China in Ghana: Easing the Shift from Aid Dependency to Oil Economy?

The author examines recent changes in the Ghanaian aid and investment landscape as China has stepped up its relations with this donor ‘darling’. Recent oil discoveries further transform the financing scenarios and more established donors are concerned about the riskiness of this. These tensions reveal wider differences in approaches to development and the desires of many African governments which could herald big changes in the ethos and practice of development.

These are interesting times for Ghana. The country is a long-standing donor ‘success’, transitioned smoothly to democracy, and the economy has been performing reasonably well. Recently the Chinese have stepped up diplomatic relations, largely through aid, as they have with many African countries that serve their geopolitical and economic ends. But with the discovery of oil things have changed quickly. The Chinese and other Asian investors are seeking deals backed by oil revenues which could see Ghana moving away from being aid dependent. Moreover the ‘established’ donors of the OECD are worried about Ghana’s turn to these seemingly riskier and un-transparent forms of finance which they see as destabilising hard won efforts at donor harmonisation. Yet the Ghana story suggest deeper tensions between approaches to development –one centred on ‘softer’ institutional agendas and the other on ‘harder’ economic ones of infrastructure and growth–. The Chinese approach favours the latter, which is also something African governments are keen to pursue, so the changing aid and investment landscape may presage major changes in the ethos and direction of African development.