Private investment has been key to transportation infrastructure in Ghana for over a decade, but implementation of public-private partnerships (PPPs) and related legislation has been slow to materialise. In 2011 the World Bank reported Ghana faced an infrastructure deficit that required $1.5bn in investment per year over the next decade. Aware of funding limitations, the government published the National Policy on PPPs to encourage private investment to help close the gap. This framework recognised infrastructure as a fundamental component of continued growth and outlined expectations for the PPP process.
Framework
Following the 2011 publication of the National Policy on PPPs, a new PPP Bill was drafted to provide legal guidelines, protect contractual agreements, and create consistency and transparency across sectors. The bill had a second reading in July 2016 and is now awaiting parliamentary approval. One aspect of the proposed bill that investors are looking out for is the current constitutional requirement for all international transactions to be ratified by Parliament. This would add significant time and cost to projects and could discourage investment.
To foster an attractive business environment and support projects within the national development agenda, the government has also established the Ghana Infrastructure Investment Fund, designed to pool public resources in support of infrastructure projects. The government also stated its intention to support projects that are not necessarily economically viable under the Viability Gap Funding scheme.
Mixed Record
In recent months the cedi has fallen in value, upsetting the period of stability from earlier in the year. The cedi has depreciated by 4.6% against the dollar as of November 17, 2016. Some bank treasuries have expressed confidence that the cedi wills stabilise after the Bank of Ghana auctions dollars to commercial banks. Kalu O Kalu, general manager of Leasafric Ghana, told OBG, “The government’s stabilisation of the cedi in the third quarter of 2015 affected a lot of companies and pricing schemes. However, if the government can manage inflation, and in turn better control interest rates, it will send the right message to those doing business in Ghana.”
Priority Projects
In late 2014 the Ministry of Finance and Economic Planning published a document providing updates on priority PPP projects, including the Boankra Inland Port, Eastern Railway Line, Takoradi Port’s rehabilitation and expansion, and the Accra-Tema Motorway.
Another PPP project is the Accra-Takoradi Highway, which includes the expansion and operation of 185 km of coastal highway connecting the capital to the Western Region, an area that has grown in prominence since the discovery of oil there in 2007. This will likely occur under a build-operate-transfer (BOT) model and include tolling stations for revenue generation. A request for expressions of interest for transaction advisory services to complete feasibility studies was announced in February 2016.
The goal of establishing a national airline was also highlighted in the PPP projects document. In the first half of 2016 PwC, the transaction advisor, recommended the government partner with an experienced and internationally established airline carrier to re-energise the aviation industry. Previously, in 2015, a number of airlines expressed interest to the Ghanaian government, including Qatar Airways, Kenya Airways and Ethiopian Airlines. However, as of late 2016 no companies had been shortlisted. Lawrence Kumi, director of research at the Ministry of Transport, told OBG that the Ghanaian government intends to hold a 10% stake in the national airline. Ghana is an attractive investment location in West Africa due to its relative political stability and dedication to establishing a clear process and pipeline for PPP projects. However, the question remains whether or not political leaders will implement plans and continue prioritising PPPs.
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