Ghana’s chamber of commerce announced their support for the country’s plan for bringing its significant bauxite ore to market last week.
Mark Badu-Aboagye, president of the Ghana National Chamber of Commerce and Industry (GNCCI) said in a statement that the country’s Integrated Bauxite and Aluminium Project represented an excellent first step in the journey to market his country’s bauxite reserves.
He explained that the typical model for mineral exploitation by resource-rich states involve dual investment strategies that are spend as you go (SAYG) and delinked investments.
“In the Chamber’s view, the government appears to be pursuing a conflation of the two models in order to bridge the estimated US$ 30 billion infrastructural gap in the country with the US$2 billion barter agreement with SinoHydro Group Limited of China for Ghana’s refined bauxite.”
Though he heaped praise on the government for pursuing such a plan, he cautioned it against the inherent instability in the aluminium market.
“We suggest that through broader and objective consultation with stakeholders, the country can structure a more beneficial management of the natural resources via: Concession; Construction; and Off-takers’ (CCOs) rights arrangement,” opined Badu-Aboagye.
He continued by calling upon the government to renegotiate the barter agreement now in place between his country and the People’s Republic of China which, in the chamber’s view, lacks sufficient stakeholder participation at present.
“The barter arrangement will likely result in infrastructure capital equivalent to roughly four per cent of Ghana’s Gross Domestic Product (GDP) and in this regard, concerted efforts are required to address liquidity cycle and spill-over, and the liquidity dynamics of this inflow and its ability to trigger non-natural resource-based capital growth.
“This entails strategic management of the fiscal mirrors with aluminium pricing; infrastructure, industry and project planning; procurement planning to improve procurement practices and processes; improvement in education to address labour and skills’ gaps; and improving the legal regime for off-taker purchasing agreements.”
According to Badu-Aboagye, the RfI model has been used by China throughout Africa, leading to complaints that the deals were one-sided in Beijing’s favor. The model was axed in 2012 due to such complaints.
“The impact of the RfI approach has also not been very encouraging for these economies in terms of real economic impact, non-resource capital increase and other investment spill-over,” he said.
Alternatively, Badu-Aboagye counseled the government to pursue an agreement that avoided resource usurpation by insisting upon local content management and skilled labor drawn from domestic sources.