China has agreed to provide a $15 billion loan to Ghana to finance the African country’s major economic projects. Ghanaian officials say the loan is not based on the traditional model of borrowing and aid, but on the bargaining power of the country’s natural resources.
Ghana owns 2.8 billion metric tons of iron ore deposits, 960 million metric tons of bauxite, 413 million metric tons of manganese, not to mention gold and cocoa, said Vice President Mahamudu Bawumia, expressing optimism about the loan.
The country needs $20 billion for its infrastructure projects, he said, adding China can provide another $4 billion. Bawumia said the loan would leverage only a small fraction of Ghana’s resources.
“Our case is that if we need just $20 billion to do a major massive marshal plan and we have $460 billion sitting in the ground… what we really need is to develop a financing module that utilizes a small fraction of those reserves to finance infrastructure,” he explained.
The decision to use natural resources as collateral has been criticized by the opposition in Ghana.
“At the end of the day, Ghana will still be shortchanged- there is no free lunch in other parts of the world,” National Democratic Congress (NDC) Member of Parliament Richard Acheampong said on local radio.
According to Acheampong, the authorities are using dodgy contracts to deceive ordinary Ghanaians.
“How much of our natural resource are they leveraging in that agreement for the $15 billion facility? If you’ll remember, former President Kufuor did the same thing when we were constructing the Bui dam. He went to China and mortgaged our cocoa for a loan agreement. Today we ship the country’s cocoa to China to service the debt,” he said.