Editorial Cont..

RESILIENT INFRASTRUCTURE TO REDUCE FLOODING

Flooding is a perennial problem throughout Ghana, but perhaps more so in Accra the capital city than most, which tend to get the headlines. Flooding in the rainy season is par for the course and leaves in its wake destruction to life and property. It is a yearly phenomenon for the people of Accra, with its estimated population of about two million people. Accra is a sprawling metropolis with conurbations. Growth has seen it expand and merging with Tema, Kasoa/Winneba, Nsawam/Suhum, Aburi, Afienya, Prampram and Ada. There has tended to be ad-hoc solutions after flood occurrences. instead of long-term solutions. There is a need to prioritise resistant infrastructure as part of a holistic plan to reduce the effects of the annual flooding menace.

DEVELOPING A MODERN RAILWAY NETWORK

President Akufo-Addo has opined optimistically saying,
“We are hopeful that, with private sector participation, we can develop a modern railway network with strong production centre linkages and with the potential to connect us to our neighbours to the north, i.e. Burkina Faso, to the west, i.e. Cote deIvoire, and to the east, i.e. Togo. We believe that this is an area where German and European technology and expertise would be welcomed”

The Ghana – Burkina Railway Interconnectivity Project;

which involves the construction of more than a 1,000 kilometres of rail network from Tema Port, through Hohoe, Yendi, Tamale to Page at the Ghana/Burkina Faso border and continuing through Dakola
to the Burkinabe capital, Ouagadougou is no longer a pipe dream as plans are in earnest. Ghana and Burkina have engaged a Transaction Advisor to undertake feasibility studies along the Corridor and will also engage a private investor to develop the proposed railway network on a Build, Operate and Transfer
(BOT) basis.

This project is not only a sign of regional cooperation, but the rail network will link both countries and catalyse trade with the rest of the West African sub-region. It is indeed a sign of the times. Ghana means business and will do all that is necessary to usher in a new era of bold ambitious infrastructural development to transform her economic fortunes.

OTHER INFRASTRUCTURAL PRIORITIES

Government flagship policies like the One District, One Factory (1D1F) and “One-Village- One-Dam” and social infrastructure needs in Health and Education all point to the need for a massive injection  of resources to satisfy growing demand emanating from population increase and increasing urbanization The carving of six new regions, which has increased the number of regions to sixteen (16) will also call for more infrastructural projects in the newly created regions to enable them be viable entities or function effectively.

PUBLIC FINANCE –

Comes principally from taxation and also public borrowing. There can be calls for government to borrow specifically for infrastructure investment. For instance, in Ghana, the Minister for Works and Housing, Hon. Samuel Atta Akyea was reported to have suggested that government heads to the Ghana Stock Exchange to raise 90 Billion US Dollars to solve all Ghana’s key infrastructural problems. His raison d’etre is summed up in this question he posed, “Are we going to go the tortoise pace of saying that let’s do internal mobilization?”. However, public sources both local and international will continue to play a critical role in funding infrastructural investment in Ghana. An example of this is the investment programme by the UK government dubbed, “The Jobs and Economic Transformation Programme” whose aim is to assist Ghana’s job creation efforts and infrastructure development by investing into the Ghanaian economy.

PRIVATE FINANCE –

Private financing for public infrastructure projects is where government borrows money from private investors to pay for specific projects. The vehicle for this is Project Finance where a project-specific company is set up to deliver a particular infrastructure project. It involves that company borrowing the money and entering into a contract which transfers the responsibility for designing, building, operating and maintenance as in the Tema Port Expansion Project and the Tema Expressway Project to upgrade the existing Arterial Road connecting the new port facility with the Accra – Tema Motorway (Road Project) The Institute for Government in the United Kingdom in response to the question – What does ‘Financing’ infrastructure mean? Posited the following response. “Financing is  how you pay upfront for infrastructure. In this context it refers to how governments or private companies that own infrastructure find the money to meet the upfront costs of building it. Financing is distinct from funding infrastructure: funding is how taxpayers, consumers or others ultimately pay for infrastructure, including paying back the finance from whichever source government or private owners choose.

PUBLIC – PRIVATE PARTNERSHIPS (PPPS)

According to the Commonwealth Governance for Development, Ghana’s infrastructure services were largely public funded until the year 2000. Government now sees Public-Private Partnerships (PPPs) as a vital means of funding its huge infrastructural requirements with a view to reducing poverty and attaining middle income country status. This viewpoint is supported by comments attributed to the Senior Minister, Mr Yaw Osafo-Maafo at a UK. High Commission forum on infrastructure development held in 2018. He is reported to have said, government would not use the convenient route of simply borrowing to provide infrastructure, but would rather explore and develop non-conventional but pragmatic financing models. These include Commodity Swap, Barter, Joint Venture with Land and Resources as Equity etc. He said, “we want to do this in closer collaboration with the private sector, utilizing various models of Public-Private Partnerships”. Mr Iain Walker, the UK High Commissioner expressed the commitment of the UK to help Ghana attain its aspiring vision of a “Ghana Beyond Aid”

PENSION FUNDS

Leveraging pension funds seems to be a poisoned chalice in the discourse of sourcing funds for infrastructure development as organized labour has been vocal in its opposition to its utilization. Banks have called for an amendment to the legislation to remove the various restrictions that surround the Tier one
and Tier two pension funds which hinder their ability to be proactive in helping mortgage applicants. This will add ballast to the real estate sector and help to bridge the housing deficit as many more climb the home ownership ladder. We must also add the drawback of the banking sectors emphasis on short term loans and deposits which encumbers their viability as a funding source.Perhaps Ghana could borrow a leaf from the company Polhem Infra, formed by a group of Swedish national pension funds to invest in unlisted companies that focus on infrastructure. This might be a model that is amenable to organised labour in Ghana who fight their corner vigorously.

…………………………………………………..Cyril Ramaphosa, the South African President thinks differently, and “refutes the view that a new colonialism is taking hold in Africa”. President Xi Jinping has
also debunked the criticism saying, “China’s investment in Africa comes with no political strings attached”, such as transparency, anti-corruption measures and environmental protection protocol. Western investment in Africa, has not been forthcoming in areas like physical infrastructure as their Chinese counterparts.Ghana has been a beneficiary of China’s financial clout. The 400 – MW Bui Dam is a US$600 million hydroelectric project which was undertaken and completed in December 2013 by SINOHYDRO Corporation Limited under an Engineering Procurement and Construction (EPC)/Turnkey Project Contract. The Chinese are actively scouting for infrastructure projects in Africa and Ghana is actively seeking innovative financial models for her infrastructure investment plans. Perhaps this makes for a marriage made in heaven? President Xi Jinping put the relationship which has been under so many lenses succinctly, by saying “China-African cooperation under the BRI is a way to common prosperity that brings benefits to both our peoples”Unsurprisingly China continues to be a very viable source of finance for Ghana’s bankable infrastructural investment plans. China’s state-owned enterprises (SOEs) are driven by state interests and invest mostly
in the extractive industries, whereas their private sector is market-driven in their approach. China has already got a massive infrastructural investment profile in Ghana and by all accounts as Ghana embarks on an aggressive public-private partnership programme to attract infrastructural investment, China will continue to play a key role in Ghana’s infrastructural development for the foreseeable future.

Infrastructure: On This Rock Ghana Shall Be Built

Ghana’s vulnerability to external shocks are well documented. Poor public infrastructure has contributed to the cost of doing business in Ghana, but by all indications the times are changing. Infrastructural planning, prioritising and investment is helping to bring about structural economic transformation. In addition to external support, domestic resource mobilization through expansion of the tax net to embrace the large informal sector, an enhanced tax system, leveraging pension and sovereign wealth funds, diaspora remittances and the promotion of public-private partnerships for infrastructural investment, herald a new dawn for infrastructural development in Ghana. Innovative financing products such as Listed Special Purpose Vehicles to isolate risk, will give that solid foundation which is required for Ghana’s economy to take-off. There are many financing sources for investment that can be tapped into, including the Bonds Market and also the Private Equity Market. The African Development Bank (AfDB) which is already an investment partner and currently financing the Pokuase Interchange has also established the Africa50,
an Infrastructure Investment platform that develops and invests in bankable projects. What more can we say? On this rock Ghana shall be built.