Are there issues with the US$50bn Chinese Century Bond?

Finance Minister, Ken Ofori Atta

In May 2013, the government of Democratic Republic of Congo announced in Paris of its intent to construct the first phase of what would be the world’s largest hydroelectric dam on the Congo River’s Inga Falls dubbed “Grand Inga”.

This massive hydropower project was estimated to cost a whopping US$80 billion and when completed, it would provide 40,000 MW of electricity. The project could also light up more than half of the continent and provide more than 500 million people with renewable energy.

Colourful fanfare graced this important milestone on the continent as major financial institution – the World Bank, supported the project with an estimated $14 billion. However, three years down the line, the bank cancelled its support, which subsequently caused some investors from the international economic community to shield away from the project.

Majority of economic players on the African continent, especially the mining industries, were optimistic following the announcement. However, it has since stalled, sparking fears that the project will not be viable in relation to the country’s ability to secure the needed investments to carry out with it.

It must have started in October, 2015. However, the cost of financing has been a major challenge till date. One major important characteristic of the construction was that it was conceived more than 40 years ago in the early 1970’s during the era of arguably, Africa’s most corruptible leader, Mobutu Sese Seko.

Bui Hydroelectric Project

Comparatively, the Bui Hydroelectric Project has a similar story to the Grand Inga. It was conceived during Dr. Kwame Nkrumah’s era as president and the 133 MW project finally came to mainstream in 2013 after being halted, following the 1966 military coup.

One major disadvantage of such developments is the cost involved. For instance, if construction of the Bui Dam had not been truncated, the state would not have spent more than US$622 million for the project.

Similarly, should the construction of the Grand Inga continue to be on the drawing board for long, the amount quoted may not be the same when preparatory works should start.

President Akufo-Addo

Speaking at a ceremony in China’s capital Beijing, President Akufo-Addo announced that his government is considering issuing a US$50 billion Chinese century bond to facilitate major infrastructural development in the country, most importantly construction of roads and revamping the defunct railway sector.

One important area worth mentioning is that, in the last 6 years, China has invested close to US$130 billion into her educational sector. So, the question now is why the US$50 billion bond for a centenary payment duration?

That is quite significant, but of course when the whole of Africa is in China, you don’t expect President Xi Jinping to dole-out money on a silver platter.

The duration of the bond which became a major talking point by some socio-political pundits from both sides of the political divide, depict the general motive behind China’s quest in laying its firm hands on the continent.

Already, some Civic Society Groups have urged government to reconsider its decision on the century bond. This followed reports of institutional take-over by China in some countries such as Zambia who defaulted in payment of loans.

On the other hand, some media commentaries by some important people concerning their take on the Chinese century bond could be irritating.

Some claimed issuing the century bond was “useless” to pile debt for “our children and grandchildren” to service them. This is however not the case.

Under the leadership of Governor Guggisberg in 1923, there were quite number of railway lines that were constructed to facilitate the movement of goods and people. It is important to note that as far back in 2004, some of the lines especially from Takoradi to Kumasi stretch were still active.

Did they not lay down the foundation for their children and grandchildren which we benefitted? Did we not benefit more than them? Wouldn’t it be a better idea if we did same for our children and grandchildren?

Since Ghana was ushered into democratic dispensation in 1992, there has never been any military coup which truncated very important national projects.

The issue of cost has not always been the main factor inhibiting the developmental process. However, the sharp destructive criticisms by some very important people from both sides of the political divide have the capability of relegating such projects to the background.

When something has to be done, it must be done now. The most important thing to do in ensuring development of our country is through constructive criticisms that will yield good results.

Criticisms that will always make the government accountable to the people and remind them of their social contract is what we must encourage at all times to ensure onward development.

By Dundas Whigham