Building the ark

At a breakfast table in the noisy restaurant of a hotel in Shenzhen, I met Kwame Song Dongshong, now President of the Powerchina International Group Limited.

The company that built the iconic Three Gorges in China, is a behemoth by its own description in ‘planning, survey, design, engineering, through finance, construction, installation, operation and maintenance of power and infrastructure projects’.  If you want a zen explanation, they claim that their philosophy is ‘harmony among human beings and harmony with nature.’    In his previous life, when he emerged for the first time in Ghana, Song was merely the Executive Vice President of a company that per the Fortune Global 500 ranking list is 190th with revenues of $48.87 billion.  You wouldn’t think it, on meeting him.

When Noah built the ark, according to the Bible, basically, technology met religion to address weather forecasts.  Warren Buffet, one of the world’s richest men, an investor and philanthropist, a fellow alumnus of Columbia University, is reported to have said ‘Predicting rain doesn’t count.  Building arks does’.  I see what he means.

The Bui Dam in Ghana, has history.  Every administration has looked, touched, walked away or engaged, belatedly, to mixed results.

The Bui project was first mooted in 1925 (during the British colonial era) and had been discussed ad nauseam since the 1960’s, including during the regime of of our independence era President, Dr. Kwame Nkrumah, with support from the World Bank and the Government of Australia.  It is endlessly fascinating how on some matters practical, Nkrumah could get a grip, dispense of his high drama and deal with the imperialist capitalist powers.  Ghana then and now, requires major investment in infrastructure.  All takers are welcome, as always, buyers, beware.

It was not until the return of democracy to Ghana in 1992, 4 military coups and a considerable reversal of Ghana’s economic and political fortunes later, that the Bui project was seriously addressed, with support for a feasibility study from a French company, Coyne et Bellier.

Former President John (I) Rawlings – 1993 to 2000 and leader of the National Democratic Congress (the NDC is now safely back in the minority) – was in the driving seat.  Environmental and social impact studies including resettlement of people, as well as cost assessment, meant that the political economy of the time was not conducive, if not controversial. No one really wanted to touch this project.

It took 4 decades, after the long overdue overthrow of Nkrumah, for the highest officials of Ghana and China to meet in Accra.  In 2006, when the announcement of the Bui Dam was made, under the administration of former President John (II) Kufuor and the New Patriotic Party (NPP), it was quite rightly met with incredulity.  At $622 million, the Bui project was at the time, the single largest investment the Chinese had committed in Ghana, if not in Africa.

Communist China was ready then and now, without equivocation to deal with the most private sector friendly led Government in Ghana (GoG) since independence.  The NPP is back in office, having won the 2016 election led by current President Nana Addo Dankwa Akufo-Addo.

The Bui dam, all 400 megawatts of it, harvesting the waters of the Black Volta on the borders of the Northern and Brong Ahafo region, is the second largest hydroelectric dam in Ghana.  It was preceded by the Akosombo Dam, it became operational in 1965 at a cost then of some 235 million gbps.  Then the largest man-made lake in the world, Akosombo was to provide the energy needs of the country and specifically, power our nascent industry including aluminum companies.

The Bui Dam, complete with a power station connected to the national grid, was eventually commissioned in December 2013 by the GoG, led then by President John (IV) Mahama of the NDC.

At the time the original Bui Dam negotiations was underway, Akufo-Addo was Minister of Foreign Affairs.  The much lamented Kojo Baah-Wiredu, was Minister of Finance, he died in office whilst recovering in South Africa from surgery. In short, infrastructure has no master, it requires focus that transcends the vicissitudes of petty national party politics.

“I bring you a Mercedes, not a Rolls Royce, that is not necessary for you right now”.  A memorable quote from my brief meeting with Kwame Song.  The Chinese are practical, if you want to waste your hard earned non replenishable natural resources on frippery in Dubai, go ahead.  They will pay, they will take and they will walk away.

We have been playing this game of Building the Ark, for a while. According to reported comments by the Minister of Railway Development, Mr. Joe Ghartey, the GoG intends to directly invest or facilitate the construction of 1,400 kilometers of railway lines at a cost of some $7.8 billion to link Accra, our capital, to Kumasi, arguably our second largest city, capital of Asanteman and home also to the Boankro Inland through Tamale and Yendi in the Northern region to Paga in the Upper East region.

  Envisaged is a combination of Public-Private Partnerships operated under a Build Operate and Transfer arrangement, to be completed by 2020.

It is very much up to Ghana to call it and negotiate with intent sustainable integrity.  Dongsheng and many more like him are sizing up Ghana, again.

POWERCHINA has pledged (not committed by any means so far) according to Song, some $4 billion of investments in infrastructure projects for the next 4/5 years in some 26 sectors – power including solar energy, water transportation, sanitation, affordable housing, roads and railways. 

The Association of Ghana Industries (AGI) is a voluntary organisation of more than 1200 companies.  It has released its third-quarter Business Confidence Barometer.  In Q2, business confidence rose on the back of the GoG making good on its promises to introduce tax reliefs and address inflation.

Taxes reduced after the 2017 Asempa budget included the abolishment of the following – 1% Special Import Levy on imported raw materials and machinery;, the 17.5% VAT/NHIL on financial services and import duty on spare parts and q review of the Energy Sector Levies Act to reduce the cost of electricity, critical to industry.

The Q3 report, issued before the presentation of the 2018 Adwuma budget is sober.  Business confidence declined marginally as industry sought clarity on if and how they could benefit from the One District One Factory (1D1F) flagship policy of government.  High cost of electricity, access to credit and exchange rate volatility remained matters of concern.

The AGI President, James Asare-Adjei, doubles as Chief Executive of the Asadtek Group Ltd.  He was in China as part of the delegation of the First Lady, Mrs. Rebecca Akufo-Addo following up on 2 things. First, was the landmark opening of the first African trade liaison office in Qingdao, a key city in northern China, central to that country’s expansionist Belt and Road Project.

The AGI office, if it actually gets around to effective strategic staffing and implementation, is to identify key sectors of the economy in Ghana and provide information required by Chinese investors who want to commit as well as support Ghanaian investors who want to explore export opportunities to China. Secondly, the AGI also serves as an implementing partner for a $2 billion supplier’s credit announced by the China National Building Materials Group (CNBM) in support of the GoG’s ‘One District One Factory’ (1D1F) agricultural technology and industrialisation drive.

The Ministry of Trade and Industry (MOTI), the Ghana Investment Promotion Center, local and international banks, the Embassy of the People’s Republic of China and a host of others provide critical input in delivering the 1D1F.

On paper, CNBM will provide the credit, local banks working through international correspondent banks will deliver the credit required for Ghanaian companies and their international partners to design, construct, run and maintain some 200 factories across Ghana to bring the agro-processing driven 1D1F to life.

Not so fast.  In the era of John IV Mahama, faced with regulatory issues including concerns of money laundering and other such nefarious challenges, a number of international corresponding banks cut links with Ghana.  Now, in order for Ghana to access the pledged $2 billion of suppliers credit from CNBM, our MOTI must pick its way through a maze.

Other than the 3 international banks – Barclays, Societe General and Stanchart – who continue to provide services, which local banks can qualify to provide the guarantees required to access the CNBM suppliers credit?  Additionally, can CNBM get the Chinese government to also go further by insuring the pledged suppliers credit?

Predicting rain doesn’t count.  Building arks does.  Building the new ark of Ghana’s new ambition in infrastructure will take time, careful measurements and agreements.  We are not quite there yet.  Me thinks.