting this will require developing climate models specifically tailored to Africa, and compiling more historical climate data to observe trends and map heat spots more accurately.

Pilot programs are under way in The Gambia and Ghana, where hospitals, epidemiologists, and researchers are collaborating to study the direct effects of extreme heat on people’s health. This is a positive step, but the immediacy of the danger posed by escalating heat waves on African populations demands more urgent action.

 

Dior artistic director Kim Jones acknowledges the applause at the end of the Dior Winter 2020–2021 men’s fashion show in Paris on January 17, 2020. (Francois Guillot/AFP)
Dior artistic director Kim Jones acknowledges the applause at the end of the Dior Winter 2020–2021 men’s fashion show in Paris on January 17, 2020. (Francois Guillot/AFP)

Kim Jones, artistic director for Dior Men, has partnered with Ghanaian artist Amoako Boafo to design the Spring/Summer 2021 menswear collection. Jones first encountered Boafo’s work at an exhibition at the new Rubell Museum in Miami, Florida, and at the Art Basel Miami fair. Taken with the Ghanaian’s unique finger-paint approach to portraiture, the designer traveled to Accra, Ghana, to visit Boafo’s studio. Jones himself spent many years of his childhood in various African countries, including Ghana, where his father worked as a hydrogeologist.

The two creatives worked around the current suspension of regular fashion shows by creating a short film to show the collection and the inspirations behind it.

 

There has been a notable change in the popular perception of African fashion

 

Boafo’s collaboration with Dior demonstrates high fashion’s changing attitudes toward creatives of African descent. In 2019, more than 1,700 young fashion designers from 100 countries entered the competition for the prestigious LVMH Prize—and the winner was South African designer Thebe Magugu. He is the first African to win the prize since its launch in 2013. Initiatives such as Industrie Africa, a digital showcase for contemporary African design talent, also reflect a notable change in the popular perception of African fashion.

 

Sylvia Arthur, founder of the Library of Africa and the African Diaspora (LOATAD), photographed in the library in Accra, Ghana. (Nipah Dennis/AFP)
Sylvia Arthur, founder of the Library of Africa and the African Diaspora, photographed in the library in Accra, Ghana. (Nipah Dennis/AFP)

The Library of Africa and the African Diaspora (LOATAD) in the Ghanaian capital Accra is the product of a dream Ghanaian-British writer Sylvia Arthur had of opening a library dedicated to African literature. She founded the library, called Libreria Ghana, in 2017, and after an expansion and renovation it reopened to the public under the new name on July 1. For a small subscription fee, members can borrow books from the library.

In an interview on the literary platform Literandra’s YouTube channel, Arthur says she could afford to accumulate such a large collection of African and African diaspora works partly because African writers are not as highly valued in the market as Western writers. Her own collection forms the nucleus of LOATAD’s catalogue, which currently offers some 4,000 literary works by authors from across the continent—including world-renowned writers Chinua Achebe, Ayi Kwei Armah, J. M. Coetzee, and Ngũgĩ wa Thiong’o—and by African diaspora authors in the Caribbean, Europe, and the United States. 

On the LOATAD Facebook page, the library is described as a “decolonized space,” reflecting a broader cultural movement that seeks to reassess how cultural works from previously colonized nations and peoples are valued.

Books displayed on a shelf in the Library of Africa and the African Diaspora (LOATAD) in Accra, Ghana, founded by by Ghanaian-British writer Sylvia Arthur. (Nipah Dennis/AFP)
Books displayed on a shelf in the Library of Africa and the African Diaspora. (Nipah Dennis/AFP)

 

IAEA
Empty chairs are seen in front of the logo of the International Atomic Energy Agency prior to a meeting in Vienna on August 1, 2019. (Hans Punz/AFP)

Ghana recently completed phase one of a three-part process to develop the infrastructure for producing nuclear power in coordination with the International Atomic Energy Agency. The focus of the first phase was on conducting a series of studies on the rationale for and feasibility of introducing nuclear power to the national and West African energy grid, a tall order considering the steep costs of constructing and maintaining nuclear reactors.

Ghana’s current installed generating capacity of 4,132 MW comprises hydroelectric power (38 percent); thermal power fueled by oil, natural gas and diesel (61 percent); and solar power (1 percent). Actual availability, however, rarely exceeds 2,400 MW due to various factors, including inadequate fuel supplies. To meet the energy demands of its growing population, currently at about 28 million, requires the country to rely on the broader West African energy grid to supplement the shortfall.

Phase Two of the nuclear plan will include meetings with potential stakeholders, developing a government financing scheme and a framework for nuclear waste disposal protocols, and determining suitable sites for construction. Dr. Robert B. M. Sogbadjie, coordinator of the Ghana Nuclear Power Program, confirmed during a press conference that four sites have already been picked out, but did not disclose their locations. Phase two is anticipated to begin in 2024, with construction to be completed by 2030.

 

South Africa has had a nuclear power plant since 1984

 

Should Ghana succeed in this endeavor, it would make it only the second country in Africa to have nuclear power, alongside South Africa, which has had a functioning nuclear power plant—providing 5 percent of the country’s total energy output—since 1984. Furthermore, Ghana’s initiative on nuclear power could incentivize other African nations to do so as well, moving the continent away from fossil fuels while meeting the energy needs of a growing population.

 

Samuel Ofosu-Ampofo
Samuel Ofosu-Ampofo (via Facebook)

Samuel Ofosu-Ampofo, chairman of Ghana’s opposition National Democratic Congress (NDC), has launched a salvo against the country’s electoral commission and the upcoming elections in early December. Speaking at a celebration of the NDC’s twenty-eighth anniversary, Ampofo encouraged NDC supporters to boycott a new voter registration scheme set to begin on June 30.

Other opposition parties have also taken to inciting their supporters against the electoral commission, partially in response to the Ghanaian parliament narrowly passing Constitutional Instrument 126. This legislation authorizes new methods for the electoral commission to create a voters’ register: Ghanaians can produce a passport or a National Identification Authority card, or have two already registered voters vouch for them. The opposition claims CI 126 is too cumbersome for millions of voters, risking disenfranchisement. This, combined with the electoral commission’s decision to void previous voter identification cards, prompted the NDC and other opposition groups to challenge its mandate to compile a new voter’s register in the supreme court.

 

It is now focusing on having the validity of the old voting cards reinstated

 

The NDC dropped one part of its lawsuit challenging whether the commission had the constitutional authority to compile a new register, and is now focusing on having the validity of the old voting cards reinstated. Judgment is set for June 23.

The general and presidential elections may be several months away, but such a court challenge and public dissatisfaction with the commission risk delegitimizing the electoral process.

 

moto
French soldiers confiscate a motorcycle found in a forest in northern Burkina Faso where jihadists have established themselves on November 9, 2019, during Operation Bourgou IV. The soldiers are deployed to Operation Barkhane in support of the G5 Sahel countries’ fight against armed jihadist groups. (AFP)

Last month, Burkina Faso and Côte d’Ivoire jointly conducted Operation Comoé along their borders. They captured thirty-eight suspected terrorists, killed eight, and dismantled training camps. The operation reflects growing concern in these and other West African coastal states about a spillover of violent extremism and the need to prevent attacks from being staged in their territories.

But the spread of attacks isn’t the only problem terrorism brings, and these operations shouldn’t be the only way countries address it. They need to also focus on the factors that allow these groups to function. Extremists are increasingly tapping into a terrorist economy, using Benin, Côte d’Ivoire, Ghana, and Togo as sources or transit zones of funding and logistics.

 

Motorcycles are valuable to extremists because of their robustness and mobility through difficult terrain

 

Institute for Security Studies (ISS) research shows that livestock stolen in Burkina Faso, Mali, and Niger is sold in Benin, Côte d’Ivoire, and Ghana at below-market prices. The profits are ploughed back through the networks of accomplice dealers. Various accounts point to terrorists being among the armed groups funded by this illicit trade. They use the income to buy arms, fuel, motorcycles, and food.

Motorcycles are valuable to extremists because of their robustness and mobility through difficult terrain. They are also easy to maintain, light on fuel, and can carry more than one person for combat and combat support operations.

 

Sahel Terrorists Draw Supplies from across West Africa
The terrorist economy affects West Africa’s coastal states.

 

Many motorcycles found in Niger’s Tillabéry region are trafficked from Nigeria through the Togolese border town of Cinkassé and Burkina Faso’s Boucle du Mouhoun Region. Some are also trafficked from Togo to Burkina Faso, and a few are trafficked further to Niger.

Both Tillabéry and Boucle du Mouhoun are hot spots for violent extremism. Although groups may not be directly involved in trafficking, they gain access to goods through vendors or criminal entrepreneurs who organize their procurement.

Evidence is also emerging of extremists sourcing materials to make explosives from Ghana. Ghanaian officials say fertilizer, a key ingredient for improvised explosive devices, is smuggled in sizable quantities to Burkina Faso. Police frequently arrest smugglers and seize consignments in northern border towns such as Hamile, Kulungugu, and Namori.

In July 2019, Upper West Region minister Dr. Hafiz Bin Salih said Ghana had lost US$12 million to fertilizer smuggling from Ghana to neighboring countries the previous year. Although terrorist groups may not be directly involved in the smuggling, an apparent rise in availability of the material in Burkina Faso means increased access and affordability.

Also, a 2018 counter-terrorism operation in Ouagadougou’s Rayongo neighborhood led to the seizure of an electric cord for making improvised explosive devices which was traced to northern Ghana. This suggests the involvement of trafficking networks from Ghana’s north where artisanal and small-scale mining is a long-standing economic activity.

Interviewees told the ISS that the northern Ghanaian town of Dollar Power has many West African illegal miners, including Ivorian former rebels and Burkinabe nationals, and is known for armed robbery. In eastern Burkina Faso, gold from some mining sites controlled by violent extremist groups is purchased by buyers from Benin and Togo. This may be providing valuable funding to terror groups, although the scale is unclear.

Leaders of coastal states are preoccupied with preventing a southward spread of attacks. This informed the February 2017 meeting of the presidents of Benin, Burkina Faso, Côte d’Ivoire, Ghana, and Togo in Accra. They had called for an extraordinary Economic Community of West African States (ECOWAS) summit on terrorism, and launched the Accra Initiative in September that year.

Attacks in southern Burkina Faso, close to the borders with Benin, Côte d’Ivoire, Ghana, and Togo, have deepened concerns among counter-terrorism officials. At an ECOWAS extraordinary session held on September 14, 2019, in Ouagadougou, leaders also decried the spread of terrorism in the region, although there was no specific reference to coastal states.

 

Extremists use Benin, Côte d’Ivoire, Ghana, and Togo as sources or transit zones for funding and logistics

 

Burkinabe officials have often alerted their coastal counterparts to suspected extremists crossing into their northern territories to avoid arrest. Such alerts followed the March 2019 Otapuana operation in southern Burkina Faso. In Ghana, extremists hide or rest in the north, counter-terrorism officials told the ISS, a situation that elicits complaints from Burkina Faso about the country’s commitment to countering terrorism.

Coastal states acknowledge the importance of addressing the root causes of violent extremism, including governance and developmental deficits. Extremists could exploit the lack of basic services, such as roads, health and education facilities, and socio-economic opportunities, to penetrate and implant themselves in communities. The 2020–2024 ECOWAS Priority Action Plan outlines steps to tackle these shortcomings.

But capacity to address the vulnerabilities that enable terror groups to source and move funds and logistics remains limited. These vulnerabilities include weak border surveillance and security; porous borders; and strong communal, family, and socio-economic ties. The content of cross-border trade transactions is largely untracked, as border officials do not have sufficient capacity and the necessary technology.

To prevent violent extremism, the various dimensions of the problem must be understood, particularly terrorists’ covert dealings. This will enable officials to strike a much-needed balance between counter-terrorism operations and breaking the funding and logistics supply chains used by violent extremists.

 

Border officials lack the capacity and technology to track cross-border trade transactions

 

West Africa’s coastal states must also address the weaknesses that allow these groups to operate. Capacity is needed to track trade consignments between countries, beef up border control and surveillance, enhance intelligence gathering and analysis, and garner the support of people living in border areas. This could help identify extremists who may be exploiting cross-border ties.

The disruption of supply chains could set the stage for more terrorist attacks. Violence could be used to protect hideouts, secure supply routes, or attack border posts that extremists believe are impediments to their supply of materials. This means that, to avoid generating community resentment, strategies aimed at disruption must be balanced with preserving the livelihoods of individuals and communities who rely on cross-border trade.

 

Sampson Kwarkye is a senior researcher at the Institute for Security Studies’ regional office for West Africa, the Sahel, and the Lake Chad Basin.

This article was originally published by ISS Today.

 

Accra
Accra, the bustling capital of Ghana, is home to many African embassies given the nation’s role in pan-African endeavors.

NAD chats to the Ethiopian ambassador to Ghana, Regassa Kefale Ere, about relations between the two countries, free trade, industrial parks, and the aerospace industry.

New Africa Daily: How would you characterize Ethiopian-Ghanaian relations?

Regassa Kefale: Ethiopia never was a colony of a European power. After Ghana received its independence in 1957, Ghanaian leader Kwame Nkrumah and Ethiopia’s Emperor Haile Selassie worked together on founding the Organization of African Unity, which later became the African Union. The two leaders worked closely together, and this political history is at the core of the relationship.

More recently, we have sought to expand economic ties between the two countries, too, building on the long-standing political ties. Ghanaian investors are interested in various Ethiopian economic sectors, from pharmaceuticals to animal hides. We have had trade events in the two capitals in the past two years to promote trade between our countries.

 

NAD: How does the signing of the African Continental Free Trade Area change the trade picture for Africa?

RK: Free trade is an important issue. The signing of the agreement establishing the African Continental Free Trade Area is an important turning point, and we are working to develop this opportunity to ensure the prosperity of Ethiopia.

A key part of our strategy is the development of industrial parks and free zones, offering large-scale employment opportunities for the citizens of our country. Indeed, some 60,000 people work at Hawassa Industrial Park (HIP). We have also developed Bole Lemi Industrial Park and other similar parks, which allow us to take advantage of new opportunities under the new trade agreement and other relationships. For too long, Africa’s trade relations have been focused externally, and not on the opportunities of intra-African trade.

 

The industrial parks will promote development and attract foreign direct investment to Ethiopia

 

NAD: Tell us more about the strategy behind Ethiopia’s industrial parks.

RK: These industrial parks offer exporters a one-stop approach, including customs, roads, and electricity. It’s not just the infrastructure, however; there are also incentives for companies who relocate to these zones, such as tax holidays. The government is committed to this policy. The industrial parks will promote development and attract foreign direct investment to Ethiopia.

 

NAD: One of the main economic components in the Ethiopian-Ghanaian relationship is in the aerospace industry. In December 2018, an agreement was announced to have Ethiopian Airlines play a key role in the relaunch of Ghana’s national carrier.

RK: Ethiopian Airlines, which has a strong brand and a solid history, will take a minority stake in the new national air carrier of Ghana. Ethiopian is a widely respected carrier and Africa’s most successful airline. It flies to more than 110 destinations around the world and operates about 1,000 aircraft, including the Airbus A380, the world’s largest passenger airliner. Above all, Ethiopian Airlines stands for unique quality and a high level of service. These were all factors in the Ghanaian decision. It is a win for both countries, as there are daily direct flights between Addis Ababa and Accra.

 

 

Undersea Cable

 

A multinational consortium of telecommunications companies—including Facebook, China Mobile International, MTN Global Connect, Telecom Egypt, and Vodafone—announced the construction of a new undersea fiber-optic cable that will connect sixteen African countries, Europe, and the Middle East. Named 2Africa, the 37,000 kilometer-long communications cable is scheduled to go live in 2023 or 2024.

 

Africans pay some of the highest data rates in the world.

 

In March, two undersea cables serving Africa experienced breakages that drastically reduced Internet connectivity for days as repairs were made. The addition of 2Africa will help improve Internet access for millions of Africans, and mitigate disruptions should other cables experience failures in the future. Such disruptions are not only frustrating for Africans, who pay some of the highest data rates in the world, but also have a negative impact on the African economy.

A 2017 report by the Collaboration on International ICT Policy for East and Southern Africa (CIPESA) concluded that intentional Internet shutdowns in twelve countries between 2015 and 2017 cost sub-Saharan Africa more than US$237 million. Unforeseen connectivity disruptions naturally can have far greater negative impact on national and regional economies.

 

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Nov 25, 2020