Masaryk university faculty of social studies
Finance and Banking Sector
Download 289.25 Kb.
|
- Navigate this page:
- 5.5.1 Analysis of Finance and Banking Sector
- 5. 6 Political Relations
- 5.6.1 Analysis of Political Relations
5.5 Finance and Banking SectorSince the establishment of the national policy banks5 in 1994 and of commercial banks, the Chinese financial engagements in Africa have become more prominent. Chinese banking institutions facilitate easier access by Chinese companies to African resources, markets and technologies (Meyer et al. 2011, 13). China Exim Bank provided $562 million loan facility for construction of Bui Dam in 2007 and offered additional $168 million loan for Bui Dam in 2011. Furthermore, the bank signed a $30 million loan for Dedicated Communications Project for Security Agencies in 2007, signed seven agreements with the Ghanaian government in 2008 and provided a $10.4 billion agreement in 2010 and in 2011 (Tsikata et al. 2008, 24; Idun-Arkhurst 2008, 7; ACET 2009, 19; CCS 2011f, 12). The CDB provided a $3 billion loan agreement in 2010 and $400 million for Kpong Water Project and an additional $1 billion loan on the development of gas and oil infrastructure in 2012 (CCS 2010e, 13; China Analyst 2012, 33) The role of China Exim Bank and CDB in Ghana is growing. The Ghanaian banking sector is attractive for Chinese institutions due to its non-competitiveness (Biekpe 2011, 77-85). In 2010, Ecobank Transnational and Bank of China (BOC) agreed to establish an office in Ghana for Chinese customers (CCS 2010a, 15). In 2011, a new office of the CADFund was established in Accra (CCS 2011e, 18). In 2010, Ecobank Ghana and BOC signed an agreement aimed at the facilitation of international trade projects and the promotion of investments between Africa and China. Stanbic Bank Ghana and Industrial & Commercial Bank of China signed two agreements in 2011. The agreements enable Stanbic to trade with Chinese Yuan within the Ghanaian business community (CCS 2010d, 21). 5.5.1 Analysis of Finance and Banking SectorThe Ghanaian currency dropped by 10% against United States dollar (USD) in 2012. Main causes for depreciation are the increased demand for foreign imports, diminishing exports to EU and Ghana’s rapid growth. China-Ghana trade, which is not based on banking transactions but on cash exchange, puts a strong pressure on the currency (ARB 2012, 19520-1). Nkrumah (1965, chap. 18) presumed that neo-colonial powers could establish foreign exchange rates. In this respect, the growing Ghanaian demand for Chinese commodities, the China-Ghana trade deficit and the growing indebtedness indicate that China has a considerable influence on the Ghanaian currency. No evidence shows that China directly controls Ghanaian banking system. In the 1960s, Ghana established its own banks and created its own currency (Ghanaian cedi) which was tied to pound sterling and later to USD. From 1986, Ghanaian cedi has been independent without any ties. Ghanaian financial institutions are independent and handle majority of the monetary reserves. The banking system is stable and regulatory (Meyer 2011, 16; Haag 2011, 30). China neither establishes a currency zone, nor consults Ghana on any financial decisions. The Chinese government claims to provide unconditional aid. Nevertheless, as Ling (2010, 7) asserts China imposes the condition to regulate the modes of implementation. In some way, the Chinese government is responsible for financial planning of the projects, however China does not in any way control Ghanaian financial sector. Haag (2011, 10) points out that one of the mechanisms of neo-colonialism is the control of capital through fixing of exchange rates. The bilateral agreement commits the two countries to transfer investment capital according to the official exchange rate set by Central Banks of both countries (UNCTAD 1989). Investment of China Exim Bank and CDB is beneficial to the Ghanaian economy. ‘Ghana has gained funding for key infrastructure improvements and the potential for economic transformation’ (ACET 2009, 24). Chinese commercial banks contribute to the competitiveness of Ghanaian banking sector and also provide credits for mutual trade. However, due to the increased trade the currency is under pressure and results in the rise of Ghanaian national debt (ARB 2012, 19521). 5. 6 Political RelationsGhana was the first Sub-Saharan country to become independent of the colonial rule and sets an example for other African countries in terms of stable democracy, good governance and respect for human rights. Since its democratic transformation in 1992, Ghana has launched a successful period of growth and stability. Ghana has been commended for democratic achievements by the UN, WB and the International Institute for Justice and Development (Sithole 2012, 1-4). Since 1992, the presidential and parliamentary elections in Ghana have been democratic and peaceful in nature. However, a few cases of post-election violence appeared in 2000, 2004 and 2007. No evidence suggests though that China would support the violence, political coups or revolutions. Between 2000 and 2008, there were no reported cases of fraud during the elections. In 2000 and 2004 John Kufuor won the presidential elections and in 2008 was replaced by John Atta Mills. Due to his sudden death in July 2012 John Dramani Mahama was elected (Sithole 2012, 4-5). The role of Ghanaian collaboration with China, the Chinese $3 billion loan facility and Chinese illegal activities became important debate topics between the candidates for presidency in 2012 (Alves 2013, 12; Bodomo 2012). The opposition accused government of receiving a financial support from Huawei Technologies, which had previously been granted $43 million tax relief on the $150 million e-government project. The Alliance for Accountable Governance revealed Huawei’s sponsorship of the National Democratic Congress party, which received $138,000 for promotional materials depicting John Dramani Mahama. Huawei Technologies was further accused of financing private trips to China for party officials (Dowuona 2012; Bodomo 2012). Financing government in order to receive favourable treatment and installation of administration are neo-colonial mechanisms (Nkrumah 1965, chap. 18, Ardant 1965, 850). The most significant diplomatic exchanges include the visit of Ghanaian president Kufuor to China in 2002 and Chinese President Jintao to Ghana in 2003 (Fernando 2007, 370-3). The visit of Chinese Premier Wen Jiabao to Ghana in 2006 was concluded by the release of Joint Communiqué, signing of six agreements and the $66 million loan agreement (Idun-Arkhurst 2008, 4). The areas of political and diplomatic cooperation were set in the 2006 Beijing Summit where Ghana promised to adhere to the ‘One-China Policy’ (Tsikata et al. 2008, 5). John Dramani Mahama re-emphasized Ghana’s commitment to recognise China in the UN. In exchange China supports Ghana in the UN, WTO and other international organizations. China also promotes the role of African Union (AU) and New Partnership for Africa’s Development (CCS 2008c, 15). 5.6.1 Analysis of Political RelationsA vital neo-colonial mechanism is the appointment of civil servants to decision-making positions (Nkrumah 1965, 1). None of the researches (ACET 2008; Idun-Arkhurst 2008; Tsikata et. al. 2008) support such situation though. China has not engaged in direct policy-making neither consulted Ghana on any of its internal issues. However, the corruption and bribery of public servants have appeared. In 2010, 40 Chinese illegal miners working in the Central Region of Ghana were arrested by GIS and an unsuccessful attempt to bribe the GIS officials during the investigation process was also reported (Odoi-Larbi 2010). Ghana ranks 64 out of 176 countries in the Corruption Perceptions Index reported by Transparency International in 2012 (0 – least corrupted, 176 - most corrupted). The public sector scores 45 out of 100 (0 – most corrupted, 100 least corrupted). In 2012, the police was perceived as the most corrupted institution, closely followed by political parties, judiciary and parliament (TI 2012a). China ranks 80 out of 176 countries in the Corruption Perceptions Index. The public sector scores 39 out of 100. In 2012, business and private sector were perceived the most corrupted, followed by political parties, parliament, police and public officials (TI 2012b). According to the 2011 Bribe Payers Index, China is placed 27th out of 28 world’s largest economies with only Russia behind (GAO 2013, 8). Given that a large percentage of the bribery in Ghana is petty, it is hard to find out about such cases. The criticism of Western media and their monopoly on creating opinions and images about China, emphasized during the 2008 Olympic Games, made China realize the importance of media. The state-owned Xinhua News Agency started offering services in several international languages, as well as China Central Television and China Radio International. The China’s African Policy indicates the importance of media cooperation. The 2006 Beijing Action Plan aims at promoting exchanges of media personnel and cooperation in media coverage. The Action Plan drafted in FOCAC 2009, seeks to deepen mutual cooperation and engagement of Chinese ICT companies in Africa (Wu 2012, 10-3). Ghana’s media sector is very liberal and independent of government control. Ghana has 144 radio stations and 52 print publications. The state-owned media are under scrutiny of the National Media Commission which ensures their independence from government control (Sithole 2012, 2). In spite of the liberalisation, Ghanaian media are susceptible to political and ideological influence (Gagliardone et al. 2012, 181). Ghanaian Business News (2010) reported that Chinese ambassador to Ghana Gong Jianzhong complimented Ghanaian media on portraying China-Ghana relations positively. The Chinese media also tend to stress the positive outcomes of China-Africa cooperation and avoid controversial topics (Wu 2012, 19). Unlike proactive Western media, Chinese media do not have a consistent strategy in Ghana. Moreover, only a very limited number of Chinese channels (China Central Television, China Radio International, China Xinhua News) are broadcasted in Ghana and in general attract small auditorium (Gagliardone et al. 2012, 188; Modern Ghana 2013). Nkrumah (1965, chap. 18) suggested that monopolistic press represented a neo-colonial domination. In case of Ghana however, the influence of Chinese media is limited. China benefits from Ghanaian recognition in the UN. Consequently, China backs the Ghanaian position on issues such as trade barriers, farm subsidies, debt relief and representation in the international organisations (Konigs 2007, 361). Cooperation on achieving the MDGs and frequent visits of high officials are also advantageous for Ghana. The corruption is Ghana’s weak point, as certain Chinese corporations engage in bribery of government and public officials (Bodomo 2012; Idun-Arkhurst 2008, 21). The Chinese media are not influential and their popularity is limited (Gagliardone et al. 2012, 188). Download 289.25 Kb. Share with your friends:
|