Ghana needs an estimated US$37.2 billion annually to bridge its infrastructure deficit, yet current public investment remains nowhere near the level required, raising serious concerns about the country’s ability to accommodate its rapidly growing urban population and sustain long-term economic growth.
These findings are contained in the World Bank’s latest report titled A Sustainable Cities Strategy for Ghana, which paints a worrying picture of widening infrastructure gaps, weak municipal financing, unplanned urban expansion and rising costs of service delivery.
According to the report, “There is a huge infrastructure gap in Ghana, and extremely limited financial resources available to fill it with implications for the SDGs.” The report adds that “An estimated US$37.2 billion is required annually to fund Ghana’s infrastructure needs, including investments in energy, telecommunications, transport, and water. This exceeds the government’s current capital expenditure by a scale of almost 40:1.”
The report notes that Ghana’s National Infrastructure Plan seeks to transform the country’s infrastructure landscape by 2047 through investments capable of supporting sustained economic growth and improving living standards. However, it cautions that achieving those ambitions will require an unprecedented increase in both public and private investment.
Investment Falls Short
The World Bank observed that Ghana has consistently underinvested in infrastructure over the years.
Between 2010 and 2020, government capital expenditure averaged only 6.8 percent of total public expenditure, equivalent to approximately 1.24 percent of Gross Domestic Product (GDP).
The report also found that combined public and private investment in infrastructure represented just five percent of GDP in 2019, a level below the average for lower-middle-income countries.
Even more concerning, the report notes that the 2023 national budget allocated only 12 percent of planned capital expenditure to infrastructure sectors, while more than 68 percent went to social sectors, leaving critical investments in roads, drainage, water, sanitation, transport and energy significantly underfunded.
The report argues that unless investment levels increase substantially, Ghana will struggle to provide the infrastructure needed to support its expanding cities and growing population.
Urban Growth Increasing Pressure
The report highlights that Ghana has experienced one of Africa’s fastest urban transitions.
The country’s urban population has increased from less than four million in 1984 to approximately 17.5 million in 2021, while the number of urban centres has more than doubled over the same period.
This rapid urbanisation, it explains, has generated enormous demand for roads, housing, drainage systems, public transport, water supply, sanitation facilities, electricity and telecommunications infrastructure.
However, infrastructure expansion has failed to keep pace with this growth, resulting in increasing congestion, inadequate public services and declining urban efficiency.
Urban Sprawl Driving Up Costs
The World Bank attributes part of Ghana’s infrastructure challenge to the rapid spread of low-density urban development.
According to the report, cities continue to expand horizontally into peri-urban communities instead of growing more compactly.
This pattern significantly increases the cost of infrastructure delivery because governments are required to construct longer road networks, extend water pipelines, electricity lines, drainage systems and other public utilities across much larger areas.
The report notes that sprawling cities also increase travel distances, fuel consumption, traffic congestion, greenhouse gas emissions and air pollution, while making public transport systems less efficient and more expensive to operate.
It warns that if current development patterns continue, Ghana’s cities will become increasingly costly to manage and less productive economically.
Informal Settlements Add to Burden
Another challenge identified by the World Bank is the rapid growth of informal settlements.
The report explains that extending infrastructure to communities that have already developed without proper planning is considerably more expensive than providing serviced land before construction begins.
It cites international evidence showing that retrofitting infrastructure in informal settlements can cost between two and eight times more than installing infrastructure in planned developments.
According to the report, these additional costs arise because underground water pipes, sewer networks, drainage systems and electricity infrastructure must be installed beneath existing buildings and roads. In many instances, authorities are also confronted with the politically sensitive task of relocating residents to make way for redevelopment projects.
Weak Municipal Financing
The report also points to weak financing at the local government level.
It states that Metropolitan, Municipal and District Assemblies (MMDAs) contribute only a small share of infrastructure investment, with the central government financing the bulk of capital projects.
Most assemblies, it says, undertake relatively small and fragmented investments, focusing largely on social infrastructure while allocating limited resources to roads, sanitation and other essential urban infrastructure.
Furthermore, much of the internally generated funds (IGF) mobilised by local authorities are used to finance recurrent expenditure, leaving little room for long-term capital investment.
The report argues that strengthening municipal finance systems and improving local revenue mobilisation will be critical to narrowing the country’s infrastructure gap.
Private Sector Must Play Bigger Role
To address the enormous infrastructure financing shortfall, the World Bank is urging Ghana to mobilise greater private sector investment through Public-Private Partnerships (PPPs).
Although the country has made progress in strengthening its PPP framework and integrating climate considerations into project screening, the report says these efforts have yet to translate into sufficient investments in critical urban infrastructure.
The report cautions that “Despite progress, there remains a significant shortfall in the number of projects related to basic services that can effectively close the infrastructure gap.”
It therefore emphasises that “It is imperative to further identify and implement PPP projects that specifically target these basic services to bridge the gap and uplift the quality of life for all citizens.”
According to the report, urban transport, water supply, sanitation and solid waste management present significant opportunities for PPP investments. It therefore urges the government to develop a stronger pipeline of bankable projects capable of attracting private capital.
The report notes that expanding private sector participation in these sectors would not only improve urban service delivery but also accelerate Ghana’s progress towards the Sustainable Development Goals while strengthening climate resilience.
Call for Urgent Action
The World Bank concludes that Ghana’s infrastructure deficit can only be addressed through a combination of stronger domestic revenue mobilisation, improved municipal financing, better urban planning and increased private sector investment.
Without these reforms, it warns, the country’s rapidly expanding cities risk becoming centres of mounting infrastructure deficits, rising service costs and declining economic competitiveness rather than engines of sustainable and inclusive growth.
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