Ghana offers more than a little of gold

Africa can offer rich pickings for Chinese investors in several sectors, says top official of ruling party

Chinese enterprises have a big role to play in Ghana's economic development, says Johnson Asiedu Nketia, general secretary of the National Democratic Congress, the ruling party in Ghana.

Nketia, who led a high-powered delegation from Ghana to China last month in a bid to attract more investment from Chinese companies, says there are several close parallels between the two countries. He cites the similar market economy steps taken by the two countries in the 1980s, but admits that Ghana has started to realize its potential only recently.

The China-Africa Business Council, an organization dedicated to promoting business ties between the two sides, organized Nketia's visit to China. The council is also the first international NGO that has been approved by the Chinese government and has more than 500 members, including state companies and private enterprises.

Currently, most of the Chinese businesses in Ghana are centered on the energy, infrastructure and logistics industries.

Shenzhen Energy Corporation, a state-owned company based in Shenzhen, Guangdong province, has been one of the pioneers in Ghana's power supply industry. During the past six years, the company has invested more than $200 million in setting up a power plant that accounts for one-sixth of the power generated in Ghana.

Hanergy Holding Group, another Chinese company, has also made considerable advances with solar power in Ghana, where it is setting up a 4 million kilowatt solar power plant.

Nketia admits attracting more foreign investment in the power sector is the top priority for the Ghana government. "Ghana is still a power-deficient country. Power demand, however, is growing steadily due to the rapid rise in population and industries," he says.

Outlining the advantages of investing in the Ghanian power sector, Nketia says that foreign investors can invest in this sector directly without having to form joint ventures with local companies. "All that the investors need to do is to reach an agreement with the government's public affairs management committee on the price of the power they will generate," he says.

"We are ready to buy power generated from coal, wind, or solar," Nketia says, adding that the government has an open mind on power generation.

Ghana is also a key member of the Economic Community of West African States, and this could be of immense benefit to Chinese investors, Nketia says. "Companies investing in the power sector can also use the ECWAS platform to sell excess power to neighboring African countries."

Another industry that urgently needs foreign capital in Ghana is the mineral and natural resources sector, Nketia says: "Ghana is rich in bauxite and iron ore. We hope that we can build a complete industry chain in mining and deep processing sectors. At the same time, we also welcome investment in the oil and gas sectors. Most of our efforts are aimed at having upstream and downstream industries in the country."

Ghana also has rich investment options in agriculture. Nketia says that though cocoa is one of Ghana's major exports, only 30 percent of the output is processed locally. "Apart from processing factories, there also opportunities for packing companies as Ghana needs lots of bags to store cocoa."

Agriculture investments can also flow into related sectors such as aquaculture, with the Volta Lake, Africa's largest artificial lake, offering rich pickings. Some Chinese companies are already raising the tilapia variety of fish in Ghana, he says.

Ghana's neighbor, the Togolese Republic, is deficient in water resources and relies mostly on Ghana for supplies. The Ghanaian government is thinking of setting up direct mechanisms to transport water between the two countries and this is another sector that has immense investment options for Chinese companies.

Ghana also needs considerable foreign investment to bridge the housing gap in the country. "The estimated shortage in the housing sector is around 1 million homes," Nketia says, adding that in Accra, the capital, people are willing to pay a premium for housing that is still under construction. Cement is another sector where Chinese companies can make a huge difference, as the 30 cement plants in Ghana cannot cope with the rising demand.

Zheng Yuewen, chairman of the China-Africa Business Council, says most of the council members are keen on investing in Ghana.

"The China-Africa Business Council plans to establish a special platform to connect Chinese and Ghanaian companies," Zheng says.

The council also plans to sponsor students and businessmen from Ghana to go to China for studies or advanced training.

"Companies will also use Premier Li Keqiang's six key investment areas as guidelines to direct future business activities, so that we can have an upgraded version of China-Africa cooperation," Zheng says.

According to Zheng, China has already become an industrial powerhouse, and the current industry upgrade will bring enormous opportunities to Ghana. "We would like to facilitate talks between Chinese and Ghanaian enterprises so that we can understand more clearly the sectors that are likely to get the red carpet treatment in Ghana."

The China-Africa Development Fund has already invested more than $3 billion in Africa. Noting that Ghana's economy has just started to take off, Nketia says the government is trying to attract more foreign investors through steps like tax incentives and setting up a one-stop investment center, that allows foreign investors to repatriate their earnings easily.

"If there are problems in some corner of Africa, we find that most investors want to withdraw from Africa. We agree that no investment can happen especially if there is an atmosphere of war and crime along with an insecure political environment. We want to reassure investors that they can live and invest in Ghana without any fear and that Ghana is an oasis of peace and development in Africa," Nketia says.

Business relations between China and Ghana have progressed smoothly, but for some occasional blips like the arrest of some Chinese people for illegal gold panning last year.

Zhou Zhenguo, head of the African affairs office, at the Beijing-based King & Capital law firm, says African people have a strong sense of laws and labor rights, and most of the former colonies have inherited relatively complete legal systems from Western countries.

"Labor relations and environmental protection are very sensitive issues in Africa, but many private enterprises that go to Africa do not pay enough attention to them," Zhou says, adding that the gold mining incidents in Ghana had a lot to do with Chinese enterprises that ignore local laws.

But Zhou says the bigger part of China-Ghana relations is quite bright. Chinese investors have unique advantages over Western counterparts such as good bilateral relations, no colonial history, and providing financial support from China Export-Import Bank and China Development Bank.

wangchao@chinadaily.com.cn

(China Daily Africa Weekly 05/23/2014 page22)