Last year, while many African countries head to the polls, Ghana’s election stood out for many reasons. Not only have the two main contenders been presidents of the nation before, but they have also battled it out twice in the past – in 2012 and 2016. The ruling party, NPP, which managed to secure a presidential victory, would have challenges dealing with the opposition NDC, with whom it shares an equal number of seats in the legislature – which is the first time in 28 years.
We often miss the impact that internal politics of this sort can have on a country’s international business atmosphere. The just ended elections may have implications on Chinese businesses in the country. In this article, I argue that with the loss of Ghana’s opposition, Huawei may have missed an opportunity to develop Ghana’s 5G-telecom infrastructure, at least for the next four years.
Huawei Projects In Ghana
According to data from John Hopkins’s China Africa Research Institute (CARI), Ghana, between 2000 and 2018, had subscribed to 37 loans from China, accounting for $3.7 billion in total. These funds secured from China have financed several projects, which cut across several sectors, like power, communication, transport, health, etc.
In the communication sector, China has granted the country five loans to execute five different projects between 2006 and 2013, accounting for $363 million dollars. These projects include:
1. $30 million: National Communication Backbone Infrastructure project phase I (2006); $30 million: Dedicated Security Information System Phase I (2007)
2. $30 million: E-government Project Phase I – Data Centre and Wide Area Network (WAN) (2009)
3. $30 million: E-government Project Phase II – WiMax Network Upgrade (CL Part) (2011)
4. $120 million: E-government Project Phase II – WiMax Network Upgrade (CommL Part) (2011)
5. $123 million: Dedicated Security Information System Phase II (2013)
With the exception of Dedicated Security Information System Phase II, which ZTE completed, Huawei completed all the projects mentioned above.
In 2020, Huawei was instrumental in launching the € 155 million Rural Telephony Project in Ghana. The company collaborated with the government through a partnership with Ghana Investment Fund for Electronic Communication (GIFEC) and some private telecom operators in the country. China EXIM bank financing of Huawei’s installation of 1,000 cell sites would connect 300,000 under-served communities and some 3 million rural people to telephony networks, thereby reducing the digital divide in the country.
However, Huawei’s business relations in the country go beyond the government. The company has struck deals with many private companies in the telecommunication sector. In the expansion of 3G coverage and transition from 3G to 4G LTE, many local network operators have increasingly turned to Huawei. In 2010, MTN, Ghana’s largest telecom operator deployed Huawei’s UMTS900 equipment for its network. Surfline communications, one of Ghana’s data-only network, contracted Huawei to expand its 4G infrastructure across the country. AirtelTigo, the third-largest telecom market shareholder, collaborated with Huawei to roll out 4G LTE to its customers.
According to Russell Xu, Huawei Ghana CEO, the company has maintenance agreements with MTN, AirtelTigo, Vodafone, and a couple of other private telecom operators. He also stated that MTN’s acquisition of 4G LTE license from the country’s telecom operator NCA had opened opportunities for Huawei.
Opposition NDC’s Manifesto Is Huawei Friendly
As the elections drew near, the opposition National Democratic Congress (NDC) unveiled its manifesto dubbed ‘The Peoples Manifesto’. NDC had hoped to woo voters with the document, which contained loads of promises of a better life. Whereas the party fell short of the 50% plus 1 required for victory, their performance had surprised the governing party, which had anticipated a landslide victory. The opposition came from a low of 44.4% of votes in 2016 to an impressive 47.36% in 2020.
The NDC promised to develop a digital functional economy as part of its $10 billion ‘Big Push’ for the economy. Page 98 of the document captures exactly what NDC intended to in this regard. Among other things, the opposition promised to:
1. Build a National Information Highway that utilizes 5G and fiber optic technologies through a public-private partnership.
2. Move to an affordable 5G licensing regime that allows telecom companies to tap into revolutionary technologies.
The NDC party, which was in power from 2009 to 2017, has had extensive collaboration with Huawei. Since the start of the digitization drive in 2010, the Ghana government and many private telecom companies have repeatedly relied on the expertise and experience of Huawei to build critical infrastructure in the sector.
In building the National Information Highway that utilizes 5G, an NDC government would have to rely on Huawei. The reasons are simple. By constructing more than 70% of 4G base stations in Africa, Huawei now commands an irreplaceable footprint in the continent’s telecom industry. Arthur Goldstruck, head of South Africa based research firm World Wide Worx, says it is unrealistic for Africa to pull away from Huawei in the transition to 5G.
The financing for potential 5G projects in Ghana or many parts of Africa would likely come from China. It is difficult to expect China to provide funding for 5G projects in Africa for Nokia or Ericson to execute. As part of its export promotion, wherever Chinese money goes, China exports a company (goods and services). In order to get 5G funding, recipient countries should be ready to work Huawei.
With a John Mahama led administration providing an affordable 5G licensing regime, private companies would get the incentive to deploy the new technology in the country. This means more business for Huawei, just as 4G licensing resulted in many private sector contracts for the company. Since private telecom operators in Ghana are profit-oriented, they will end up choosing Huawei over Nokia, Ericson, etc. since it is affordable to do so. Moreover, since most of these operators operate mainly in Africa, they have no reason to worry about US sanctions.
Bad News For Huawei: NDC Lost
Since it has lost the elections the NDCs’ plan for the country’s telecoms industry has come to naught. Huawei might have also lost the opportunity to spearhead the 5G drive. The manifesto of the governing party NPP does not make mention of 5G technology, giving the indication that it is not a priority for the ruling party. Therefore, as some African countries, like South African, Uganda, Kenya, etc. prepare for deployment, Ghana would likely miss out, at least until 2025, when a new government has come to power.
NDC’s loss is not even the worse for Huawei’s 5G business in the country. The kind of divisive politics at play in the country where the ‘winner takes it all’ would make it even harder for Huawei’s 5G business. However, with the opposition commanding as many seats as the ruling party in the legislature, analysts are projecting a possible break down of the governance process. This concerns some Ghanaians, including the president, who has called for consensus-building between the two parties to forestall any deadlock.
On the condition that these consensus talks are not just mere words, NDC could still use the legislature to implement 5G policies, if indeed the party is that passionate about digitization. Perhaps, Huawei should not lose all hopes.
What do you think?
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Amodani is a past student of Koforidua Technical University. He is majoring in Biomedical Engineering. He has served as the past president of KTU Debate and Public Society. In that capacity, he helped students understand local and global issues and the impact they can have through constructive dialogue and debate. He is passionate about community advocacy and development. He aims at engaging in national and international politics after pursuing graduate studies in International Relations and diplomacy.