GHANA’S INFRASTRUCTURE: A CONTINENTAL PERSPECTIVE Ghana already spends approximately $1.2 billion per year on infrastructure, equivalent to about 7.5 percent of GDP. A further $1.1 billion a year is lost to inefficiencies, the bulk of which are associated with the underpricing of power. Relative to the country’s African peers, subsidy-related losses in the power sector are relatively high. This need not be so. Ghana’s urban population is relatively well-off, and cost-recovering tariffs should be possible.

Ghana’s annual infrastructure funding gap is about $0.4 billion per year, most of which is associated with power and water. Following its recent oil discoveries, Ghana is in a position to raise additional public funding for infrastructure from increased fiscal receipts. It should also be possible to capture more private finance for infrastructure. Overall, Ghana’s infrastructure situation is hopeful. There are several strong areas on which to build, and the country has a solid economic base from which to fund incremental efforts.

# The continental perspective

The Africa Infrastructure Country Diagnostic (AICD) has gathered and analyzed extensive data on infrastructure in more than 40 Sub-Saharan countries, including Ghana. The results have been presented in reports covering different areas of infrastructure, including ICT, irrigation, power, transport, water, and sanitation, and different policy areas, including investment needs, fiscal costs, and sector performance.

This report presents the key AICD findings for Ghana and allows the country’s infrastructure situation to be benchmarked against its African peers. Given that Ghana is a relatively well-off lowincome country well on its way to reaching middle-income status, two sets of African benchmarks will be used to evaluate Ghana’s situation. Detailed comparisons will also be made with immediate regional neighbors in the Economic Community of West African States (ECOWAS).

Several methodological issues should be borne in mind. First, because of the cross-country nature of data collection, a time lag is inevitable. The period covered by the AICD runs from 2001 to 2006. Most technical data presented are for 2006 (or the most recent year available), while financial data are typically averaged over the available period to smooth out the effect of short-term fluctuations. Where possible, data have been collected for the period 2007 to 2009 with a view to measuring progress made relative to the baseline. Second, in order to make comparisons across countries, we had to standardize the indicators and analysis so that everything was done on a consistent basis. This means that some of the indicators presented here may be slightly different from those that are routinely reported and discussed at the country level.

# Why infrastructure matters

As on the rest of the continent, West Africa’s growth performance improved markedly in the 2000s. The overall improvement in per capita growth rates has been estimated at <u>around 2 percent, of which 1.1</u> percent is attributable to better structural policies and 0.9 percent to improved infrastructure. During the five years from 2003 to 2007, Ghana’s economy grew at an average annual rate of 5.6 percent, which 2