Let me repost on the beleaguered $3bn CDB loan. FIRST, the Governments attempt to chase illegal Chinese Miners out of the country is a red herring. Nothing of the sort is the reason for the delay in the loan disbursement. The Loan agreement was misunderstood by the Ghanaian government to mean a DONE DEAL- The Chinese begin their real negotiations after signing deals. A notion is taking hold in Africa that Chinese money is “easy” money. A misconception has grown regarding the rigour of credit evaluation by Chinese financial institutions of opportunities in Africa, and this is leading to confusion and disappointment in many African countries when pledged monies ultimately delay by several years. A good case in point is the $2.6 billion pledged by China Union to Liberia for the development of the Bong iron deposits. Nearly 5 years on and 2 amendments later, the Chinese partners are still scrutinising the terms of the deal, with very little actual cash having been seen in Liberia. Let us bear in mind that Chinese financial institutions are adopting global standards of credit and risk evaluation and have therefore increasingly little propensity to pump money into half-baked or unready projects. Increasingly, their expectations of quality and rigour, and in particular profitability, are as high and as tough to meet as those of any financial institution anywhere on the globe. Note that the government bundled too many unprofitable projects (such as industrial estates) with strategically important ones such as the Atuabo Gas project. Also, the Chinese get offended by bypassing rules through the use of foreign emissaries to beg for operationalising a commercial agreement with another country. The Chinese Development Bank Loan cannot be granted by begging in public as we recently did when the Chinese Foreign Minister visited. It is a commercial loan. Once again when dealing with the Chinese, you have to show a PLAN and crucially show that you can spend $1m wisely before you can get $1bn from the Chinese. Also , when dealing with the Chinese and I think just with any country, do not poke fun at them by talking to others on the same project , essentially saying that we will talk to others, you can take your money. Finally, please get the Cabinet strengthened with persons who are skilled in negotiations and can conduct cost benefit analysis. And please never again allow ill-informed members of the communication team to be spinning such important global matters in the media. They dont get loans delivered. You were advised. But lessons learnt. Please let the Finance Ministry get busy now. No begging.
Posted on: Tue, 14 Jan 2014 07:04:40 +0000
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