Public and private funding supports Ghana's aim of becoming a strategically important transport centre for West Africa

Significant spending increases in Ghana have seen the country take vital steps to reduce the transport infrastructure backlog and establish itself as a regional logistics centre for West Africa. Several large-scale projects are under way to support industrial development through more efficient connectivity, while recent expansion and modernisation works at various air and seaports are aimed at increasing trade and trans-shipment. The construction of road and rail infrastructure projects is also supporting this vision by opening new corridors to Ghana’s landlocked neighbours and developing strategic routes that support local industries.

Structure & Oversight

Executive authority over the transport sector is divided between four ministries: the Ministry of Transport (MoT) oversees maritime activity and the broader coordination of policy, while the Ministry of Aviation (MoA), the Ministry of Roads and Highways (MRH), and the Ministry of Railways Development (MRD) are similarly responsible for coordinating development and policy with a narrower scope, emphasising improvement and expansion of transportation systems falling under their respective remits. Ministries are supported by several government agencies and authorities, including the Ghana Highways Authority, the Ghana Railway Development Authority, the Ghana Civil Aviation Authority and the Ghana Maritime Authority.

In order to support such broad infrastructure expansion efforts, the government significantly increased funding for the transport sector in the 2019 budget. Public spending on infrastructure more than doubled from GHS1.8bn ($348.6m) in 2018 to GHS4bn ($774.8m). Of this, the MoT was allocated GHS294m ($56.9m), representing a 280% increase from 2017; the MRH was allocated some GHS1.3bn ($251.8m), up 142%; while MRD and MoA allocations remained relatively stable at GHS636m ($123.2m) and GHS318m ($61.6m), respectively. Additionally, the Ghana Infrastructure Investment Fund (GIIF) – a sovereign wealth fund that was set up by the government pursuant to the Ghana Infrastructure Investment Fund Act 2014 – also provides financing for critical infrastructure projects.

“GIIF, under the Ministry of Finance, currently has the function of de-risking outside investments, particularly for international investors, by being a local partner and anchor investor,” Solomon Asamoah, CEO of GIIF, told OBG. “Because GIIF’s investments are structured to be profitable, they demonstrate commercial sustainability as well as commitment from a government entity. GIIF’s goal is to create a pool of de-risked cash generating infrastructure assets which can be packaged and sold to institutional investors, such as pension funds,” he added.

The transport and storage sector contributed GHS20.9bn ($4.1bn) to Ghana’s economy in 2018, up from approximately GHS17.1bn ($3.3bn) the previous year, according to figures from the Ghana Statistical Service. As a share of GDP, transport and storage contributed some 6.6% and 7.2% in 2016 and 2017, respectively, and 7.5% in 2018. This performance comes despite a deceleration in the sector’s growth rate, from 8.9% in 2017 to 1.1% in 2018.

Road Network

Ghana’s road network remains the most widely used means of transport, accounting for 96% of combined passenger and freight traffic. As of September 2018 the national network comprised approximately 78,401 km of roads, of which 41% were considered to be in good condition and 33% in fair condition, according to the MRH. At the global level Ghana ranked 118th for the quality of its road infrastructure and 79th for its road connectivity out of 141 countries in the World Economic Forum’s “Global Competitiveness Report 2019”. However, for the transport pillar as a whole, including road, rail, sea and air connectivity, Ghana ranked 127th, which leaves room for improvement.

In an effort to boost the quality of the road network, Kwasi Amoako Attah, the minister of roads and highways, announced in January 2019 plans to improve 11,000 km of trunk roads, 25,000 km of feeder roads and 6500 km of urban roads over the year. This follows GHS1.4bn ($271.2m) of funds disbursed at the end of 2018 for road maintenance activities and the repayment of related debt.

Road Works

In April 2019 the Parliament approved 10 projects to be completed as part of the first phase of the $2bn Master Project Support Agreement between Ghana and Chinese construction firm Sinohydro. Under the agreement, Sinohydro will construct critical infrastructure in exchange for revenue from refined bauxite sales. The deal is intended to bridge the gap in infrastructure funding through a series of road, rail and other infrastructure projects. So far, the approved projects have been focused on the construction of road networks in each of the country’s 16 regions. Among them is the development of some 84 km of inner-city roads in Accra; 100 km of inner-city roads in Kumasi and Mampong; 32 km of roads in Cape Coast and Prestea; and the rehabilitation of 68 km of feeder roads in Ashanti and the Western and Northern Regions to support bauxite mining. The first phase is estimated to cost $646.6m and began in August 2019 with the construction of an interchange in Tamale.

Parliament also approved a €55m credit facility from Deutsche Bank for the rehabilitation of the inner ring roads in Kumasi in June 2019. Aimed at enhancing road capacity, the project will be completed in two phases that will cover 243 km of roads, with 100 km to be completed in the first phase.

In July 2019 Kojo Oppong Nkrumah, the minister of information, announced the release of GHS3bn ($581.1m) to repair roads leading to cocoa farms, supporting improved logistics for one of the country’s top agricultural exports. Four major roads in the Wa District in the Upper West Region were also earmarked for rehabilitation. Works will include 21 km of road at the cost of GHS352,000 ($68,200), to be financed by the District Development Fund, which was founded in 2017 to provide district assemblies with additional infrastructure funding.

Rail

Existing rail lines handled less than 2% of passenger and freight volumes in 2018. Much of the infrastructure was constructed by the British colonial government prior to Ghana’s independence in 1957 to transport commodities by connecting major mining areas to seaports. Rail lines are concentrated in the southern parts of the country, forming a triangle that connects Accra, Kumasi and Takoradi. Over the years the system has been largely neglected, with only the 373-km western line between Takoradi and Kumasi remaining partially operational, out of the original track length of 1300 km.

However, long-awaited plans to upgrade the network have seen a number of projects get under way in 2019. Progress has been reported on the $400m Tema-Mpakadan Railway project that will connect Tema Port, the country’s primary maritime outlet, to Lake Volta behind the Akosombo Dam in Mpakadan. The line is expected to span over 97.3 km and, upon completion, will mark the start of a larger Accra-Ouagadougou line linking Ghana and Burkina Faso. As of August 2019, 35 km of ground from Tema to Doryumu had been levelled and was awaiting the laying of track, while work on 80 of the planned 157 bridges had been finalised. The project, which is financed by Export-Import Bank of India, is being carried out by India’s Afcons Infrastructure, a subsidiary of conglomerate Shapoorji Pallonji Group. It is due for completion in June 2020.

The construction and rehabilitation of both narrow- and standard-gauge lines along the western and eastern railways could boost mining activities as the country taps into its bauxite reserves. In May 2019 China Railway Group and the Ghana Railway Development Authority reached an agreement for the construction of 100 km of new track between Manso, which is about 30 km from Takoradi, and Dunkwa in the north. The rail will be connected to a 22-km section between Manso and the Western Region town of Kojokrom, which is under construction, after being awarded in 2017 to Ghanaian firm Amandi. The line will support gold and bauxite mining operations in nearby regions such as Obuasi, Awaso and Tarkwa by linking them to Takoradi Port.

Meanwhile, the Eastern Railway project, which links Accra, Tema and Kumasi, has moved forward after the number of bidders was shortened from 45 to three, and a final decision regarding the contract is expected to be made in the near future. The project will see roughly 340 km of standard-gauge rail, constructed over three years, at an estimated cost of $2.2bn. The planned railroad will be the first electric line in the country. From the Boankra Inland Port in the Ashanti Region, a branch line will connect at Bososo to Kyebi in the Eastern Region.

Air

Airport passenger traffic has enjoyed strong growth following the opening of a third terminal at Accra’s Kotoka International Airport in September 2018. The airport, which accounts for 90% of all passenger traffic in Ghana, is the only international airport in the country, located 10 km from the city centre. The new terminal is capable of handling 1250 passengers per hour, or 5m passengers per year.

Annual passenger throughput at Kotoka International Airport was expected to reach the 3m mark by the end of 2019, a notable increase from the 2.3m passengers that were recorded in 2018, with the facility reporting it processed between 8000 and 9000 passengers per day as of June of that year, according to statistics released by the MOA. Total international passenger throughput grew by some 6.3% year-on-year in the first quarter of 2019, with an additional 29,566 passengers passing through the airport, while domestic passenger throughput witnessed a significant expansion of 76.5% year-on-year, increasing by roughly 66,594 travellers during the same period. Plans to position Kotoka International Airport as a regional transport centre in West Africa were boosted by an announcement that the government had entered into a strategic partnership agreement with Africa’s largest carrier, Ethiopian Airlines, in May 2019. The agreement aims to establish an Accra-based, pan-African airline, in which the Ghanaian government would hold a 10% stake and Ethiopian Airlines would hold a 49% share. As of the beginning of 2020 the parties were seeking additional investors to take up the remaining equity. Both of Ghana’s national flag carriers – Ghana Airways and Ghana International Airlines – closed operations in the early 2000s.

Approximately 20 regional and international airlines currently offer direct flights to Accra, although the international flight market is primarily driven by outbound demand. In September 2019 South African Airways strengthened its service to Ghana by introducing a daily route between Johannesburg and Washington DC, stopping off in Accra. This was followed by an announcement in August 2019 by Air Tanzania that it was considering adding new routes to Lagos, Nigeria and Accra.

Airport Expansion

The drastic increase in domestic passenger numbers is due in part to the elimination of a 17.5% value-added tax on domestic ticket sales in 2017; the government estimates that the measure was responsible for a two-fold increase in local air travel in 2018. Looking ahead, the refurbishment and expansion of three of the country’s five local airports is expected to further bolster domestic aviation activity.

The second phase of an expansion project at Tamale Airport commenced in August 2019. Works include the construction of a 5000-sq-metre modular terminal building, a single-carriageway access road, and landside and airside infrastructure, at an estimated cost of $70m. In the capital of Brong Ahafo, Sunyani Airport is undergoing a GHS50m ($9.7m) rehabilitation project. Work began in July 2019 to resurface and extend the facility’s runway and improve security measures.

At Kumasi Airport, the third phase of a construction and development project to turn the facility into the country’s second international airport has received the green light after Parliament approved a €58.9m engineering, procurement and construction contract with Contracta Construction UK. The scope of work includes a 25,500-sq-metre extension of the terminal building, construction of a 202,800-sq-metre runway strip, a 7730-sq-metre apron extension and an airside service road. The project is expected to catalyse economic growth in the Ashanti Region, boosting tourism and supporting the agriculture sector by facilitating the export of fresh produce. Adding to these ongoing developments, the recently refurbished and expanded Wa Airstrip was opened to commercial flights in mid-2019. The tarmac is now larger than those located in Kumasi, Sunyani and Takoradi, and has the capacity to handle Code C aircraft with wingspans of 24 to 36 metres.

Ports

Ghana remains committed to expanding its ports to keep up with the demands of its burgeoning economy. The country has two primary seaports: Tema Port, which is located approximately 25 km east of the capital and skewed towards imports; and Takoradi Port, which is located 230 km to the west of Accra and is mostly focused on exports. Together, these two ports account for more than 90% of Ghana’s foreign trade by volume.

Takoradi Port has traditionally supported the country’s mining industry and, more recently, its offshore oil and gas fields. Increasingly, the port has served as an outlet for neighbouring states including Burkina Faso, Niger and Mali. The Boankra Inland Port near Kumasi may further support the transit route, offering a staging post for goods originating from Ghana’s northern and western neighbours. In previous years, capacity constraints at the seaports had led to lengthy delays and congestion; however, with the ensuing expansion projects, which saw a significantly larger Tema Port open in July 2019, Ghana is well positioned to establish itself as a regional maritime gateway (see analysis).

Urban Transport

Recent investment in urban transport systems has focused on Accra, which struggles with both traffic congestion and urban sprawl. Between 1990 and 2005 the rapid and unplanned expansion of the city’s built-up area, coupled with the doubling of the population, resulted in a 40% decrease in population density as the population spread to outer areas, to 1262 people per sq km in 2019. Urban sprawl has also made it more difficult for the local government to provide a centralised public transport system. People in urban areas rely largely on privately owned minibuses called “tro-tros” that travel fixed routes. Combined with a relatively high motorisation rate of 90 vehicles per 1000 people, Accra’s roads are often congested, particularly during peak traffic times. To compare, motorisation rates in Nairobi, Kenya, Dar es Salaam, Tanzania and Addis Ababa, Ethiopia are between 20 and 30 vehicles per 1000 people.

In a bid to reduce congestion and improve connectivity, recent initiatives to provide reliable urban mobility have focused on reducing the number of vehicles on the road. In January 2019 a passenger train service commenced operations between Tema and Accra as part of a line stretching from Accra to Nsawam in the Eastern Region. The opening of the full line from Accra to Nsawam experienced a number of delays, however, it is now expected to be in operation by mid-January 2020.

The 1067-mm gauge line is being rehabilitated by the Ghana Railway Company at a cost of around $3.1m. Restored passenger coaches with a seated capacity of 149 people will be used on the route.

In November 2018 GIIF entered into a memorandum of understanding with the Ai SkyTrain Consortium for the construction of a $2.6bn Accra Skytrain. The private sector project will be delivered in multiple phases, with the first covering 256 km at a cost of $1.2bn. The elevated light rail system will make use of air propulsion technology to drive lightweight, high-passenger-volume vehicles.

The system is expected to help alleviate congestion in the inner city by connecting Adenta, a district in the Greater Accra Region, to the Kwame Nkrumah Circle, a major transit point for commuters. In January 2019 the project underwent a feasibility study, following which it was announced in August that the parties were in negotiation. Once this is complete, the next step will involve sending a concessionary agreement to the Cabinet for approval.

New Techonology

Ride-hailing services including US-based Uber and Estonia’s Bolt have proved popular in the Ghanaian market, offering passengers reliable services and the ability to travel long distances to precise drop-off points. In July 2019 Bolt announced that it would expand its operations into Kumasi. The move follows Uber, which was already operating in the region, a development that suggests growing demand for such services.

Further boosting competition, Russian tech company Yandex launched its Yango taxi-on-demand service in July 2019. The ride-hailing app offers trips for as little as GHS2.00 ($0.39), with the system designed to lower costs by reducing driver pick-up and arrival times, and requiring lower driver commissions. At the time of its launch, more than 3000 vehicles had partnered with Yango.

On the logistics front, Nigerian company GIG Logistics has turned to the digital marketplace to offer last-mile delivery and fleet management operations. The company, which provides air freight, cargo and excess baggage delivery to over 100 countries, began delivering to most of Ghana’s 216 districts in August 2019. GIG Logistics is targeting e-commerce businesses – a growing sector in Ghana – for end-to-end courier services. To expand its last-mile capabilities, it allows vehicle owners to perform the final delivery through an app, similar to the way ride-hailing services function.

Outlook

Significant progress has been made on improving infrastructure and establishing Ghana as a regional logistics and transport centre. The country aims to cement its position by improving roads and expanding its rail infrastructure, enhancing connectivity with its landlocked neighbours. Improvements to the transport system have targeted areas critical for some of the country’s top exports, including gold, bauxite and cocoa. Meanwhile, increases in investment in transport infrastructure are set to boost passenger mobility and logistics, supporting the country’s plans for industrial development.