The Chinese government has released phase one of funding for a substantial road construction project in Ghana as part of a $2 billion infrastructure deal which gives Beijing access to the country's reserves of bauxite — a crucial source of aluminum.
The deal has drawn criticism from environmental activists, political opposition, and international government investment partners, with a new report from risk consultancy EXX Africa highlighting a lack of transparency and increasing threat to debt sustainability.
As part of a memorandum signed between the two nations last year, Beijing will finance $2 billion worth of rail, road and bridge networks, and in exchange, China will be granted access 5% of Ghana's bauxite reserves.The $2 billion Master Project Support Agreement would see Chinese state-owned hydropower and construction company Sinohydro gain access to the mineral, and is part of a wider loan facility worth $19 billion. Bauxite is the world's main source of aluminum.
"This is because African governments often lack the will or capacity to ensure the proceeds from mega-projects have the desired trickle-down effect and Chinese investors do not make this a prerequisite of investment," she added.Last week, in his first budget following the latest IMF visit, Ghana's Finance Minister Ken Ofori-Atta pledged to boost spending by 21%, promising higher public sector wages and more infrastructure projects.
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