In a statement released in Accra, he said that had been a common practice among most resource-rich nations – pursuing dual investment strategies regarding natural resource revenue.      

These are “spend as you go” (SAYG) and delinked investment.

"In the Chamber’s view, the government appears to be pursuing a conflation of the two models in order to bridge the estimated US$30 billion infrastructural gap in the country with the US$2 billion barter agreement with SinoHydro Group Limited of China for Ghana’s refined bauxite.”

He said that was commendable for a natural resource-endowed country.

The Chamber, however, he said was seeing a tilt towards “SAYG” and admonished the government to be mindful of the impact of aluminium price volatility on any infrastructure spending that was frontloaded.

“We suggest that through broader and objective consultation with stakeholders, the country can structure a more beneficial management of the natural resources via: Concession; Construction; and Off-takers’ (CCOs) rights arrangement.”

The statement said the barter arrangement, as mentioned in the mid-year budget review, known in international financing circles as Resource for Infrastructure (RfI), was introduced into Africa by the Britain, France, and The Netherlands in the late 1990s as a resource collateral arrangement in a more mutual fashion and was later taken on by China with conditions more favourable to them.

The Chamber therefore wanted a broader stakeholder consultation on the barter agreement that would place the country in a position to prevent the situation of a greater portion of the liquidity exiting back to China.

“The barter arrangement will likely result in infrastructure capital equivalent to roughly four per cent of Ghana’s Gross Domestic Product (GDP) and in this regard, concerted efforts are required to address liquidity cycle and spill-over, and the liquidity dynamics of this inflow and its ability to trigger non-natural resource-based capital growth.”

“This entails strategic management of the fiscal mirrors with aluminium pricing; infrastructure, industry and project planning; procurement planning to improve procurement practices and processes; improvement in education to address labour and skills’ gaps; and improving the legal regime for off-taker purchasing agreements.”

The statement noted that the RfI model of financing had been pursued by China in Africa since 2004 with several beneficiary countries, including Angola (US$4.5bn, Oil), Sudan (US$1.3bn, Oil), Nigeria a (US$12bn, Oil), DRC (US$9bn, Cobalt, Diamond, Copper), Gabon (US$3bn, Iron Ore), Zimbabwe (US$700m), Tanzania (US$400m), Mozambique (US$300m), and Ghana (US$3bn, Oil), which was later truncated.

The Chamber said these deals were seen as too favourable for China, and that led several of these countries to complain, causing an abrupt suspension of the model in 2012.  The Chamber said reasons for the complaints included pushy disagreements, traditional donor pressure, poor or non-existent regulatory framework, and poor sourcing relations.

“The impact of the RfI approach has also not been very encouraging for these economies in terms of real economic impact, non-resource capital increase and other investment spill-over.”

The Chamber therefore called for government to ensure that the appropriate due diligence was made to ensure that the barter process, now and in the future, created more non-resource capital upsurge via proper local content management and skills update.