Chinese Investment in Ghana

Abstract

Over recent periods, especially in the last two decades, Africa has recorded growth and received inflows of both direct and indirect forms of foreign investment. This is due to ongoing globalisation and to the redistribution or allocation of capital and wealth among nations with the idea of competing on a global scale. Many countries, particularly sub-Saharan African countries, have seen this trend as part and parcel of their long term development plan and growth agenda ever since China became a development partner for most of these countries. In this paper, the Investment Development Path (IDP) theory introduced by Dunning in 1981 is used to examine the basis of the Chinese Investment model. The author sheds light on Chinese investment in Ghana after 2008 and the performance of these investments. In order to examine the possible positive impacts and prospects of foreign direct investment in Sub-Saharan African countries, the author considers the significant role of Asian investment, especially that of the People's Republic of China and its strategic dominance of investment on the continent. The last section of the article briefly examines the specifics of Chinese investment in Ghana. Finally, the author presents a summary and some policy recommendations.

China’s Outward Foreign Direct Investment in Africa: How are Ghana Benefiting and its Issues on the Economy?

“…As indicated by the Ghanaian government projections of oil costs, Ghana with end up paying US$ 6.4 billion to China for the US$ 3 billion credit, or should give away 750 million barrels of the nation's raw petroleum to a Chinese company for more than 15 years. Consequently, the development and technical assistance as in the form of investment also comes with conditions attached to them, thereby raising concerns about how to refinance these loans in a profitable way without societal costs in the long run (Joseph, 2015). Another example of an investment with major conditions attached is the dam funding deal, where natural resources such as cocoa will be used to pay for the cost of credit (Reuters, 2007).…”

“…Conversely, like other African countries such as South Africa and Nigeria, Ghana's manufacturing sector is missing out on the opportunities for trade with China. Because of increasing Chinese business and investment with majority shareholder control, the industrial sector is being challenged by the continuous and rising import of manufactured goods (Joseph, 2015). The relationship between China and the African continent through China-Africa cooperation has ultimately received many criticisms from international observers.…”

Foreign Direct Investment Inflows in Ghana: Is There Any Political and Priority Influence in the Distribution among the Sectors and Regions of the Ghanaian Economy?

“…The political pressure from foreign investors turns to influence the allocation and distribution of FDI inflows into some sectors and regions within their economy at the expense of others. The longing for portfolio enhancement powers nations and multinational partnerships to look for new markets and grow their piece of the overall industry so as to contend on a universal scale [1]. The abundance of natural resources with the lack of capital and skilled labor in Ghana and some African nations encourages market and resource-seeking investment by well developed economies and developing countries, such as China and India.…”

“…The inflow of foreign direct investment from foreign investing nations comes in the form of loans and grants. On the other hand, these loans and assistance come with conditions attached to them, thereby raising concerns about how to refinance these loans in a profitable way without societal costs in the long run [1]. For instance, an investment with major conditions attached is the dam funding deal, where natural resources such as cocoa will be used to pay for the cost of credit [4].…”

“…FDI inflows values in Ghana and Nigeria between 2012 and 2016. Open Journal of Business and Management every campaign era the two leading political parties target a percentage share of votes in the opponent strongholds in order to enhance their chances of winning.For instance, in the Volta Region which is the NDC's fortress, the NPP is focusing on 30% of legitimate votes in favor of the 2016 decisions, while the NDC is focusing on half of substantial votes in the Eastern Region, which is generally considered as one of the NPP's fortifications1 . Infrastructural development and investment allocations are concentrated in these strongholds regions at the expense of other regions.…”