Unfortunately, the Ghanaian economy lacks the capacity to support large-scale infrastructure development. Ghana’s drive to become the gateway to West Africa is seriously hampered by the lack of good quality infrastructure much of which is dated and in need of improvement.
Ghanaian utility providers can afford to be sluggish because customers do not have an option. The Public Utilities Regulatory Commission (PURC) can decide to punish them by withholding needed funds away from them, but they careless because they are state-owned.
In fact, whilst it sounds logical to punish them for poor services, that is counterproductive and not the solution. It is just like punishing your wayward child by withholding food. Private finance will allow the involvement of world-class players in the provision of world-class infrastructure and social services.
A single unwieldy entity such as the Ghana Water Company Limited (GWCL) not particularly noted for effeciency and wholly responsible for our water supply is bad. Let us invite international competition for different areas as has been done in leading nations like the UK where there are 26 water supply companies.
Private Sector Participation
Aqua Vittens Rand Limited (AVRL), a South African company was appointed in a management contract to manage Ghana’s water infrastructure. AVRL did not bring new funding to develop the infrastructure but was rather paid for their management services.
It is my considered opinion that this was not what Ghana needed and did not offer value-for-money. What Ghana needs is fresh investment in the provision of new infrastructure and improving existing facilities. For this, it is proposed that we open up to the international community and allow world-class players with proven international experience to come and invest in Ghana’s infrastructure as public-private partnerships.
The Private Finance Initiative (PFI)
PFI is the system of procurement, which involves the use of private sector finance and management in the provision of public services. It is a type of public-private partnership where the government makes a commitment at the contract stage to acquire the services to be provided by the private sector. The more popular system, Build- Operate-Transfer (BOT) is loosely used synonymously with the PFI system of procurement in Ghana. The PFI system will help ensure that the interest of the consumer, especially the poor are protected through the regulatory functions of the government. Rates charged by the managers are controlled by the government to ensure affordability.
To those opposed to private sector involvement in the delivery of public services, PFI is different from privatisation because the public sector retains a substantial role, either as the main purchaser of the services provided, or as an enabler of the project and guardian of the users’ interests. To the argument that prices will rise with private sector participation, yes, we may need to pay market rates. However with the current tariffs we currently pay for our utilities, we are not too far off market rates anyway. In any case, will you rather pay a little extra if it guarantees always-on lights and water to drink and flush your toilet always ?
The Challenge
Much as the decision not to renew the management agreement with AVRL is right, the corresponding decision to revert control to the Ghana Water Company Limited is wrong, akin to taking one step forward and two steps back. The way forward is to develop innovative private finance schemes for the development of Ghana’s water infrastructure.
Private finance will offer good value for money as well as ensuring favourable returns on the investment of investors. This will be the vital first step to the development of the required infrastructure for the provision of world-class public services in Ghana. The Private Finance Initiative can do for Ghana what it has done for the UK, Australia, Hong Kong and many advanced economies. There will be sufficient water to drink and provide good sanitation for all. To this, I call on the government to engage all stakeholders and to explore the best way forward. Let the debate begin.
Author: Kwame Ofori-Kuragu
(The author is a lecturer at the Department of Building Technology, KNUST and can be contacted at: [email protected])
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Feature: The way to effeciency in Ghanas water sector