Afreximbank and Ghana Railway Company to develop Western Railway corridor
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 299km standard gauge railway network that connects Ghana’s western corridor to the Port of Takoradi, providing an essential link to external markets.
The Head 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 terms of the project preparation facility, the bank will make early-stage project preparatory funding available 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 providing financial solutions, including project preparatory support, project financing, syndication and financial advisory services, and risk-bearing instruments, to enable the project to reach a timely 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 the 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 aligns with our commitment to helping member countries address key trade-enabling infrastructure bottlenecks through private sector-led investments. These will unlock significant pent-up demand for Ghanaian mineral and agricultural commodities in regional and international markets. I’m 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, the training of 400 Ghanaians to participate at all levels of project implementation will be facilitated. The railway line will also expedite the export of minerals and commodities, resulting in at least US$ 950 million of trade per annum.
