The impact of infrastructure development on economic growth in sub-Saharan Africa with special focus on Ghana

Abstract

Purpose This paper aims to assess the impact of infrastructure development on Ghana’s economic growth. Design/methodology/approach Using data obtained from the World Bank’s World Development Indicators, the United States’ (US) International Energy Statistics and the Central Intelligence Agency’s (CIA) Factbooks from 1980 to 2016, an autoregressive distributed lag (ARDL) framework is used to determine the long- and short-run impact of the selected infrastructure stock and quality indices on Ghana’s economic growth. Findings Findings indicate a statistically significant relationship between infrastructure development and economic growth. Additionally, electricity-generating capacity is identified as the infrastructure stock index that has the greatest positive impact on Ghana’s economic growth. The study reveals that electricity-distribution loss has a significant negative effect over both long- and short-run periods. Research limitations/implications Commercial petroleum export from Ghana since 2010 has been a key contributor to economic growth. Although its aggregate effect is included in the annual GDP figures adopted for the study, the authors would have wished to assess its impact on GDP as an independent standard growth determinant. However, because of a lack of available data over this study period, petroleum exports could not be adopted as an independent standard growth determinant. Additionally, an aggregated index of infrastructure stock and quality could not be derived because of the small size of data available. Hence, this study did not assess its impact on Ghana’s economic growth. Practical implications The research provides pragmatic guidance to policymakers to focus their efforts on expanding electricity-generating capacity while simultaneously taking steps to curb electricity transmission and distribution losses. These two related actions offer the greatest positive impact on infrastructure development and, as a consequence, Ghana’s economic growth. Originality/value This paper represents the first attempt to empirically study the relationship between infrastructure development and Ghana’s economic growth. A key contribution to the existing body of knowledge includes strong evidence of a positive effect of infrastructure development upon Ghana’s economic growth. Results also reveal that the greatest positive impact on economic growth is derived from electricity-generation capacity. However, the study also uncovers a negative, but statistically significant, relationship between road and economic growth.

Mainstreaming sustainable development goals in Ghana’s energy sector within the framework of public–private partnerships: challenges, opportunities and strategies

“…This feature implies that there should be a mutual agreement of objectives and responsibilities among parties. Traditionally, there are specific public infrastructure projects that are provided by the government such as transportation (railway and highways), public hospitals, housing and many others (Owusu-Manu et al, 2019). These physical public infrastructures when adequately financed, constructed and operated by the private sector could only be termed as PPP in Ghana (Badu et al, 2013).…”

“…3. Challenges and opportunities for public-private partnerships implementation in Ghana According to Badu et al (2011) and Owusu-Manu et al (2019), major basic reasons for PPP in Ghana are that PPP promotes the quick delivery of public infrastructure projects; it reduces government financial burden; and finally, it allows for shared risks. In Ghana, public projects procured through the traditional bid-build method are often delayed due to several reasons including the lack of public funds, improper planning and design variations.…”

“…According to Marco et al (2017), Ngowi et al (2006);and Owusu-Manu et al (2019), the demand for infrastructure has outweighed its supply irrespective of recent political attention on the importance of infrastructure in modern years. It has become important for the government to seek additional funding for public projects.…”

“…PPP implementation in Ghana faces many obstacles as seen in many other developing countries (Chou and Pramudawardhani, 2015). Nonetheless, the key challenges in Ghana's PPP practice include the lack of experience and appropriate skills in PPP delivery, misallocation and incomplete transfer of risks (Osei-Kyei and Chan, 2017;Owusu-Manu et al, 2019). Because of the complexities and large-scale nature of PPP projects, they require highly experienced personnel to handle and manage (Badu et al, 2011).…”

“…Ghana has very little experience in managing PPP transactions. The majority of public officers and civil servants are more familiar with the traditional approach compared to PPP arrangements, and this has contributed largely to the slow pace of PPP development in Ghana (Badu et al, 2011;Owusu-Manu et al, 2019).…”