World Bank provides US$30 million to support initiative
WASHINGTON D.C., March 27, 2012 The World Bank Board of Executive Directors today approved an International Development Association (IDA*) \interest free credit of US$30 million to kick-start a new Public Private Partnership (PPP) centered on infrastructure development in Ghana, the multilateral institution announced today.
Bank 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.
The Republic of Ghanas PPP program with the World Bank will combine the skills and resources of both the public and private sectors. For its part, 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. Meanwhile, private firms will take care of day-to-day operations of various tasks, allowing both the private and public sectors to better coordinate while working more efficiently.
Specifically, phase one of the Public Private Partnership project for the Republic of Ghana seeks to improve the legislative, institutional, financial, fiduciary and technical framework to generate a pipeline of bankable PPP projects.
On behalf of the Government of Ghana, Minister of Finance and Economic Planning, Dr. Kwabena Duffuor welcomed the announcement saying:
Our goal is to attract investors to Ghanas rapidly growing economy, which we expect will do even better with the injection of additional technical and infrastructural support to the exports sector& Public Private Partnerships are a cost effective way to stimulate the infrastructure needs for Ghanaian industry. I am delighted that the World Bank is supporting us in this important endeavor.
In a briefing for Banks Board of Executive Directors, Bank experts pointed out that Ghana lags behind its Sub-Saharan African peers in terms of private sector investment in infrastructure, attracting far less private finance as other African peers. Countries such as Benin, DRC, Kenya, Nigeria, Senegal, Tanzania and Uganda all captured between 1.0 and 1.6 percent of GDP for infrastructure investment, while the most success country in this regard has been Mozambique which captured in excess of 3.5 percent of GDP. Meanwhile, Ghana registered just less than one percent 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 Ghanas infrastructure development, said Yusupha B. Crookes, World Bank Country Director for Ghana, Liberia and Sierra Leone.
Cocoa and gold exports have lead to high global commodity prices, and increased construction and service activities in Accra, Ghanas capital. To date, informal economic activity has blocked the GoG from capturing the power PPPs can provide more effectively. The start of oil production is projected to underpin 13 percent real GDP growth in 2011. Strong non-oil activity is predicted to contribute to 67 percent 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.
The World Banks current portfolio in Ghana consists 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 helps the worlds poorest countries. Established in 1960, IDA reduces poverty by providing interest-free credits and grants that boost economic growth, and improve peoples living conditions. IDA credits are zero interest and repaid over 25 to 40 years, including a 5 to 10-year grace period.