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ACEP Cautions Govt to be Wary of Chinese Lending Strategy and Stringent Conditions in their Loan Agreements

EFO MAWUGBE by EFO MAWUGBE
March 12, 2025
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ACEP Cautions Govt to be Wary of Chinese Lending Strategy and Stringent Conditions in their Loan Agreements
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Africa Centre for Energy Policy (ACEP) has cautioned government to be mindful of some stringent conditional clauses in Chinese Loans Agreements which often make it difficult for countries to service the loans.

A Policy Analyst at ACEP, Mr. Mohammed Saani Osman made this revelations at a Media Training on Chinese Lending Strategy and Ghana’s Debt Sustainability held in Accra on Wednesday.

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Policy Analyst at ACEP, Mr. Mohammed Saani Osman

According to the Policy Analyst, their research findings revealed that Ghana ranks 10th on the list of African countries benefiting from Chinese lending with over $4billion between 2011 and 2022.

He added that 54 loan agreements were identified to have taken place from 2000 and 2022 between Ghana and China valued at $5.4billion with the energy sector, emerging as the primary beneficiary receiving $2.3 billion.

According to him, the Studied samples identified some of the characteristics of Chinese Lending including far-reaching confidentiality clauses, little or no disclosure concerning the size, scope and terms.

The rest are Resource-back(mortgaging Ghana’s oil and gas receipts for the repayment of the US$3billion Master Facilities) and Mortgaging Ghana’s bauxite deposits for the repayment of Sino hydro deal and a mandatory preference of 60% of Chinese Contractors.

Mr. Osman explains that, in view of the aforementioned, coupled with the fact that lending strategy often has impacts on wider economy, there was therefore the urgent need for government to always make analysis of long term gains so as to ensure sustainable lending.

“If we dont change the Chinese loans it will have dire consequences on us a country”, Mr. Osman emphasized.

He revealed that Ghana risks of ownership of its natural resources , long term debt sustainability, limited knowledge, skills and technology transfer and wider economic Impact.

The Policy Analyst however stressed that Chinese loans have played significant role in Ghana’s development trajectory contributing to both social and economic advancement.

ACEP, as part of its recommendations, is therefore cautioning government to renegotiate better terms supported by cost benefit analysis of loan agreements.

“Government should prioritize medium to longterm benefits of engaging with China or other bilateral partners”, Mr. Saani stressed.

He also advised Government to adopt a. Lending strategy on how to contract loans while ensuring long term debt sustainability.

Policy Lead at ACEP, Mr. Kojo Yaotse

Earlier, the Policy Lead at ACEP, Mr. Kojo Yaotse called on the media to develop more interest and oversight on government lending to ensure that a long-term benefits are prioritized over a short term political gains.

He said rallying the media around the subject to build their capacity is the objective of the training.

Source: Senaradioonline.com

Tags: ACEPChinese lending strategyConditional clausesDebt sustainabilityhigh interest rateReource-backed

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