Nicholas Institute for Environmental Policy Solutions
March 2021

The Environmental Implications of China-Africa Resource-Financed Infrastructure Agreements: Lessons Learned from Ghana’s Sinohydro Agreement

Author and Editor
The Environmental Implications of China-Africa Resource-Financed Infrastructure Agreements cover

Over the past two decades, African governments have increasingly entered into resource-financed infrastructure (RFI) agreements with Chinese governmental and commercial entities to meet their critical infrastructure needs. Under these agreements, a Chinese entity provides an African government infrastructure loans in exchange for the African government’s pledge to repay the loans with future revenues from natural resource projects. Due to the link between loan repayment obligations and the exploitation of natural resources, environmental and social risks are inherent in this model of finance, and, without due care, RFI agreements can counter rather than promote sustainable development.

To contribute to the understanding of the environmental and social implications of China-Africa resource-financed infrastructure agreements, this case study assesses the environmental and social risks of the aluminum industry projects linked to the Sinohydro Agreement concluded in 2018 between the Government of Ghana and the Sinohydro Corporation, a Chinese state-owned enterprise specializing in infrastructure development. In addition, this case study analyzes what role, if any, Ghana’s environmental assessment laws have played in avoiding, managing, or mitigating those risks.