BY DAWALOLA SHONIBARE, EMILY LARKIN, HAYDEN HUBBARD, AND QIANRONG DING
Dawalola Shonibare, Emily Larkin, Hayden Hubbard, and Qianrong Ding are recently-graduated SAIS IDEV students, who supported both The Transnational Environmental Accountability (TEA) and China Africa Research Initiative (CARI) in carrying out extensive research. The focus of their research was on how to combat environmental, economic and legal challenges stemming from natural resource agreements signed by both Guinea and Ghana with China.
The SAIS International Development (IDEV) Practicum allows students to work directly with public, private, and non-governmental organizations as a capstone to their graduate studies. The 2021 IDEV Practicum Blog is a seven-part series that chronicles the virtual travels of IDEV students who take on client projects.
While Chinese resource-for-infrastructure deals have become less common in recent years, Guinea and Ghana both signed multi-billion dollar agreements related to bauxite mining between 2017 and 2018. The Transnational Environmental Accountability (TEA)/China Africa Research Initiative (CARI) practicum team conducted desk research and 25 interviews to investigate governance surrounding these agreements in each country. For our final deliverable, we provided a comparative analysis of the governance issues facing Guinea and Ghana with a focus on the environmental, economic and legal challenges stemming from the agreements.
A resource-for-infrastructure agreement is a contract in which one country provides a line of credit in exchange for access to the other country’s natural resources. The loan is designated for infrastructure investments by the resource-endowed country, who repays the loan using revenues, such as taxes or partial ownership in extraction consortiums, from to the natural resource extraction process. Governments in most natural resource-rich countries welcome such agreements for the much-needed investment they provide. However, the agreements often face governance challenges and stakeholders within these countries generally hold differing opinion from the government on these agreements .
Transparency is one of the foremost problems in resource-for-infrastructure deals, as our interviews made clear that the concept of transparency varies significantly across various stakeholders and countries. However, a broad range of experts and organizations in both Guinea and Ghana have criticized the lack of transparency surrounding these particular agreements. In Guinea, the resource-for-infrastructure framework agreement has not been made public, and in Ghana the government has actively shrouded details as to the precise location and amount of mining that will be taking place.
In both Guinea and Ghana, recent bauxite mining investments have also experienced a lack regulatory enforcement by government bodies, raising serious social and environmental concerns. Ghana’s new bauxite project linked to the agreement was fast-tracked through the environmental compliance processes, even though the project is slated to break ground in a protected and highly biodiverse region of the Atewa Forest Reserve. In Guinea, many interviewees stated the government both lacks capacity to effectively monitor compliance with its regulations and often gives firms compliance exceptions.
Where Guinea and Ghana differ most significantly is in both the size and impact of the resource-for-infrastructure agreements. While Ghana signed a $2 billion agreement with China, Guinea signed a $20 billion agreement despite having a much smaller and less-diversified economy than Ghana. Guinea’s economy is highly reliant on natural resource exports and on Chinese investment for growth, which puts the country at risk for defaulting on its loans. This risk creates a power dynamic that adversely effects Guinea’s ability to compel China to follow environmental regulations in-country.
Our proposed recommendations to help improve governance in both Guinea and Ghana revolved around improving transparency and feedback mechanisms. In Ghana, we argued that the government should be forthcoming regarding the details of the proposed Atewa Forest bauxite project so it can be fairly debated in court. In Guinea, we highlighted Chinese dependance on Guinean bauxite and recommended that better feedback mechanisms be established such that the Guinean government should report regulatory violations by Chinese firms to Chinese financers. In turn, Chinese financers would then hold these firms accountable in order to maintain its access to Guinean bauxite.
PHOTO CREDIT: Uncle Kick-Kick, licensed under CC BY-SA 2.0