United Party (UP) founder and leader Alan Kyerematen has backed the government’s decision to finally pursue the long-awaited Accra-Kumasi Expressway but questioned why the state should commit billions of dollars to a road he believes can attract private financing.
The former Minister for Trade and Industry argued that the proposed US$4 billion expressway should be structured as a commercially viable infrastructure investment, allowing domestic or foreign private investors to finance its construction and recover their investment through toll revenues.
“We should commend the government for at least thinking about having an expressway between our two capital cities,” Alan Kyerematen said, describing the project as something that should have been delivered many years ago.
He was, however, quick to add that “But the financing option, in my humble opinion, is not the best.”
Why Use Scarce Public Money?
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Alan Kyerematen argues that if a road can generate revenue from users, why should government finance the entire asset from scarce public resources? The proposed expressway is expected to cost about US$4 billion.
The government has said it intends to finance the project without borrowing, using domestic resources, with President John Dramani Mahama recently indicating that US$2 billion had already been made available for the project.
For him, this approach creates a significant opportunity cost. He argued that the same US$4 billion could instead be deployed to sectors such as healthcare and education or used to support businesses through financing programmes.
“Can you imagine what four billion dollars can do for our health sector, for our educational sector, or even to give those of you here interest-free loans to start your own businesses?” he asked.
The Road Could Potentially Pay for Itself
The commercial logic behind the former Trades Minister’s argument is the expressway’s potential to generate toll revenue. Once completed and properly tolled, the road would have a direct revenue stream from the large volume of passengers and commercial vehicles expected to use the Accra-Kumasi corridor.
He believes that this principle could provide the basis for a public-private partnership, concession or build-operate-transfer arrangement under which private investors provide some or all of the upfront capital and recover their investment over an agreed period.
Alan Kyerematen therefore questioned the need for government to tie up billions of dollars of public funds in an asset with identifiable commercial revenue potential.
The High Street Journal’s Earlier Question
The politician and businessman’s criticism comes after The High Street Journal previously questioned the decision to allocate substantial public resources to a project which can be taken off public expenditure due to its viability.
The High Street Journal maintained that borrowing could be a viable option since it could be recouped, adding that the country does not have a good history when it comes to publicly funded projects, citing the Sofoline Interchange. In July, policy analyst Alfred Appiah argued that the Accra-Kumasi Expressway was among the most commercially viable projects under the government’s Big Push programme because its potential toll revenues could make it attractive to private investors.
He questioned whether scarce oil and mineral revenues should be concentrated on a project capable of mobilising private financing, rather than being used for infrastructure that is less commercially attractive and therefore more difficult to finance privately.
The High Street Journal’s analysis argues that the financing debate should not be reduced to a simple “borrow or don’t borrow” question. One possible model would be to use appropriately structured long-term financing for the expressway and establish a credible tolling mechanism capable of servicing the financing while allowing government to preserve scarce fiscal resources for other priorities.
Alan’s Proposal
Alan Kyerematen, although he supports the expressway, does not necessarily support the current financing structure. Ghana may urgently need the road, but that does not settle the question of whether government should provide all the money upfront.
He wants policymakers to determine whether the expressway can be structured in a way that brings in private capital without making tolls prohibitively expensive for road users or exposing the public to excessive contractual risks.
“The principle and the idea behind it and the intention is good,” he said. “But the financing option, in my humble opinion, is not the best.”
