Chamber of Commerce & Industry Backs Integrated Bauxite and Aluminium project

The Ghana National Chamber of Commerce and Industry (GNCCI) has expressed its backing for the Integrated Bauxite and Aluminium Project.

Mr. Mark Badu-Aboagye, the Chief Executive Officer, said it was a step in the right direction.

In a statement released in Accra, he said that had been a common practice among most resource-rich nations – pursuing dual investment strategies regarding natural resource revenue.

These are “spend as you go” (SAYG) and delinked investment.

“In the Chamber’s view, the government appears to be pursuing a conflation of the two models in order to bridge the estimated US$ 30 billion infrastructural gap in the country with the US$2 billion barter agreement with SinoHydro Group Limited of China for Ghana’s refined bauxite.”

He said that was commendable for a natural resource-endowed country.

The Chamber, however, he said was seeing a tilt towards “SAYG” and admonished the government to be mindful of the impact of aluminium price volatility on any infrastructure spending that was frontloaded.

“We suggest that through broader and objective consultation with stakeholders, the country can structure a more beneficial management of the natural resources via: Concession; Construction; and Off-takers’ (CCOs) rights arrangement.”

The statement said the barter arrangement, as mentioned in the mid-year budget review, known in international financing circles as Resource for Infrastructure (RfI), was introduced into Africa by the Britain, France, and The Netherlands in the late 1990s as a resource collateral arrangement in a more mutual fashion and was later taken on by China with conditions more favourable to them.

The Chamber therefore wanted a broader stakeholder consultation on the barter agreement that would place the country in a position to prevent the situation of a greater portion of the liquidity exiting back to China.

“The barter arrangement will likely result in infrastructure capital equivalent to roughly four per cent of Ghana’s Gross Domestic Product (GDP) and in this regard, concerted efforts are required to address liquidity cycle and spill-over, and the liquidity dynamics of this inflow and its ability to trigger non-natural resource-based capital growth.”

“This entails strategic management of the fiscal mirrors with aluminium pricing; infrastructure, industry and project planning; procurement planning to improve procurement practices and processes; improvement in education to address labour and skills’ gaps; and improving the legal regime for off-taker purchasing agreements.”