[ 2014-10-18 ]

Solving Ghana's Infrastructure Deficit…The Role Of PPP
The development of Ghana has seen a steady growth
in the past few years, with the Ghana Statistical
Service pegging the Gross Domestic Product (GDP)
of the country at 6.9 percent in 2014.

This seemingly impressive growth has however not
translated into the provision of needed
infrastructure to further augment the
socio-economic development of a country newly
promoted to the status of 'lower middle income'.

A recent study of the infrastructure situation in
Ghana by The Africa Infrastructure Country
Diagnostic [AICD] Report 2010, shows that though
the country is doing quite well economically,
there remain serious shortfalls in the provision
of infrastructure.

Budget for projects and activities in the running
of the country have also experienced huge deficits
in the past years, causing government to borrow
sometimes beyond its limit—a situation
attributed to the lack of adequate funds and other
resources available to government to undertake
infrastructural projects.

With Ghana attaining the status of a lower middle
income country, sources of concessional funding,
both from donors and development partners, have
reduced drastically.

According to the Finance Minister, Seth Terkper,
the country needs about US$1.5 billion per year
for the next decade to meet the demand for
infrastructure.

He said, 'Given the limited budget resources, the
country's huge deficit in infrastructure cannot be
met by the public sector alone through budget
allocations.'

It has, therefore, become a necessity for
government to be proactive and find alternative
ways to finance projects to make up for the
infrastructural deficit of the country for
national development.


The PPP Concept
The Public Private Partnership (PPP) programme
offers the opportunity to attract significant
funding and expertise from the private sector to
develop infrastructure and provide services on
behalf of government.

PPP is a long-term contractual arrangement where
government taps the financial, human and technical
resources of the private sector for the delivery
of infrastructure and services traditionally
provided solely by government.

The arrangement ensures that there is a
significant degree of risk-sharing between the
public and private sectors.

Director of Public Investment Division of the
Ministry of Finance, Magdalene Apenteng, said
principally the Ghana PPP concept enables
government to provide better infrastructure and
services by adopting some of the efficiencies and
good practices of the private sector.

Also, it frees public resources that would have
been used for such projects for other equally
important uses . The private sector, on its part,
derives benefits from the revenue generated from
the projects.

'Generally, we see the PPP programme as necessary
and good for the country,' noted Mrs Apenteng.

This, she said, is due to the fact that government
does not have enough funds to undertake all the
needed infrastructural projects.

'It has worked for many countries, both in the
developed and developing world-Britain, USA,
Canada, India, Brazil and many others—and we
must make it work for us here,' she added.


Policy On PPP
The provision of public infrastructure and
services through the PPP initiative has typically
been viewed as the responsibility of government.

To ensure the smooth and efficient operation of
the new arrangement, a National Policy on PPP was
developed and approved by cabinet in June 2011 and
was officially launched by the government in
October 2011.

The policy provides the framework for the
development and implementation of PPP projects in
Ghana.

It also serves as the basis for the preparation of
the legal framework for PPP arrangements. A
draft bill on PPP is now with government and is
expected to be passed before the end of this
year.

'It is government policy, therefore, to encourage
the use of Public Private Partnership (PPP) as a
means of leveraging public resources with private
sector resources and expertise, in order to close
the infrastructure gap and deliver efficient
public infrastructure and services,' he said.

Mrs Apenteng stressed that it is important to
note that the PPP arrangement significantly
impacts on some core values which are different
from the traditional relationship between public
institutions and citizens.

Explaining further, she stated that services which
have traditionally been provided free of charge
for instance, may under a PPP arrangement be paid
for.

Also, the work attitudes of employees in a public
facility may need to change drastically when
management of the facility comes under management
of the private sector.

These factors make it critical for stakeholders in
a PPP and the general public to understand what is
at stake with the introduction and implementation
of the new policy.

'Such understanding and appreciation of the new
policy is necessary for the acceptance and
sustainability of PPP projects,' she said.

Mr Terkper said government is committed to the
accelerated development of the country and will
ensure that the necessary environment is created
to enable the private sector partner the public
sector to provide the needed infrastructure and
services for a better Ghana.

PPP Projects Underway
PPP projects cut across all spheres of the
economy; from transport to health, business to
community development, new government projects
supported by the private sector are taking over.

The Asutsuare Bulk Water Project is one such
project worth noting. It is expected to benefit
the about three to four million people in the
Accra and Tema Metropolitan areas.

The project, expected to be completed this year,
will provide bulk water supply to the Accra and
Tema water system and address the growing gap
between demand and supply of water in the Ghana
Water Company Limited (GWCL) service system.

The water from the project is to be produced in
two stages; the first supply is expected to come
on stream in 2016 and the second in 2018.

PPP is also playing an important role in the
delivery of quality healthcare services in Ghana.

The Korle-Bu Teaching Hospital's Diagnostic
Service—another PPP project—is for instance a
solution to the current issues that challenge the
hospital's laboratory and imaging services.

The delivery of all laboratory and imaging
services across the hospital (with the exception
of the Cardiothoracic Unit which operates
independently of the hospital), including
maintaining and operating the new facility, will
be covered by the project.

The construction of the new international standard
accredited facility and the introduction of robust
performance requirements through the PPP contract,
should ensure a well maintained and efficiently
operated service capable of meeting stringent
output specifications.

The project, designed to encourage private revenue
generation to offset public cost, is estimated at
$24.5 million.

These are among the numerous projects being
undertaken under the PPP initiative. Others
include model markets, the Makola Market Project,
Salaga Market Project, and Martey-Tsuru Community
Development.

The development of sports and residential
facilities, the Accra Plains Irrigation Project,
Foreigner Identification Management System and
modern pedestrian foot bridges are also part of
the PPP projects.

The Tarkoradi Port Rehabilitation and Expansion,
Boankra Inland Port/Eastern Railway Line Project
and the Nungua Desalination Plant are all part of
projects being undertaken under PPP.


Key PPP Benefits
There are a lot of benefits that could be derived
from the PPP programme by both government and the
private sector.

Mrs Apenteng disclosed that notable among the tall
list of benefits are the accelerated delivery of
needed infrastructure and public services on time
and within budget.

She also observed that the initiative encourages
the private sector to provide innovative design,
technology and financing structures.

'It also helps to increase international and
domestic investment, and ensuring good quality
public services and their wider availability,' she
added.

Other benefits, she said, are real financial
benefits reflected in reduction in the initial
public capital outlay, and a better utilisation
and allocation of public funds.

'It has the potential to increase economic growth
and wider employment possibilities, technology
transfer and capacity building also improve
operation and maintenance of public
infrastructure,' she noted.


World Bank's Role in Sustaining PPP
The World Bank is supporting the Government of
Ghana to create a strong PPP policy that will
bring mutual benefits to the parties involved.

To this end, they are helping in the preparation
of the legal framework, systems and capacity of
relevant bodies for the adoption of PPP as a major
strategy to finance public infrastructure.

The Bank is therefore providing an amount of US$30
million over a four-year period, beginning from
2012 to 2016, for capacity building at various
levels so that a more comprehensive programme
could be put in place to fully implement PPP
projects from 2017 and beyond.


Way Forward
Mrs Apenteng noted that the benefits of the
collaboration between government and the private
sector are evidence of government's commitment to
finding alternative ways of developing the
country.

She said there might be an increase in tariffs but
this will be matched by vast improvement in the
delivery of services and the tariffs will be
controlled by a public regulatory body, stating
that tariffs/user charges for public services can
only be adjusted by government.

In all cases, Mrs Apenteng assured, arrangements
will be made to ensure that public services remain
affordable under PPP projects.

Source - Daily Guide

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