Tighten infrastructure loopholes - Dr. Manuel

South African National Planning Commission Minister Dr. Trevor Manuel has asked government to tighten loopholes in public institutions in order to make a meaningful case for infrastructure spending to sustain and grow the economy.

He said the current infrastructure deficit is sizable and worrying, which cannot be resolved just by throwing money at it without strengthening the institutional capacities to address the infrastructure dilemma.

“Funding the infrastructure gap is not the sole problem -- the core issues are institutional in nature. Pouring additional funding into sectors characterised by high levels of inefficiency makes little sense.

“There is a need to improve the capacity and efficiency of those institutions responsible for developing and managing infrastructure. While the scale of the challenge varies greatly across African countries, three general strategies including more efficient spending, an enlarged regional approach to infrastructure investment, and an improved regulatory framework could help to foster institutional advancements,” he said.

Ghana currently requires about US$1.2billion every year to bridge its infrastructure gap, which has become a dilemma for successive governments to resolve. Last month, government through the auctioning of a 10-year Eurobond raised US$1billion from the international capital market as a long-term financing option to bridge the wide infrastructure gap that has constrained development efforts.

Dr. Manuel however said making institutions efficient and effective in closing the infrastructure gap is necessary to ensure that the country reduces its over-reliance on the extractive sector. He said the road and railway sectors need much of the infrastructure spending to give support to agricultural activities, which is the economy’s backbone.

“In understanding the importance of investing in infrastructure and the distinctive opportunities presented by the African continent, it is important that we recognise the significant role that agriculture can contribute to growth. This is crucial not only for growth, but more importantly in tackling the growing threat of food insecurity -- which is a global challenge as increases in population growth and diminishing land and water resources apply increasing pressure on outputs.

“The development of urban infrastructure, economic infrastructure and agriculture are but parts of a much larger challenge of economic transformation,” he explained.

Ghana’s economy is rich in oil and gold, which cumulatively yielded US$8.5billion at the end of last year, making the extractive sector the largest contributor to the country’s foreign exchange earnings, according to the Bank of Ghana.

Dr. Manuel said it is about time government used revenues from the extractive sector to diversify the economy to ensure sustainable development.

He said that despite the contribution of the extractive industries to government revenue, the elastic nature of the sector means that government cannot continue to bank its hopes on that sector alone to grow the economy.

He advised that revenue from the extractive sector be used to grow others sectors that have the potential to sustain the economy in the long-run. “Diversification from extractive industries is important for sustainable development in Africa.

“African economies need to use the mineral wealth to invest in the infrastructure that will allow them to diversify our economies, and pay for our capability upgrade.

This means that we should re-evaluate in detail the licencing regimes that apply in the extractive interests -- who benefits and why? And how can we use the benefits of products that can be extracted only once for the common good?” he said.