Economic Analysis: How the Floods Exposed Ghana’s Infrastructure Gap

ghana-infrastructure-gap

Ghana requires some $15 billion over the next decade in order to address gaps in its infrastructure, the Vice President Kwesi Amissah-Arthur said on Tuesday, after flooding in Accra last week exposed problems with creaking public services.  According to him, the country requires about $1.5 billion per annum over the next decade in order to sufficiently address the issue.  More than 150 people died last week in the capital when aging drainage systems collapsed after days of rains and a petrol station where dozens of people were sheltering exploded.

Given the government’s tight budgetary constraints, it was looking to Public-Private Partnerships to fund infrastructure investments.  He also said, “We recognize the critical importance of infrastructure in driving economic growth but we are confronted with the constraints on public resources that require that we curtail public spending therefore it is necessary to turn to the private sector”. [1]

Infrastructure  deficiency   remains   a  major   obstacle   to   growth . Ghana currently  ranks  far  behind  the  best  performing  countries  in Africa in terms of infrastructure quality (See  Graph  8). Infrastructure was , therefore, cited as  the dominant perceived barrier to development  in   the   most   recent   World   Bank   Enterprise  Survey   in   Ghana.   During   the   mid – 2000s,  Ghana’s  infrastructure  gap  was  estimated  at  about  7%  of  GDP  and  about  half  of  this  was  associated   with   shortfalls   in   power   sector  alone.   Recent   robust   economic   performance  and  growing demand for infrastructure services  in  the  face  of  inadequate  investment  is  expected  to  have  further  widened  the  infrastructure  gap. At 0.5%, the net contribution of infrastructure to Ghana’s per capita  growth  between  2001 and 2005 was less than the average of about 1% for the ECOWAS region as a whole.  Significant shortfalls in transport have also been  identified. For instance,  the railway system  has  limited  coverage  (a  triangle  linking  Accra – Kumasi – Takoradi),  and  serves  only  the  southern  part  of  the country. The capacity of Ghana’s two ports at Tema and Takoradi is  under pressure resulting in delay and congestion. Ghana’s infrastructure constraint presents a  major  threat  to  growth  and  international  competitiveness  given  the  close  link  between  the  availability of  good infrastructure and economic  growth.  Studies have estimated that barring  the electricity crisis of 2006 and 2007, Ghana would have likely grown at 7.5  – 8.0% in 2006  – 2007 instead of 6%. [2]

Conclusion
In spite of Ghana’s decent economic growth in recent years, the country still  faces significant  challenges  in its  development  trajectory,  including  productivity  weaknesses, infrastructure gap, and capacity weaknesses and skills shortages among others.  However, the country also enjoys many opportunities, which it is now poised to better exploit to consolidate its  economic  achievements,  and  quicken  its  rate  of  economic  growth  and  jobs  creation. [3]

Related references:

  1. http://af.reuters.com/article/ghanaNews/idAFL5N0YV2DJ20150609
  2. http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/GHANA%20CSP%20DRAFT%20FOR%20COMMENTS.pdf
  3. http://www.theafricareport.com/West-Africa/un-pledges-to-help-ghana-deal-with-chronic-deadly-floods.html
  4. http://in.reuters.com/article/2015/06/09/ghana-vice-president-says-some-15-bln-ne-idINL5N0YV22Y20150609
  5. http://www.sovereignwealthcenter.com/Article/3439517/In-Africa-SWFs-Seek-to-Bridge-Infrastructure-GapAnd-Make-Money-Too.html#.VXkNxudrXG0
  6. http://www.dailymail.co.uk/wires/reuters/article-3116827/Ghana-says-needs-15-bln-10-yrs-close-infrastructure-gap.html
  7. http://www.daargroup.com/daar-group/latest-news/vanguardngr-ghana-seeks-15bn-over-10-years-to-close-infrastructure-gap
  8. http://www.africaneconomicoutlook.org/fileadmin/uploads/aeo/PDF/Ghana%20Full%20PDF%20Country%20Note.pdf
  9. http://www.worldfinance.com/inward-investment/middle-east-and-africa/ghana-steps-up-infrastructure-investment-programme
  10. http://www.worldfinance.com/inward-investment/middle-east-and-africa/ghana-to-invest-in-infrastructure
  11. http://www.dailyguideghana.com/solving-ghanas-infrastructure-deficit-the-role-of-ppp/
  12. http://www.infrastructureafrica.org/library/doc/824/ghana-country-presentation
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About Anang Tawiah

About the author :: Anang Tawiah is a New York City based Management Consultant specializing in Investment Risk and Technology Strategy. He continues to guide many Blue chip companies and Governments as a Business and Technology Consultant. Please direct all follow up questions, concerns, request for speaking engagements and presentations regarding my articles and research to my Facebook Page listed below. You can read more of his analysis or reach him for further professional consultations and or guidance at: // Email: anang@labaddi.com // Follow me on Wordpress: www.anangtawiah.com // Follow me on Facebook: www.facebook.com/AnangTawiah

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