World Bank/IDA provide US$30 million to support initiative in Ghana

The World Bank Board of Executive Directors has approved an International Development Association (IDA) interest-free credit of 30 million US dollars to kick-start a new Public Private Partnership (PPP) centered on infrastructural development in Ghana.

The Bank’s 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, a statement made available to the Ghana News Agency in Accra on Friday said.

The statement explained that Ghana’s PPP programme with WB will combine the skills and resources of both the public and private sectors as 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.

While the private firms will take care of day-to-day operations of various tasks, both the private and public sectors would also be allowed to better coordinate and work more efficiently, the statement explained.

Phase One of the PPP project seeks to improve the legislative, institutional, financial and technical framework to generate a pipeline of bankable projects.

The statement captured Finance and Economic Planning Minister, Dr. Kwabena Duffuor as having explained that the goal was to attract investors to Ghana’s rapidly growing economy.

He said Ghana’s economy was expect to do even better with the injection of additional technical and infrastructural support to the exports sector through the PPP as a cost effective way to stimulate the infrastructural needs for Ghanaian industry.

“I am delighted that the World Bank is supporting us in this important endeavour,” Dr Duffuor stated in Washington DC.

World Bank experts pointed out that Ghana lagged behind its Sub-Saharan African peers in terms of private sector investment in infrastructure, attracting far less private finance as compared to other African peers, the statement said.

It said countries such as Benin, DRC, 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 program 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.

He said, cocoa and gold exports had led to high global commodity prices, and increased construction and service activities in Accra, stressing that, to date, informal economic activity had blocked the GoG from capturing the power PPPs can provide more effectively.

He said the start of oil production was projected to underpin 13 per cent real GDP growth in 2011. Strong non-oil activity was also 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.

He said the World Bank’s current portfolio in Ghana consisted of 31 IDA-financed projects with a net commitment of approximately US$2,000 billion.

The International Development Association (IDA), is the part of the World Bank, that seeks to reduce poverty by providing interest-free credit and grants that boost economic growth, and improve people’s living conditions.

IDA credits attract zero interest and are repaid over 25 to 40 years, including a 5 to 10-year grace period.**