Africa: China’s flexes speed advantage in Ghana’s bauxite for roads deal
The ability of Chinese companies to move quickly on infrastructure deals keeps it ahead of the pack in the race to capture growing African infrastructure spending.
With the first tranche of the $649 million financing now available, Ghana is moving very fast to build the infrastructure projects promised as part of the controversial bauxite deal that it recently finalized with the state-owned Chinese construction conglomerate Sinohydro.
The agreement stipulated that Ghana would sell 5% of its bauxite reserves in exchange for $2 billion in infrastructure development.
Now, less than 18 months after negotiations for this bauxite deal began, road construction is getting underway.
Beijing’s ability to move this fast, from negotiations to shovels in the ground, highlights one of China’s key advantages over the U.S., European and Japanese rivals who have all said they’d like to capture some of the African infrastructure market from the Chinese.
Those countries are just not configured to move quickly with large scale development projects like this. There are a myriad of regulations they have to follow to comply with disclosure requirements (transparency), environmental impact assessments, local community engagement and so on.
“If a Chinese would come this road is done in a month,” explained Kenyan real estate entrepreneur George Hinga in a 2017 Vice China documentary. “With the Westerners,” he added, “the bureaucracy to get this approved would take a year, first of all, without any construction. I mean, why partner with the West?”
There are important political considerations here as well. Ghanaian President Nana Akufo-Addo needs to show quickly that the Sinohydro deal is worth the massive environmental and financial risks. If people see the benefits in the forms of roads, ports and other new infrastructure then that would likely mitigate the mounting criticisms the president and his administration are facing from environmentalists, the media and the international financial community.
Chinese infrastructure development projects get sucked into electoral politics as well, with incumbent presidents like Senegal’s Macky Sall touting big infrastructure projects completed under his leadership.
These include paved roads and a gleaming new international airport. Former DR Congo’s president Joseph Kabila similarly ran for re-election on his ability to deliver the “5 Chantiers” or five construction projects in Kinshasa in the mid-2000s.
China is able to move this fast because it brings African leaders a turn-key approach to development that most other countries are incapable of matching. With financing, construction and resource-extraction all bundled together with little-to-no emphasis on transparency or environmental impact, it’s not surprising that the Chinese move as fast as they do in places like Ghana.
Meanwhile, France’s public-private-partnership initiative to build a new railway from Nairobi’s airport to downtown is bogged down and a similar PPP effort led by the United States for the Nairobi to Mombasa Expressway is also stalled. It shouldn’t be a surprise that so many African stakeholders continue to prefer dealing with the Chinese to build their infrastructure.
The bottom line here is that for many African leaders, China’s ability to deliver infrastructure quickly supersedes the priorities that other countries place on transparency, higher quality, and more sustainable development.