Elections, oil and a Chinese dam in Ghana

African democracy often seems like an oxymoron. We hear so much in the western press about corruption, failed states, dictatorships, ethnic violence, and disputed elections that many would be surprised to find that anything like ‘normal’ politics occurs in Africa.  But in Ghana there has just been a very close presidential election that saw the opposition candidate win by the tiniest of margins. On 7^th January Professor John Atta Mills was sworn in as President, representing the National Democratic Congress (NDC) who displaced the New Patriotic Party (NPP) that had governed for two terms. The NDC conspicuously borrowed from President-Elect Obama’s campaign by arguing that ‘A Change We Need’ although in terms of economic policy there is not a lot to tell between the two main parties.

  

Although the credit crunch and global recession have affected many developing countries in terms of demand for their commodities and availability of credit, Ghana already had a huge budget deficit compared to the size of its economy. So, like all governments, it is concerned with what will drive the country’s economy. Last year, after much speculation, oil was discovered in the west of the country, mainly offshore, but with the possibility of land-based reserves. For a country dependent on oil imports and a massively over-stretched energy generation infrastructure this was great news. No sooner had the discovery been confirmed than the NPP president hailed Ghana’s economic problems to be greatly relieved. Domestically people were cautiously hopeful, but have witnessed the plight of their near neighbours in Nigeria who have massive oil wealth, but are dogged by corruption, environmental damage, and growing inequality and so are desperate that Ghana doesn’t go down the same path.

 

Internationally, the oil producers began arriving. Initially the discovery was through a UK-US consortium, but the Chinese were soon in negotiations to secure drilling rights in one of the off-shore blocks. The Chinese, like all industrialising countries, need to secure energy supplies and so see sub-Saharan Africa as a region that is under-exploited, although one with higher than average risks for investment. Already the Chinese are well-established in Sudan, Angola, Gabon, and Equatorial Guinea with Ghana representing the latest addition to a string of producers bordering the Gulf of Guinea. With oil production due to begin within the next two years it is a critical period for Ghana and the new NDC government who have the benefits of this new revenue stream, but also need to manage the potential downsides.

 

Ghana’s energy problems run deep. When I was in Accra last month we had power cuts everyday as the water levels in the Volta Dam, Ghana’s main source of electricity, dropped during the dry season. Here, again, the Chinese are heavily involved in energy production through the construction of another hydro-electric dam in the north-west of the country at Bui, and a power plant near Accra.

 

As part of China’s development assistance and more commercial considerations it has given low interest loans to the Ghana Government for the Bui Dam. The original plans to dam this part of the Black Volta River began in the 1920s and both the Soviet Union in the 1970s and the French in the 1990s looked at the feasibility of the project. However, it was the Chinese who offered the most favourable finance package and the cheapest tender, and got agreement from the Ghana Government in 2005. The Chinese contractor, Sinohydro, is a major multinational and is well under way to finishing the project with electricity beginning to flow in December 2011.

 

Although Chinese firms in Africa have been criticised for importing their own labour the agreement ensures that jobs go to Ghanaians with about 700 Chinese expatriates working on the project compared with 3000 Ghanaians. Already we have seen migration of job-seekers from other parts of Ghana to the remote Bui site. Bui is also a national park and about one-third of it will be lost to the dam with associated loss of land and wildlife. However, despite some rumours on the web about an anti-dam lobby we made inquiries among a number of NGOs in Ghana and not one of them seemed opposed to the dam, which will add 400 MW of power to the grid. And there are plans to build Bui City next to the dam, which one official optimistically said would be “like Dubai”. All in all, then, these are interesting times for Ghana where the people deeply crave the infrastructure of modernisation and have new lines of finance from China and the prospects of oil revenue.