The World Bank Board of Executive Directors has approved an International Development Association (IDA) interest free credit of US$30 million to kick-start a new Public Private Partnership (PPP) centered on infrastructure development in Ghana.
Bank support is the first phase in a series set to close a critical funding gap and to leverage urgently needed private sector investment from 2012-2016, the World Bank Office in Accra has announced.
The Republic of Ghana’s PPP programme with the World Bank would combine the skills and resources of both the public and private sectors, it said in an official statement released on Friday.
For its part, the Government will benefit from the expertise of the private sector by making it easier for authorities to focus instead on policy, planning and regulation. The approval was made on Thursday.
Meanwhile, private firms will take care of day-to-day operations of various tasks, allowing both the private and public sectors to better coordinate while working more efficiently.
The statement said phase one of the Public Private Partnership project for the Republic of Ghana sought to improve the legislative, institutional, financial, fiduciary and technical framework to generate a pipeline of bankable PPP projects.
Ghana’s Minister of Finance and Economic Planning, Dr. Kwabena Duffuor, welcomed the announcement saying: “Our goal is to attract investors to Ghana’s rapidly growing economy, which we expect will do even better with the injection of additional technical and infrastructural support to the export sector and Public Private Partnerships are a cost effective way to stimulate the infrastructure needs for Ghanaian industry. I am delighted that the World Bank is supporting us in this important endeavour.”
In a briefing for Bank’s Board of Executive Directors, Bank experts pointed out that Ghana lags behind its sub-Saharan African peers in terms of private sector investment in infrastructure, attracting far less private finance as other African peers.
Countries such as Benin, DR Congo, Kenya, Nigeria, Senegal, Tanzania and Uganda all captured between 1.0 and 1.6 per cent of GDP for infrastructure investment, while the most successful country in this regard has been Mozambique which captured in excess of 3.5 per cent of GDP. Meanwhile, Ghana registered just less than one per cent during the same period.
“Ghana is an important partner of the World Bank and we are glad to be providing some of the funds needed to make this initiative possible. We do hope that the new programme will help bring on board important private stakeholders to contribute to Ghana’s infrastructure development,” said Yusupha B. Crookes, World Bank Country Director for Ghana, Liberia and Sierra Leone.
The statement said to date, informal economic activity has blocked the government from capturing the power PPPs could provide more effectively.
The start of oil production is projected to underpin 13 per cent real GDP growth in 2011. Strong non-oil activity is predicted to contribute to 67 per cent growth in 2012 and beyond. Gross national income per capital was estimated to be US$1,240 in 2010 (using Atlas method) making Ghana a lower middle income country.