Interview: Solomon Asamoah
What is the current environment for the funding and development of infrastructure?
SOLOMON ASAMOAH: Developing infrastructure is a long-term commitment, which requires long-term financing. For most power projects to be well structured they will need funding with tenor for at least eight to 10 years, and significant amounts of equity. Through our own funding work at GIIF we have seen first-hand how both instruments are in scarce supply in Ghana’s domestic financial sector, often leading to such projects being funded by international financiers.
However, vehicles such as GIIF have the ability to provide such instruments, bringing a strong Ghanaian partner to the table when these deals are constructed and financed. This means that projects are funded on equal terms in the interest of the Ghanaian people and economy, while also assuring international financiers that there is a domestic financing entity taking the same commercial risks as them, and therefore demonstrating a shared commitment. A successful example of such a partnership in the transportation sector is the new terminal at Kotoka International Airport in Accra, where GIIF’s financing contribution enabled the Development Financing Institution tranche of financing to reach closure through partnering with the African Development Bank and the Development Bank of Southern Africa. This collaborative financing solution has helped Ghana produce a world class terminal which will help it reach its stated aim of becoming an efficient and modern airport able to handle increased volumes of traffic.
What efforts could be taken to encourage further investment in infrastructure?
ASAMOAH: Addressing the infrastructure deficit is a key condition for Ghana to move up the value chain and industrialise, adding value to goods before they are exported. The government has been clear that its public budget is constrained and therefore one preferred route is to encourage the private sector to play a greater role in solving infrastructure deficit. One approach is greater use of public-private partnerships (PPPs). PPPs constitute a model that has had some great successes in Africa and, when used cautiously, can be an ideal arrangement through which the government retains ownership of the asset and can regulate the price charged to the public, as well as the right to intervene if the private sector party fails to deliver on pre-agreed performance levels. At the same time, the private party knows that it has a pre-agreed time to recoup its investment and make a return. If it works properly, the public benefits by receiving better services. In an environment that is short of capital, PPPs are an efficient way to maximise private sector investment and expertise in infrastructure development, whilst leaving government resources to be focused on other areas where private sector financing rarely reaches.
How are Ghana’s ports becoming more efficient?
ASAMOAH: An ineffective port system has many costs and reduces an economy’s productivity and competitiveness. In a typical African port, it is common for there to be long lines of cargo waiting to be unloaded and delays in collecting goods. Ghana’s ports are working to overcome this, and there is the investment and expertise to do so. Tema Port has led the way with a major expansion, and GIIF is involved in developing, expanding and investing in Takoradi Port with its partners, including introducing new paperless systems, docking for larger vessels and faster turnaround times.
Ghana is also strategically located in Africa in relation to the number of landlocked countries to the north and its easy access to adjacent countries. Therefore, as Ghana increases the efficiency of its ports, it is expected to attract a greater number of larger vessels, which could use Ghana as a gateway to landlocked nations. However, as port facilities improve, special attention must also be paid to inland infrastructure, to ensure that a seamless trade network is in place.
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