Declining relations between Ghana and the US Exim Bank.

M. Mbems, Accra, Ghana
November 11, 2024

In January 2021, Export-Import Bank of the United States (US Exim) President and chairperson Kimberly A. Reed met via teleconference with Ghana Minister of Finance Kenneth Ofori-Atta. According to a public statement from US Exim Bank, Chairperson Reed, and Minister Ofori-Atta discussed the important bilateral relationship between the United States and Ghana and potential water projects Ghana.

On October, 31st 2023, the new president and chair of the Board of Directors of US Exim, Reta Jo Lewis, paid a courtesy visit to Ghana Minister of Finance. The two parties want to revitalize a commercial relationship that is in a steady decline since 2013¹.

Commitment to revitalize relations to counter China

After the visit of chairperson Lewis, the ministry of finance released a statement which summarized the issues the two delegations discussed. During their call, chairperson Reed, and minister Ofori-Atta also discussed US Exim’s new ‟Program on China and Transformational Exports̶. This program directs US Exim to provide financial products to “neutralize export subsidies offered by the People’s Republic of China”. The goal is to ensure ‟a level-playing field for U.S. businesses and workers as they compete globally̶.

The ministry also that the two parties discussed Ghana’s economy, financial sector, energy, in particular, power generation, transmission, and distribution. Ghana wants US Exim to improve the private sector participation in the economy. Dan Tobin, (Managing Director), Hazeen Ashby (Acting Senior Vice President & Chief of Staff) and Christopher Organ (Confidential Assistant) and Lucy Herbert (Press Secretary) from US Exim, accompanied President Lewis during the visit. Three officials from the US Embassy in Ghana also took part in the meeting, including Dean Matlack (Commercial Counselor), Dan Reback (Economic Officer) and Erik Adotey (Economic Section).

Historical overview: Ghana and US Exim

US Exim offers a variety of financing and insurance services to Ghanaian companies and U.S. exporters, providing access to new markets and opportunities. Over the past decade, the commercial relations have shifted slightly, with emphasis towards infrastructure projects. US Exim has shown an interest in projects related to energy, transportation, and telecommunications.

With these changes, Ghana has benefited from US EXIM finance. In fiscal year 1999, US Exim approved more than US$145 million in financing for U.S. exports to Ghana. In the same year, US Exim, and Ghana Export-Import Bank (GEXIM) announced a cooperative framework agreement to finance U.S. exports for Ghana’s industrial development. This new facility will fund the establishment of small-scale industries in each of Ghana’s administrative districts. Under the agreement, US Exim approved a preliminary agreement to provide up to US$300 million in guarantees. GEXIM’s clients will use these funds to source machinery and equipment from the United States. For Ghana, this agreement falls under the government “One District, One Factory“ program.

In 2000, Ghana bought U.S.-manufactured construction equipment, excavation equipment, freighters, trailers, used trucks, spare parts, and housing materials to Ghana in seven separate transactions, worth US$5.7 million.

On November 5th, 2020, US Exim approved two potential authorizations totaling US$229.7 million to rehabilitate, designing, and constructing water treatment facilities in Ghana. The first potential authorization will be a direct loan to Ghana’s Ministry of Finance to rehabilitate an important hydroelectric dam (in Weija, Ghana). This dam provides 80 percent of the potable water to the capital city of Accra. The loan will allow Ghana to engage the world-class design services of AGEISS, Inc. The second potential authorization will be another direct loan to Ghana’s Ministry of Finance to design and construct a water treatment plant. AGEISS’ and the government of Ghana will use the facility to increase the supply of potable water to the locality of Begoro and surrounding towns.

Ghana has, in the past, maintained a solid credit rating standing with the US Exim. Under the current Country Limitation Schedule (CLS) Ghana qualifies for short and medium term borrowing facility from the US Exim. The CLS sets the limit for financing assistance based on the economic health of the borrower. The private sector qualifies for long-term financing. However, Ghana's recent default on its international and domestic bond in November had a negative impact on its credit standing with US Exim.

Decline

After the visit of President Reta Jo Lewis, the ministry reported a mutual desire to revitalize the relationship with Ghana. She also pledged a continued to support for Ghana’s economic programs. However, despite the warm words, the exposure and interest of US Exim Bank has declined over the past decade.

Decline

US Exim Bank provides cover for public sector transactions require the full faith and credit of the government of Ghana (as a sovereign obligation or guarantee). Medium- and long-term public sector transactions must conform with IMF and World Bank program limits on non-concessional debt. Private sector long-term risk cover is available on a limited basis. This means that the decline will likely continue at least until Ghana completes the IMF The Extended Credit Facility (ECF) Arrangement in 2026 and also show signs of strong recovery afterwards.

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