Professor Peter Quartey, Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, has expressed concern over the country’s lack of investment and economic growth despite two decades of heavy borrowing. Speaking during his inaugural lecture as a Fellow of the Ghana Academy of Arts and Sciences, he pointed out that much of the borrowed funds were used to pay salaries and loan interest rather than being directed towards productive sectors.
Delivering his lecture titled “Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?”, Prof. Quartey highlighted the growing debt burden, with Ghana’s debt-to-GDP ratio rising from 42.9% in 2013 to 82.9% in 2023. Though it is projected to drop to 61.8% by the end of 2024 due to the ongoing debt restructuring programme, the lack of matching loans with productive investments remains a significant challenge.
He called for urgent legislation to establish a 60% debt ceiling and urged the government to develop a framework that ensures loans are channeled into strategic investments capable of generating returns. He also emphasized that such investments should spur economic growth and improve the well-being of citizens. According to him, public investment has had limited long-term impact due to weak project selection, appraisal, and management processes.
Prof. Quartey pointed to a worrying decline in capital spending, or capital expenditure (CapEx), which dropped from 6.9% of GDP in 2010 to just 2.4% in 2023, with only a slight increase to 2.5% projected for 2024. Capital spending typically goes into infrastructure such as roads, bridges, airports, and technological advancements, all of which are critical for creating jobs, increasing productivity, and enhancing competitiveness. However, the country’s underinvestment in these areas has stifled economic progress.
One of the key examples Prof. Quartey cited was the Pwalugu multi-purpose Dam project in the Upper East Region. Although US$12 million had been disbursed for the project, which was supposed to deliver a 25,000-hectare irrigation scheme and generate 60MW of electricity, work has yet to begin after six years.
“There is no rigor in the process for project approvals, especially for large projects. These challenges cause major delays in executing projects, which translates into poor execution,” Prof. Quartey stated. He added that inefficiencies in the use of funds were exacerbated by non-competitive bidding processes and poor procurement practices, noting that Ghana lacks a robust framework for monitoring and evaluating projects once they are completed.
To address these issues, Prof. Quartey urged the adoption of a national development planning process to guide capital projects, rather than allowing them to be driven by partisan interests. He advised that projects be carefully selected to align with the country’s medium-term strategy and broader developmental goals.
Prof. Quartey reiterated the need for reforms to ensure that borrowing translates into tangible investments that foster economic growth, rather than merely serving to finance consumption or administrative expenses.
