How poor roads and weak infrastructure affect intra – national trade and international trade in Ghana

How poor roads and weak infrastructure affect intra – national trade and international trade in Ghana (Sub – Saharan Africa)

Abstract

The Republic of Ghana is located in West Africa, on the coast of the Gulf of Guinea. It is hailed as one of the most promising developing country’s due to its considerable natural resource wealth. As a result of its vast natural resources, the economy of Ghana is heavily reliant on agriculture and the export of natural resources. Since the late 1980’s, Ghana has been working strongly towards achieving economic stability and eradicating poverty throughintra – national trade and inter- national trade.With assistance from multiple international donors such as the International Monetary Fund (IMF), African DevelopmentBank (ADB) and the World bank group, Ghana embarked on several large scale multi- million-dollar infrastructure projects to improve its road network.

Background

Poor-quality roads and weak transport infrastructure have long been an issue for African trade and are considered prime reasons for the continent’s low level of competitiveness. As a leading exporter of raw materials and horticultural products, Ghana mainly exports ore and gems, cocoa, woods, oil, fish, and horticultural products. Its main clients are India, China, South Africa, Switzerland, and the Netherlands.

Introduction

In Ghana, transportation development is often used as a tool to alleviate poverty and promote economic growth. Transportation development involves, but is not limited to, the implementation, rehabilitation and maintenance of technologies to facilitate the movement of people and goods. As the scope of transportation development is wide, this paper will focus on road development which is a priority in infrastructure development throughout Ghana. Road transport is a priority because it is the most widely available and most used form of transport in the country. Not only does the road network link agricultural production areas with local, regional and national markets, it also accounts for 97% of all passenger and freight traffic in Ghana (Styles, 2018).

Most roads in Ghana are poorly maintained and a significant number – around 53% – remain unpaved (The African Development Bank, 2014). Which leads to à high internal transport costs due to poor infrastructure/ road quality.

Road development projects

Since independence in 1957, Ghana has embarked on a significant amount of infrastructure projects that have been funded from external donor organizations. These organizations include but are not limited to the African development fund (ADF), International Development Agency (IDA), Arab Bank for Economic development in Africa (BADEA), Organization of Petroleum Exporting countries (OPEC Fund), the International Monetary Fund (IMF) and the World Bank Group. Unfortunately, to discuss each individual project and contribution would be beyond the scope of this paper. However, it is important to acknowledge that many external agencies are extensively involved in road development initiatives in Ghana.

This brings us to address the impact of foreign aid on road maintenance and rehabilitation in Ghana. As a recipient of foreign financing why has Ghana not been able to produce a network of quality roads.

It can be said that impact of foreign aid in road development has had limited success as it has failed to adequately address the political and institutional factors that contribute to the deterioration of a road network. The programs failed to appropriately address the problem in a multi-faceted approach. Rather, it focused on one aspect; physical rehabilitation and neglected the institutional and political constraints. Additionally, the experience of Ghana further asserts that financial resources alone will not ensure effective restoration and preservation of roads or prevent a recurrence of the same types of problems that these projects are attempting to correct.

Challenges(Institutional Challenges&Infrastructure Challenges)

There remain a wide range of factors that generate high intra-national trade costs within African countries: the price of inputs such as fuel, labor, and equipment on the one hand; and market characteristics, including regulations, transport, and trade procedures on the other.

Additionally, a fewother challenges impair trade: cumbersome administrative processes, corruption, a weak productivity, insufficient water and power supply (access to electricity), unskilled labor and corruption and protectionism. Among potential logistics costs are market-entry barriers such as access restrictions, technical regulations, customs regulations, and cartels (Teravaninthorn and Raballand, 2009).

Infrastructure challenges: many routes are under-utilized, and trucks often travel short distances, or only carry a small load. As a result, potential economies of scale are not captured, and internal transport prices remain high.

In addition, inferior technology, for example old truck fleets that are fuel-inefficient, unpaved roads severely increase the cost of intra-national trade (Atkin and Donaldson, 2015).

Recommendations/ solutions

Instead, to be successful, policies need to recognize the complexity and diversity of high intra-national trade costs and address a wider range of infrastructure constraints such as those highlighted above(Atkin and Donaldson, 2015).

Reducing trade costs

Improvement of roads

It has often been presumed that large investments in improved road infrastructure would reduce transport prices, but this does not appear to have been the case. The significant support programs implemented by the World Bank since the 1970s in transport corridors in Africa has had little if any impact on transport prices (Teravaninthorn and Raballand, 2009).

Once roads are paved, further improvements have not been found to result in a significant reduction in transport costs (Teravaninthorn and Raballand, 2009). That is, transportation investments have had little impact on the overall quality of roads as projects are not completed, ran over a budget, or even when completed are not maintained.

Conclusion