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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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