An Analysis and Assessment of China's Investment in Ghana.

Abstract

There is now a general belief that China, as a nation, contributes to the development of the economy of many African countries including Ghana. Due to this, many African countries including Ghana have been doing all that they can to create economic-friendly environments to attract more investments from China. China has been investing in the various sectors of the economy of Ghana. Hence, this study analyzed and assessed the investment of China in Ghana. Employing the explanatory research design, major sectors of the economy of Ghana and major projects of the country financed by China in Ghana were purposively selected. Major data were collected from Ghana Investment Promotion Center (GNPC) relating to the Chinese investments on the economy of Ghana in 2017 and 2018.Analysis for the data collected was done using tables in order to explain the relationships between Chinese investments and their impacts on the development of Ghana. It was found that Chinese companies have been engaging in Greenfield investment where these companies were directly set up and financed by these Chinese. Few of these Chinese engaged in transfer of existing assets from local firms to their firms which can be termed as mergers and acquisitions. It was also found that China has been investing in Ghana as a result of market size, trade openness, infrastructures and availability of natural resources. It was further found that the main sectors of the economy of Ghana benefitting from the various investments and number of projects by China included manufacturing, general trade, export trade, service, agriculture, liaison, building and construction. It was again found that reduction in the unemployment rate, improvement in infrastructures and having access to several Chinese goods and services at cheaper prices are all positive impacts resulted from investments of China in Ghana. However, it was found that company practices and policies leading to dissatisfaction in several communities who perceived that companies set up by China are not adding enough to strengthen the economy of Ghana and the low demand for locally manufactured goods are major negative impacts resulting from investments of China in Ghana. The study concluded that that there will always be an impact (positive and negative) in terms of the various investments made by China in Ghana. It was also concluded that China will continue to be an integral part with regards to the development of the sectors of the economy of Ghana because more Chinese firms will continued to be established in Ghana. The Government of Ghana is encouraged to create the enabling economic environment and produce favorable economic indicators to attract many Chinese investors. Governments’ role in supporting the local firms should also be deepened.