The outlook of Ghana has been rated by Fitch Solutions as the second most attractive country for power supply out of 18 countries in SSAs. Ghana comes second only to South Africa in this category, with Botswana taking the third position. The report indicated that Ghana has one of the lowest Power Risk/Reward Indexes in the whole of the region. Ghana had a score of 50.3%, while that of South Africa was a mere 0.7% above 50%.
Among the 18 countries, Sudan (18th), DRC (17th), Zimbabwe, Mozambique (16%) were ranked bottom. Their risk/reward index were very high.
“We expect political and economic risks to limit power sector growth in Sub-Saharan Africa over the next decade. Political instability and economic challenges in Sub-Saharan Africa will continue to pose major hurdles for power sector development.”
“Countries within the region, such as Ethiopia, Kenya, Nigeria, and South Africa are grappling with issues such as corruption, social unrest, and economic inequality, which deter foreign investment and complicate infrastructure project developments”, it added.
Furthermore, the UK-based firm said despite efforts by governments for power market reforms and private sector participation, the volatile political climate and weak governance structures undermine the effectiveness of these initiatives.
For instance, it said “in Nigeria, the ongoing conflict in the Northern regions and pervasive corruption issues have hindered the liberalisation of the power sector, limited the effectiveness of reforms, and deterred potential investors”.
Moreover, the economic outlook for SSA is clouded by high debt levels and limited fiscal space.
“An increase in public debt consumes a share of the national savings and this decrease in savings leads to higher interest rates, diminishing the incentives for investment. The International Monetary Fund (IMF) expects that the average debt ratio for SSA will remain elevated at around 60%, thus constraining public spending on infrastructure projects, including in the power sector”, it mentioned.
SOURCE: JoyBusiness
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