Mainstream PPPs to finance infrastructure gap - Oppong Nkrumah to Govt

The Government has been urged to prioritise Public-Private Partnerships (PPPs) as a sustainable means of financing Ghana’s growing infrastructure deficit. 

This is because  PPPs offer a viable alternative to traditional funding sources which have become increasingly difficult to mobilise in the country.  

In an address in Parliament yesterday, the Member of Parliament (MP) for Ofoase Ayirebi, Kojo Oppong Nkrumah, argued that the country had faced critical infrastructure challenges due to dire financial constraints, and that turning to PPPs held the key to filling the gap. 

“Ghana, in the last decade, has faced a critical infrastructure and public service deficit heightened by fiscal constraints, rising debt levels and limited access to international capital markets.

The demand for road investments, energy, healthcare, water and education far exceeds the government's financial capacity to deliver at any point in time,” he stated.  

He stressed that  most administrations have resorted to cutting government expenditure in response to these challenges,and that such an approach risked slowing economic growth and limiting job creation.

However, many countries around the world are increasingly turning to PPPs to bridge the infrastructure financing gap, allowing private sector actors to assume significant responsibility for financing and managing public projects

“By leveraging private sector capital, technical expertise and innovation, PPPs can deliver essential projects more effectively and efficiently while reducing the financial burden on the government,” he said.  

Challenges

Despite the passage of the Public-Private Partnership Act (Act 1039) in 2020, Mr Oppong Nkrumah observed that Ghana’s PPP ecosystem remained underdeveloped, with only a few projects successfully executed under the model.

He cited parts of the Tema Motorway expansion and the Boankra Inland Port project as some of the limited cases where PPPs had been utilised.  

He said several factors continued to hinder the widespread adoption of PPPs in Ghana.  

“First, there's a low level of awareness and preference for PPPs within both the public and private sectors. Many project promoters and government agencies still prefer outright contracts where the private sector delivers and the government pays, rather than structuring projects as PPPs,” he explained.  

He further pointed to limited capacity within both the public and private sectors for structuring, modelling and negotiating PPP transactions, noting that even when there was an appetite for PPP arrangements, institutions often lacked the technical know-how to execute them effectively.  

Additionally, he lamented the bureaucratic bottlenecks embedded in the current legal framework which slowed the negotiation and execution of PPP projects which needed to be urgently addressed.

“Anecdotal evidence suggests that in some cases it takes close to a year to put one project together,” he revealed.  

Way forward

To address the challenges, Mr Oppong Nkrumah proposed a series of recommendations to help mainstream PPPs in Ghana’s infrastructure and public service delivery.  

“First, we need to improve the level of awareness and acceptability of PPPs. It’s important for increased public and stakeholder engagement to make PPPs a more common feature in infrastructure and service delivery,” he urged.  

He further called for increased investment in specialised training for government officials in areas such as negotiation, risk assessment and financial structuring.

“Consulting groups, including legal and accounting firms, as well as project management experts, also need to deepen their expertise in modelling and structuring PPPs,” he added.  

To encourage private sector participation, the MP recommended that the government introduced credit enhancement mechanisms such as government-backed guarantees, to mitigate investment risks. Citing his experience as Minister for Works and Housing, he noted that efforts had been made to de-risk housing PPPs by providing incentives such as access to land.  

“Also, the PPP Act itself, though new, may require some immediate amendment to certain sections and enforcement of others,” he suggested and specifically called for a revision of Section 77 of the Act to streamline project implementation, and urged the government to expedite the passage of regulations to clarify gray areas in the law.