“It is estimated that Africa holds 40% of the world’s hydro-electric power supply potential, the bulk of the world’s diamonds and chromium, 30% of uranium, 50% of the world’s gold, 90% of its phosphates, 40% of its platinum, 7.5% of its coal, 8% of its known petroleum reserves, 12% of its natural gas, 3% of its iron ore, 64% of world’s manganese, 13% of its copper and much of its bauxite, nickel, and lead deposits.
It abounds also in such strategic and rare minerals as cobalt, critical in the manufacturing of jet engines, rhodium, palladium, vanadium, and titanium.
Africa supplies about 70% of the world’s cocoa, 60% of coffee, 50% of palm oil, 20% of the total petroleum traded in the world market (excluding the US and the former USSR).
Perhaps no other continent is blessed with such abundance and diversity. And yet Africa’s share of global trade is a mere 2%,” According to George B.N Ayittey.
However, Ghana is blessed with the world’s third-largest reserves of bauxite, the raw material for aluminium, which the government says it is keen to reap the benefits by engaging in forward deal with the Sinohydro of China.
The Akufo-Addo Government decided to enter into a barter agreement with the Chinese Government by securing US$2 billion in exchange for Ghana’s bauxite
lying beneath the Atiwa forest in the Eastern region. Dubbed the Infrastructure for Bauxite barter agreement, Ghana is to receive US$2 billion while using bauxite/alumina/aluminium to pay for the amount received.
But according to the Institute for Liberty and Policy Innovation (ILAPI), a policy think tank, there is nothing like barter in this deal. “What’s the barter here? Barter is a Trading in which goods or services are exchanged without the use of CASH/MONEY. Barter is often Voluntary and individualistic.”
ILAPI emphasized that, “Resource Backed Loan is all about using the natural-resources (Raw or Refined) as collateral to access sources of finance for investment, countervailing the barriers they face when accessing conventional bank lending and capital markets.
The Bauxite belongs to everybody and not to only the government. Government is a caretaker and can’t go into a Barter Trade with it.”
The policy think tank however strongly believes that, Using Commodity-Backed Securities to Support the Future of Ghana’s economy is never a Barter Trade.
Noting that, “China is Giving out cash and Ghana is giving out Bauxite (Natural Resource). Do you call this Barter? There’s is cash in exchange and that, such a transaction loses the characteristic of Barter Trading.”
Written By: Peter Bismark Kwofie
Founding President, ILAPI
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