Structural (Re)adjustment? North-South aid and FDI in New Resource frontiers in Ghana

China’s entry into the role of aid donor in Africa has altered global southern relations on a bilateral and multilateral level, carving new leverages for south-south partnership and north-south relations as well as... [ view full abstract ]

China’s entry into the role of aid donor in Africa has altered global southern relations on a bilateral and multilateral level, carving new leverages for south-south partnership and north-south relations as well as introducing interesting implications for development finance and resource-frontierism. Using a case study of Ghana, this research uses a historical narrative analysis of the interaction between foreign aid, economic deregulation and resource-extraction to explore new channels of deregulation being created in the country’s contemporary oil and gas industry. Here, China and USA are used as the dominant analytical frames of global north-south resource-aid. The case study area is the Western region of Ghana which is the onshore hub of Ghana’s offshore Petro-chemical frontier and considered the most biodiverse region in the country. Research questions therefore centre on aid complementarity, competitiveness and compatibility into the resource-frontier. It also looks at the institutional re-adjustments to these forms of finance structures and the cumulative environmental implications that are currently emerging. The methodology involves document analysis, key expert interview analysis and aid-data analysis.
Findings show that the US shows a more dispersed technical assistance aid programme manifested in significant parts of Ghana’s oil production chain (e.g. entailing projects on port operations, gasification and power transmission projects). China however is a bit-part downstream investor with substantial project-led aid especially on infrastructure projects. Crucially, the complementarity between Chinese project-led aid and US programme-led aid directed to Ghana’s Petro-chemical sector takes on a more competitive form when analysed in its broader “gateway effects” to these donors’ foreign investment intentions. The research also argues that a newer form of deregulatory (“re-adjustment”) is emerging through this new Petro-chemical frontier in Ghana, this re-adjustment entailis (i) demonopolized foreign aid sources, (ii) loans based on conditions of access to resources and (iii) the upsurge in high-risk, high reward investments whereby transnational firms are increasingly granted licenses to explore for oil and gas both on land and sea.
Lastly, the paper explores the inherent contradictions between foreign aid simultaneously directed towards mineral extraction, poverty-reduction and environmental protection. This last point exposes the weakened and passive role of the state in tackling (especially) the currently unravelling cumulative environment effects. Such effects linked to the extant resource-deregulation policies shows that attempts at poverty-reduction and environmental mitigation programmes are often initiated via these same aid sources. The implications of such government weaknesses and contradictions will only intensify with the increasing and enlarged ‘aid market-place’ that has emerged.