China Eximbank provides EUR 140.8 million buyer's credit loan for Ghana Rural Telephony and Digital Inclusion Project

China Eximbank provides EUR 140.8 million buyer's credit loan for Ghana Rural Telephony and Digital Inclusion Project On May 13, 2020, China Eximbank and the Government of Ghana signed an EUR 140,814,285.10 ($154,670,410.75) buyer's credit loan agreement [ID#1420313022020211419] for the Ghana Rural Telephony and Digital Inclusion Project.

The loan carried a 2.5989% interest rate.

However, it is known that the borrower is expected to use the proceeds of the loan to finance a commercial contract with Huawei Technologies Co., Ltd. and China National Technical Import and Export Corporation (CNTIC). It is also known that the borrower purchased a buyer’s credit insurance policy from Sinosure.

As of May 2022, the EUR 140,814,285.10 loan achieved a 60.2% disbursement rate, with China Eximbank making 10 loan disbursements (worth EUR 84,788,048.33) between 2021 and 2022: an EUR 9,064,285.10 disbursement to pay for 85% of the cost of a Sinosure insurance premium on September 15, 2021, an EUR 15,54,699.35 disbursement to make a payment to Huawei on September 29, 2021, an EUR 9,807,363.98 disbursement to make a payment to CNTIC on October 29, 2021, a EUR 23,351,064.63 disbursement to make a payment to Huawei on November 26, 2021, an EUR 5,142,798.41 disbursement to make a payment to CNTIC on December 1, 2021, an EUR 4,316,846.90 disbursement to make a payment to Huawei on January 5, 2022, an EUR 1,213,646.40 disbursement to make a payment to CNTIC on January 5, 2022, an EUR 5,990,156.35 disbursement to make a payment to Huawei on April 15, 2022, and an EUR 10,647,187.21 disbursement to make a payment to CNTIC on April 18, 2022.

As of April 18, 2022, the loan’s total amount outstanding (including principal and capitalized interest) was EUR 84,788,048.33.

As part of the Ghana Digital Acceleration Project (GDAP), the purpose of the project is to improve the overall quality of mobile communication networks by building wireless mobile networks in rural area.

It involves the provision of telecommunication infrastructure to towns and communities where Mobile Network Operators (MNOs) do not operate and deploy more than 2,016 telecom sites in 172 rural areas.

Huawei Technologies Co., Ltd. will deploy its ‘Rural Star’ solution to deliver voice and data services in remote communities.

These services are expected to reach over 3.4 million rural residents, increasing Ghana’s national coverage rate for voice and data access services from 83% to 95%.

The ‘Rural Star’ solution, which uses Relay Remote Node (RRN) wireless backhaul, is powered by solar energy and can be installed on a simple pole, making it around 50% cheaper to deploy than the microwave or satellite transmission typically used for rural connectivity. Once the rollout is complete, it is expected that mobile operators will be able to lease the network.

The head of Ghana Investment Fund for Electronic Communications (GIFEC), Abraham Kofi Asante, has said that '[p]artnering with Huawei on this project…will ensure that all persons in Ghana are part of government’s digitization agenda, and improve the socio-economic wellbeing of people living in Rural Ghana.' Communications Minister Ursula Owusu-Ekuful has also noted that '[w]e selected Huawei as a partner in this rural network project as we have seen Huawei’s unremitting efforts in bridging the digital divide.' On November 4, 2020, the first site was successfully launched by the President of the Republic of Ghana, His Excellency Nana Addo Dankwa Akufo-Addo at Atwereboana, a rural community located in the New Edubiase District of the Ashanti Region.

The project was originally slated for completion in September 2021; however, it encountered a number of implementation delays.

In 2021, a total of 506 towers and 2 network operation centers were put into operation in Accra and Kumasi, providing 800 communities with broadband infrastructure.

By early 2024, the project had reached 1,010 rural telephony sites with voice and data services to ensure reliable, affordable, and secure broadband infrastructure provision. At a February 2024 press conference, Ghana's Communications Minister, Mrs.

Ursula Owusu-Ekuful, said that 618 out of the 1,010 sites were operational, offering essential voice and data services to citizens in approximately 1,620 rural communities. She also said that project presented up to a 70 per cent cost reduction, as compared to traditional masts.

Additionally, she emphasized that the project had facilitated remote learning, digital financial inclusion through mobile banking and mobile money, access to market information for farmers, and SME development by helping small businesses reach customers due to the availability of mobile internet in small communities.

Prior to project implementation, Mrs.

Ursula Owusu-Ekuful said that basic healthcare delivery and education, among other critical services, presented a challenge, as health workers and teachers were reluctant to accept postings to certain communities due to the lack of connectivity.

There are some indications that the China Eximbank loan for the Ghana Rural Telephony and Digital Inclusion Project may be financially underperforming vis-a-vis the original expectations of the lender.

According to the World Bank’s International Development Statistics, the Government of Ghana had accumulated principal and interest arrears to one or more official sector Chinese creditors worth $908,337,346.70) in 2020 ($763,228,526.60 in principal arrears and $145,108,820.10 in interest arrears).

There are some indications that the China Eximbank loan for Phase 1 of the Kpong Water Expansion Supply Project may have financially underperformed vis-a-vis the original expectations of the lender.

According to the World Bank’s International Development Statistics, the Government of Ghana had accumulated principal and interest arrears to one or more official sector Chinese creditors worth $908,337,346.70) in 2020 ($763,228,526.60 in principal arrears and $145,108,820.10 in interest arrears).

Then, on December 19, 2022, the Government of Ghana announced a sovereign default, suspending debt service on its Eurobonds, its commercial loans, and most of its bilateral loans.

The Government of Ghana suspended debt service to China Eximbank for the Ghana Rural Telephony and Digital Inclusion Project in 2023.