Ghana among top 3 African markets in infrastructure investments – Report

A total of US$7.9 billion of investments involving private participation in infrastructure since the year 2000 put Ghana among the top three Sub-Saharan African markets, after South Africa and Nigeria.

According to Fitch Solutions latest appraisal of the Ghanaian economy, considerable Private Public Partnership track record and pipeline underscore private infrastructure investment opportunities in the country since the year 2000.

“Our positive outlook for private participation in Ghana’s infrastructure sector is underpinned by the country’s considerable PPP track record and project pipeline, with energy and transport being key sectors for private investment opportunities”, it pointed out.

Furthermore, it said “according to our proprietary Fitch Solutions Infrastructure Key Projects Database, public-private partnerships account for almost 20 percent of planned infrastructure projects in Ghana, highlighting that PPPs will continue to play a significant role in Ghana’s infrastructure sector.”

The pipeline of planned PPPs again it stressed underscores the significant potential of Ghana’s power sector, as electricity projects account for the pipeline’s largest share. Independent power producers (IPP) play a significant role in Ghana’s power sector, with IPPs contributing a large share of installed capacity.

However, a significant debt burden, with outstanding arrears towards IPPs exceeding US$1 billion, has prompted the Electricity Company of Ghana to renegotiate standing power purchasing agreements (PPA) with independent power producers.

“While renegotiations of take-or-pay agreements, which oblige the public utility to pay a fee for electricity it does not purchase from IPPs, will likely weigh on investor interest in the short term, we expect that they will contribute to lower electricity prices and a more financially sustainable IPP programme, particularly if coupled with a reform of electricity distribution”, it emphasized.

“A recent concession of distribution in Ghana was cancelled quickly after its award, but we expect that the government’s existing readiness for privatising distribution will increase further following the national elections in December 2020”, it noted.

In the transport sector, Fitch Solutions said the prevalence of debilitated colonial railways will continue to provide ample opportunities for high-value brownfield concessions, following the completion of capital intensive port projects.

Currently, two rail projects worth a total of US$2.8 billion are being constructed as public-private partnerships respectively involving German and Indian companies and financiers, indicating foreign investors’ confidence in Ghana’s potential as a gateway to West Africa and its hinterland.