A Comparative Analysis of the Financial Strategies and Development Impacts of Chinese and US Energy Investments in Ghana Open Access
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The US and China are competing in Africa for investment opportunities, particularly in the energy sector, as African countries seek investment from both countries to drive infrastructure development. This can be seen in projects such as the Chinese-backed Bui Dam hydroelectric project and the US-backed Power Africa Amandi Power Plant in Ghana. Chinese financial strategy in the region is significantly different from US financial strategy: while the US tends to create energy investment partnerships through private sector initiatives and grant funding, China tends to leave energy investments in the hands of its state and semi-state enterprises and channel funding to them through the Belt and Road Initiative. Although both countries create partnerships with Ghana on the premise of promoting economic development through energy access and subsequently economic growth, the outcomes for both countries' projects are ambiguous. Using a mixed-methods approach, I utilized data from AidData to analyze the impact of China and US energy investments on energy access and job creation in Ghana. Time series quantitative data on energy investment projects sourced from AidData and Power Africa was used to determine whether US and Chinese energy investments improved energy access and distribution. Then, I travelled to Accra to conduct semi-structured interviews with project officials from the Bui Dam project and the Amandi Power project as well as government officials and environmental NGO officials. In this research, I discovered that Chinese energy investments are often better or equal to US energy investments in terms of improving energy access in Ghana and reducing energy costs, but do not surpass US energy investment in terms of creating employment opportunities, encouraging technology transfers, or mitigating environmental damages. Additionally, the negotiation process for Chinese energy investments is much quicker than US energy investments, but compliance with environmental and labor regulations is much lower. The Chinese energy investment model is loan based, while the US energy investment model is donor based.