Economic expert, Paul Frimpong said that Ghana needs to develop policies that would attract funding from banks for infrastructural development in the country.
Mr Frimpong, who is the founder of the Young Professional Economists Network, believes that Ghana can adopt a liberal version to Ethiopia’s model, which compels private banks to purchase government bonds to fund developmental projects.
He said the country has over the years relied on foreign assistance for developmental projects but rather should find innovative means to generate funding internally to close its infrastructure gap.
Ghana like many developing African nations has a peculiar challenge. Although the country has achieved steady growth over the last decade, more needs to be done to plug its infrastructure deficit.
According to the World Bank Ghana has an infrastructure funding gap of $400 million per year. A publication on the World Bank’s website stated that the country “has several strong areas” it can leverage to raise added revenue.
Mr Frimpong said that the Infrastructure Bill is one step in the right direction but stressed the need for additional policies to attract private sector funding for public infrastructure.
“We need to set policies in place to ensure that banks invest in public infrastructure. Increasing the capital base of banks would lead to greater financial muscle to undertake long term projects. The Bank of Ghana already does this and it is effective as is evident in Nigeria’s financial landscape.
“The second aspect is to define the rule of engagement for the banks. Rules of engagement are very important for every investor and serves as an incentive to invest. The current public-private partnership policy (PPP) can be upgraded into law to strengthen its resolve,” he said.
Mr Frimpong added that the country should exhibit more boldness when negotiating terms of an investment agreement in the country. He said this was equally important in channeling funds into infrastructure development.
The country, he said, has a set of attractive characteristics that would allow it to dictate its terms to foreign investors. Some of these characteristics, he said, were the country’s political stability and high investment returns compared to other developed countries.
Mr Frimpong said while investors could make between two and five percent in Europe and the United states (US) respectively, Ghana’s market could yield returns in the region of 15 and 20 percent. Added to its political stability, Ghana is regarded as one of the best investment destinations, Mr Frimpong said.
Recounting how China became an economic success, Mr Frimpong said the Asian nation used its over one billion population as leverage to influence the direction of foreign investment.
He said China was in a similar situation as Ghana some 30 years ago but is now the second biggest producing country of most industrial products in the world.
“Ghana is one of the most politically stable countries in Sub-saharan Africa and this makes us one of the most attractive investment destinations in the sub-region.
“Foreign investors stand to gain between 15 and 20 percent in the country. For these and other reasons, we should have a greater say on where investments should go.
“Over 30 years ago, China was in a similar situation, occupying one of the lowest echelons of the global industrial value chain. Now the Asian state has risen to become the second biggest producing country of industrial products around the world,” he said.
Managing Director of Lamudi Ghana, Akua Nyame-Mensah said: “Over the years, the country has experienced growth in its economy. What we need now is to complement that with infrastructural development.
“We need to explore other avenues to finance our long term projects. The infrastructure fund is a great start.”