Promises, Priorities, Pandemics: How an “investor perspective” drives PPP funding in Ghana’s infrastructure

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Water Sanitation project WASH World Bank Ghana.
Man drinking water | © Arne Hoel / World Bank

During my graduate studies in Washington D.C., a successful Ghana-based urban sanitation enterprise –innovatively designed as a public-private partnership (PPP) – grabbed my attention. Until then, I had been exploring how PPPs have been used in India’s urban transport sector. But this encounter with private-sector participation in the infrastructural setup of an emerging economy in Sub-Saharan Africa piqued my interest in the institutional and policy environment at work.

Soon enough, thanks to a collaboration between the Johns Hopkins School of Advanced International Studies (SAIS) and the World Bank’s Public-Private Infrastructure Advisory Facility (PPIAF), I became part of a team of students who delved into several research questions surrounding PPP institution-building in Ghana. Earlier this year, I travelled to Accra to engage in conversation with various  people working to further Ghana’s PPP story, in particular colleagues in the central PPP Unit and several sectoral ministries.

With an efficiency and funding gap of $1.5 billion per annum, Ghana has been unable to achieve an infrastructure endowment comparable to the region’s middle-income countries. No doubt, PPPs in infrastructure are accompanied by a range of arguments about risk-sharing, innovation, and accountability. The Ghanaian experience is no different. Regardless, there is one distinctive institution whose ethos lies in  “cautiously” using the PPP model –  The Ghana Infrastructure Investment Fund (GIIF).

I remember joking with senior officials at the GIIF headquarters– “Now that I’ve made a note of all the interesting points you shared, I’ve run out of paper!” Of course, this remark only meant that GIIF gave our team much food for thought.  

What is the GIIF?

Ghana’s financing market has long faced constraints in both local and international long-term funding. As a response, the Ghanaian government implemented the Ghana Infrastructure Investment Act in 2015. In addition, by injecting seed capital of $250 million (using the proceeds of its Euro Bond issuance in 2014), the government launched the GIIF. The GIIF is a sovereign fund designed to leverage private-sector project finance for infrastructure projects in Ghana, through debt, equity, and other instruments.

An entity of promise?

Despite being a wholly government-owned vehicle, the GIIF reflects an “investor perspective” by deploying public funds for investment in commercially viable projects.  It is operationally autonomous of the Ministry of Finance and Economic Planning. In the eyes of the private sector, project bankability, along with the promise of cost-reflective tariffs and the ability of the government to implement viability gap funding, are the most important drivers of participation. Therefore, the GIIF holds promise because it strongly signals a political commitment to the interests of the private sector.

The usual suspects

Lack of technical capacity in the infrastructure investment ecosystem, high interest rates of the Ghanaian Cedi, and exchange rate fluctuations are seen as impediments to the success of PPPs in Ghana. Along with these usual suspects, the mismatch of political cycles with PPP planning and implementation cycles continues to be the elephant in the room.

To alleviate exchange rate risk, GIIF operates a dual currency system, characterized by currency matching of assets and liabilities. This implies that Dollar capital finances Dollar investments and Cedi capital finances Cedi investments— providing a natural hedge. GIIF allows for a mismatch only after carefully assessing the other measures undertaken to hedge any risk arising from the mismatch.

Moreover, as of 2017, the GIIF’s private sector mentality has also meant that its products are priced using market-based principles.  Thus, the GIIF does not price its products below market rates. However, it does offer a longer tenor than a private financier typically would.

Now, the not-so-usual suspects

When I stepped out of the GIIF headquarters in mid-January, COVID-19 had not been declared an international public health emergency. Now cooped up in my apartment, I write this article as the ongoing pandemic raises several questions about its effect on private-sector infrastructure financing in Ghana, at least in the immediate run. But my curiosity lies in the nexus of GIIF’s mandate and long-term infrastructure provision in Ghana.

Last year, the GIIF issued its Environmental and Social Policy Statement. This outlines the organization’s plan to use a Social and Environmental Management System (SEMS) before making the decision to finance a project by identifying and evaluating its associated social and environmental risks. After disbursement, SEMS would also facilitate monitoring of social and environmental performance. The policy statement strikes a chord with the expected push for sustainability and decarbonization in the post-COVID world. The World Bank can play a major role in furthering this emphasis on environmental and social sustainability, by providing capacity-building resources on green bonds and green projects, for instance.

And some more food for thought

With every $1 of their own money invested into a project, GIIF has managed to attract $10 of private funds - a significant indicator of GIIF's success. All in all, GIIF provides many noteworthy lessons to nascent PPP markets that have been unable to attract private investment. Going forward, I’m curious to see how the pandemic might lead to the resetting of private-sector priorities for investment in different infrastructure sectors. For example, in the use of the PPPs, would digital technologies and healthcare infrastructure take precedence over airports and road expansion? What does this mean for the investor perspective?

If other governments consider launching sovereign infrastructure investment funds such as the GIIF, I hope that the collective response accounts for these questions.


Disclaimer: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.


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This blog is managed by the Infrastructure Finance, PPPs & Guarantees Group of the World Bank. Learn more about our work here.


Adyasha Mohanty

Recent graduate of Johns Hopkins University School of Advanced International Studies

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