Ghana to reduce infrastructure deficit in next ten years mainly on $3b Chinese loan
Dr Kwabena Duffuor, Minister for Finance and Economic Planning, said Ghana would need about $1.6 billion per year to meet the country’s infrastructure needs in the next ten years.
He said sustaining the medium term growth targets set for the country, would require a significant scaling up of investment spending.
Dr Duffuor, who was presenting the 2012 budget to Parliament in Accra on Wednesday, said even though Ghana’s fledgling oil and gas industry presented new opportunities for mobilizing additional revenues to finance critical infrastructure, these revenues were inadequate to meet “our financing requirements to close the infrastructural gap.
He said in the immediate to the medium term, therefore, external resources in (loans and grants) would continue to be an important complement to the country’s own resources in closing the infrastructural funding gap.
The Minister announced that the Government would in 2012, prepare a Public Investment Programme (PIP) to ensure a systematic, coordinated and comprehensively planned public infrastructure investment for the next five years.
The PIP, according to Dr Duffuor, would also assist the Government to establish synergy and network between the various infrastructure types, introduce prioritization into infrastructure provision, and provide the basis for a comprehensive funding plan.
He said Government would utilise the $3.0 billion loan facility sourced from China Development Bank in 2010 to reduce the country’s infrastructure deficit by undertaking number of critical projects consistent with the GSGDA priorities.
Dr Duffuor mentioned specific projects to be funded by the CDB loan as the Western Corridor Gas Infrastructure Project incorporating the Helicopter Surveillance Fleet for Western Corridor “Oil Enclave”, Western Corridor Infrastructure Renewal Project (Western Railway Line Modernization and Takoradi Port Rehabilitation/Retrofit Project) and the Accra Plains Irrigation Project.
Other projects would be the Coastal Fishing Harbours and landing Sites Project, Eastern Corridor Multi-modal Transportation Project, Western Corridor Petroleum Terminal Project, Western Corridor Oil Enclave Toll Road Project, Development of ICT Enhanced Surveillance Platform for Western Corridor “oil enclave”, Sekondi Free Zone Project, SME Projects Incubation Facility and Accra Metropolitan Area Intelligent Management Project.
“These projects have the potential to significantly transform the Ghanaian economy. For example, the Accra Plains Irrigation Project will irrigate 11,000 hectares of land for a mixed cultivation regime, targeting approximately 60 percent of irrigated area for agribusiness; 20 percent for large scale farmers; and 20 percent for small scale farmers”, Dr Duffuor explained.
He said developing the Eastern Corridor Multi-modal Transportation Infrastructure would enhance the cost-effectiveness of freight handling corridors linking the Tema Port via the Volta River to the Savannah Accelerated Development Zone, and the land-locked countries of Burkina Faso, Niger, and Mali.
The Minister said it would also facilitate access to the Afram Plains, Accra Plains and areas of the Volta Region that had great potential for developing agro-industrial and fishing businesses.
Dr Duffour noted that Government would ensure that each project was supported by robust project execution strategies and project implementation agreements, and said the disbursement of funds for the projects would be scheduled for consistency with the agreed medium term fiscal sustainability plan.
He said in line with Government’s policy to accelerate the delivery of infrastructure and public services, a national PPP policy had been launched to enable Government to use the following instruments to support the implementation of the PPP projects.
Dr Duffuor mentioned Project Development Facility to finance upstream investment appraisal, value-for-money assessment and other feasibility and safeguard studies; Viability Gap Schemes to provide financial support for PPP projects that were economically essential but not commercially viable as well as Infrastructure Finance Facility to raise the requisite long-term local currency financing for on-lending at commercial rates to private sector partners for PPP projects.
On local content enhancement, the Minister said huge opportunities existed in procurement for the growth and development of local companies and businesses.
Dr Duffuor said: “Recognizing this potential, Government will develop a local content policy for the whole economy. This policy will significantly enhance the level of participation of Ghanaians in the economic activities of the country. Government will also ensure that certain goods and services as well as labour expertise which are readily available in the country are not imported”.
On labour market information system, he said labor market information was very critical in designing responses to the problem of unemployment and that in the 2010 budget statement, it was indicated that Government was developing and would install a functioning Labour Market Information System (LMIS).
The LMIS had now been put in place, and from the 2012 fiscal year, Government would incorporate measurable employment targets in its economic and social programmes.
Source: GNA