A team from the Macro, Trade and Investment unit of the World Bank Group paid a curtesy call on the leadership of the Construction Sector of the Association of Ghana Industries (AGI) in Accra, last month at the AGI Secretariat.
The team from the Work Bank comprised Kaliza Karuretwa (Senior Private Sector Specialist), Hania Kronfol (Private Sector Specialist), Barbara Kotschwar (Senior Private Sector Specialist), Kobina Daniel (Senior Private Specialist), Lina Sawaqed (Consultant), Jim Friedlander (Consultant), Zhi Ken Gan (Consultant), Neustadt Amarteifio (Consultant), and Bianca Clinton (Consultant).
The mission’s objective in Ghana was to meet with the Ghana Investment Promotion Center (GIPC) Board and related stakeholders to present and discuss key policy and institutional recommendations aimed at improving Ghana’s ability to attract and retain private investment. The focus of the meeting was on the level of services investors are getting from GIPC and also identify the main entry barriers to foreign direct investment.
It emerged that trade barriers in the form of some local content policies may be hindering foreign direct investments. The uncompetitiveness of most local businesses emerged as a strong reason for the existing trade barriers. Many factors such as the lack of capacity and financial constraints among others contribute to the uncompetiveness of local businesses. In the construction sector for example, delayed payments by government for public construction works was identified a major limitation to growth and the sustainability of the construction businesses and the sector at large, according to the Chair of the Sector, Rockson Dogbegah.
Rockson further stressed the difficulty faced by local construction companies to raise finance from banks because of the government’s failure to pay contractors on time. This he said explains why local construction companies are unable to compete effectively with their foreign counterparts. As a result, the big and juicy contracts go to foreign companies who are relatively favoured in terms of payments for construction works. Kobina Daniel, a Senior Private Sector Specialist with the World Bank therefore suggested partnerships between local and foreign companies as a potential solution to delayed payments. However, large multi-national corporations often lack the incentive to strike such partnerships.
Kalisa Karuretwa of the World Bank intimated the weaknesses of unions and the lack of strong collaboration and unified voice in dialogues with the government. She therefore indicated the need for more private private dialogues, which the World Bank is willing to support.
Eric Defor, the Vice Chair of the AGI Construction Sector emphasized the need for local content as one of the surest ways to ensure that Ghanaians participate in the construction sector. He said this with reference to some construction contracts with Chinese contractor that have provided only a few jobs for Ghanaians because labour and equipment, even those that are available locally were imported into the country.
Kenneth Donkor-Hyiaman, the Executive Secretary of the Sector cautioned against any move to liberalize the construction sector with investment to build the capacity of local construction sector to compete effectively. To this end, he encouraged foreign companies to partner local companies and promote technology transfer.
Rockson Dogbegah acknowledged the World Bank’s support and collaboration with the sector in the areas of corporate governance; developing and sharing inputs in public private dialogue platforms; and the promotion of sustainability concepts in building designs and construction methods in collaboration with IFC Edge programme. He also noted the bank’s support in completing work on the Building Code of Ghana and
the general support given to Ghana in general in terms of fiscal discipline and enhancing the general business environment.
The following conclusions were reached:
- There was a need for the world bank to keep supporting government and the private sector to building sustainable institutional relationships;
- World bank to help strengthen the capacity of the private sector to effectively engage with peers in other jurisdictions in the areas of sharing best practice in private private dialogues;
- The construction sector could be better supported by improved construction governance systems in the country which could provide ready opportunities to solving unemployment challenges facing the country;
- Private sector must be more engaging and be strategically represented across the governance architecture of the country.
In attendance were the Finance Director, Nathaniel Quarcoopome, and the Policy and Research Director of the AGI, John Defor, who also made general observations about the importance of local content for the development of the local industry and prosperity at large.