The African Export-Import Bank (Afreximbank) and Ghana Railway Company, the national railway operator of Ghana, have signed a project preparation facility Head of Terms agreement and Pre-Mandate Letter to finance the development and implementation of an integrated 299-kilometer (“km”) standard gauge railway network that connects Ghana’s western corridor to the Port of Takoradi and provides an essential link to external markets.
The Heads of Terms was signed by Mrs. Kanayo Awani – Executive Vice President, Intra-African Trade Bank at Afreximbank and Dr Michael Anyetei – Managing Director, Ghana Railways Company Limited. Under the Heads of Terms of the project preparation facility, the Bank will avail early-stage project preparatory funding to finance the preparation of bankable feasibility studies. The Pre-Mandate Letter appoints Afreximbank to perform certain tasks in advance of the project attaining bankability aimed at raising the debt facility amount, currently estimated at US$ 2.1 billion.
Under the terms of the agreements, signed during the Afreximbank Annual Meetings (AAM2023), Afreximbank committed to prescribe financial solutions, including project preparatory support, project financing, syndication and financial advisory services, and risk bearing instruments, to enable the project attain a timeous financial close.
The Bank believes that pursuing railway investments along the continent’s trade corridors would expand existing capacities and create new routes, links and pathways for value-added goods to be transported from manufacturing and processing areas to regional and global markets, thereby promoting intra-African trade within the AfCFTA context. This is evidenced by new mining projects and expansion of existing mining projects being planned in the country that stand to benefit from the project through more efficient and competitive transportation of imports and exports thereby boosting trade, regional integration and overall economic development.
Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, said, “The Western Railway Corridor project is a vital transport network for Ghana, and Afreximbank’s support is in line with our commitment to help member countries address key trade-enabling infrastructure bottlenecks through private sector-led investments that will unlock significant pent-up demand for Ghanaian mineral and agricultural commodities in regional and international markets. Am particularly thrilled that in this project, Afreximbank and its partners are pioneering our innovative non-recourse project finance solution premised on freight volumes and not member countries debt-carrying capacity. Such novel approaches present concrete steps Afreximbank is taking towards paving the way for member countries economic transformation. We look forward to rolling out this solution to other member countries across the continent.”
The project, when fully implemented, is expected to reduce transport costs by 30 per cent, increase the safety and reliability of transport services, and stimulate Ghanaian trade and economic growth. About 5,000 jobs are expected to be created directly during the implementation phase, with another 50,000 indirect opportunities created along the railway corridor in addition to the training of 400 citizens of Ghana to participate in all levels of the project implementation. The railway line will also facilitate the export of minerals and commodities resulting in at least US$ 950 million of trade per annum.