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President Mills and the Chinese Bonanza
E. Ablorh-Odjidja

Various sums of money, ranging from 13 to 16 billion dollars, have been cited as the target amount of loan that Ghana will obtain from China, should the lending go through.

Even so, expectancy of the pending loan has already started a fever. Some fertile minds think the loan size alone is indicative of the pulling power of Ghana as an investment destination.

Additional to this thinking is a fondness for the novelty of its origin. Ghana is not getting it from traditional sources like the West, the IMF or the World Bank - all imperialist sources.

This trend, according to some self styled optimists, affirms Ghana’s independence from the West. However, forgotten in the process is the fact that the same trend was pursued by the  Zimbabwes, and the Sudans, where China invests but hardly speaks about their atrocious political systems.

The same trend also deprives us the ability to make a fine discernment: The magnitude of the loan compared to our midget size economy. The lack in comparison has helped to elevate China to hero status.

True, and by any estimate, the loan amount is huge. And probably by my estimation alone it is superfluous; that is if and when we get it.

This “superfluous” view does not concern itself with our ability to make payment. That’s a problem for the Chinese. Because, eventually, Ghana will be able to say in the local parlance, “Kafo didi,” meaning the debtor must eat!

The Chinese, I am sure, must have thought about payment too. How else could they have a different discernment of our account as borrowers (recent graduates of HIPC), unless they add oil to the equation?

True, sudden wealth has its attractions. Cinderella had her slippers as we now have our oil. Still, the specter of being drunk on sheer expectation of new wealth can trigger risks. Worse, it can attract muggers.

The Chinese, I am told, boast of being one of the oldest civilizations extant. That they invented the abacus, didn’t they? And, therefore, know how to count and have been managing their national budget for decades without a shortfall. They are no fools.

In Ghana, we are no fools either. But for the perennial budget shortfalls and gaps that we have depended on the West to make whole, we could match the Chinese in calculating the exact impact this huge loan will have on our small time economy.

I am not here to weep for the Chinese. My concern here is a local, home grown justifiable worry. I feel we lack some discernment in our pursuit of this huge loan.

Discernment, I must say, is when history informs the moment.

Simply stated, what the blinkers are we going to do with this loan in an economy worth 16 billion at the last count (16,123 millions of US dollars in 2008 according to Global Finance group)? And, on this we are asking the Chinese to saddle a 16 billion loan; or, must we conclude that the oil wells have already been mortgaged?

Granted, the infinite wisdom of the Chinese may tell them that the loan is worthwhile. But are they considering the ill effects this sudden ingestion of such a huge sum may bring to our economy; unless the sum being loaned is paper money to be accounted for by the presence of thousands of Chinese workers and contractors within our economy?

Still, how about us? It is not our duty to worry  about these harmful effects first. Apparently not. because we are so much in hurry to have the loan done and over with.  But signatories to the loan on Ghana’s side should worry.  There is this new charge of  causing financial loss to the state that may apply to them in the future - the harm caused by inflation.

Inflation is when you have a lot of money chasing after fewer goods and services within an economy. And we don't manufacture many of these goods.  The well known Ghanaian ingenuity prefers “buy and sell.” But for the mercy of these same Chinese we will be out of many manufactured goods, including tooth picks!

This means that the sudden wealth the loan creates get siphoned out to feed the Chinese economy, in addition to the loan  payments we make.

Sixteen billion is a lot of money and can encumber or nail down a lot of promissory notes on resource allocations; until we run out of money and cry “Yen tua” or the Chinese finish extracting the hell out of our resources.

Remember our dalliance with Kaiser and VALCO in the 60s? That got VALCO virtually free electricity for years, even when energy cost had soared to premium level in the 70s and 80s. We came to regret that.

In this instance, it is said that the Chinese loan will help construct the infrastructure needed to move us into the 21st century. I am not told why we are not yet in the 21st century.

Back in the 60s, we had infrastructures. What was revealed years later was that we lacked the institutions to manage these infrastructures effectively and for this reason they were run or torn down.

There were public institutions like the PWD that took care of roads and potholes. There was a Railway Authority that took care of rail tracks and the engines that made the trains run. There was a Black Star line that managed the logistic needs of the country and ploughed back the savings into our economy. These institutions went the way of our ancestors.

Before we create huge debts for infrastructure settlements, let’s form the discipline to run them by producing small scale ventures first. Let’s adopt for starts the American (George Bush initiated) MCA arrangement that required a planned program and funding approval based on prior success; meaning before you advance to stage two you must have completed successfully stage one. Does the Chinese, with abacus in hand, have any plan like the MCA? The MCA, by the way, was a grant.

President Professor Evans Atta Mills can ask for an MCA like account and let’s find out the quality of Chinese goodwill minus our oil.

E. Ablorh-Odjidja, Publisher www.ghanadot.com, Washington, DC, October 1, 2010.
 

Permission to publish:  Please feel free to publish or reproduce, with credits, unedited.  If posted at a website, email a copy of the web page to publisher@ghanadot.com . Or don't publish at all.




 


 

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