Prof. Peter Quartey

Development Financing in Africa: Is Ghana on the Path to HIPC?

Prof. Peter Quartey

(B.A (Ghana), MPhil. (Ghana), MSc. (Warwick), PhD. (Manchester))


Development financing encompasses all financial flows aside funds from the domestic private sector which are usually received from internal or external sources. These flows to developing countries usually take the form of (i) Government revenues (ii) Concessional development assistance (i.e. external grants and concessional credits) (ii) Non-concessional loans taken out by (or guaranteed by) developing country governments, usually from International Financial Institutions (IFIs) or private sources or commercial loans such as Eurobonds, typically used for infrastructure development or other revenue generating projects; and (iv) Private external finance, in the form of Foreign Direct Investment (FDI), portfolio flows, and remittances. Private external finance funds are mostly targeted at engaging in direct production or provision of services with focus on growth objectives rather than social objectives.

Development financing across Sub-Saharan Africa (SSA) has undergone a number of transformations over the past two decades with a major shift in recent times from concessional financing, especially in middle-income countries to non-concessional financing and other new methods of financing growth.  For instance, private capital flows, mainly in the form of FDI, and remittances have now overtaken official development assistance (ODA), while China and the other non-DAC Donors have increased their presence within the continent.  Another notable development in low middle income countries is the increased resort to the capital markets especially Sovereign Bonds. Although the UN (2005) argued that private capital flows will contribute significantly to development, the reality has been less than desired. In order to augment the existing financing mechanism, there has been a proposal from the UN High Level Panel on Financing Development chaired by the former President of Mexico, to consider innovative sources of finance such as currency transaction tax, carbon tax, international air transport tax, new issuance of Special Drawing Rights (SDRs) etc.

Despite these dynamics in the development finance architecture, there remain significant resource gaps between inflows and public investment requirements within SSA. Investment requirements were in the range of 15% of GDP in 2000 to 20.3% of GDP in 2015, while savings as a percentage of GDP was about 20% in 2000 and by 2015, it had declined to 13.8% of GDP, indicating a gap of about 7% of GDP to be filled in the midst of declining concessional finance. Interestingly, in lower-middle-income countries, on average, savings as a proportion of GDP has hovered around 27-32% and has consistently been above investment. However, this cannot be said about Ghana, though it is also a lower middle-income country. One may then ask, how has Ghana financed its development expenditures in the midst of the changing dynamics within the new financing architecture? Is this trend gradually driving the country’s debt sustainability thresholds to HIPC levels?

In this lecture, I review the development finance architecture across SSA and critically analyze the specific case of Ghana. I particularly examine the savings investment gap and how it has been financed through Taxes, Aid, FDI, and other forms of development finance. I then analyze the trends in debt as a result of the country’s reliance on external assistance and ascertain whether the country’s debt ratios are gradually cruising to HIPC threshold.


Prof. Peter Quartey started his Secondary education at Wesley Grammar School (1982-1987) and proceeded to Accra Academy for his Sixth Form education (1987-1989).  He then enrolled at the University of Ghana in 1990 to read BA Economics and later MPhil. Economics (1994-1996). He later gained an ODA Scholarship to University of Warwick (UK) to read MSc Quantitative Development Economics (1996 -1998) and then to the University of Manchester where he obtained a PhD in Development Economics (1998-2002).  He returned to Ghana in 2003 and joined the Institute of Economic Affairs and later the Institute of Statistical, Social and Economic Research (ISSER), University of Ghana in 2004 as a Research Fellow.  He was promoted to Senior Research Fellow in 2008, to Associate Professor in May 2011 and Professor in January 2016.

Prof. Peter Quartey is currently a Professor at the Institute of Statistical, Social and Economic Research (ISSER), the Head (Department of Economics) and Director (Economic Policy Management Programme), University of Ghana. His research interests are in Development Finance, Private Sector Development, Monetary and Financial Sector Development and Migration and Remittances.

His teaching portfolio dates back to 1998, when he served as a Teaching Assistant at the School of Economics, University of Manchester (UK), where he taught Statistics and Econometrics.  He also served as a Research Associate at the Institute for Development Policy Management (now the Global Development Institute) at the University of Manchester where he worked on the DFID Funded Finance and Development Project. He currently teaches Macroeconomics and Development Economics (MPhil) at the Department of Economics, University of Ghana. He combines this with teaching Advanced Macroeconomics, Applied Theories and Methods of Economic Development and Advanced Monetary Economics at the PhD level at the Department of Economics and Development Economics at both the MPhil and PhD levels at ISSER.  Over the past 4 years, he has supervised or co-supervised 4 PhD, 8 MPhil students and 10 MA Dissertations. He is currently supervising 2 PhD and 5 MPhil students.  He is also an External Examiner to the University of Cape Coast, Accra Institute of Technology and the University of Stellenbosch, South Africa. He is very committed to improving his scope of knowledge and as such has participated in as many as over 60 conferences/workshops/seminars across the globe.

As a Development Economist with specialization in Development Finance and Private Sector Development, he has published extensively in international peer reviewed journals such as the African Development Review, International Research Journal of Finance and Economics, Journal of International Development, Review of Development Economics, Journal of Developing Societies, Journal of African Business, African Finance Journal, International Journal of Social Economics, International Journal of Educational Development to mention but a few. He has also published with reputable publishing houses such as Oxford University Press, James Curry, Subsaharan Africa, Woeli and Springer, among others. He has contributed immensely to literature through his various works especially in the areas of Development Economics, Macroeconomics, Monetary Economics, Labour Economics, Health Economics and Financial Economics.  He has over 70 publications to his credit comprising 4 Edited Books, 16 Chapters in Books, 30 Articles in Refereed Journals, 7 Peer Reviewed Technical Publications, 13 Working Papers, a Book Review and numerous Consultancy Reports.  Some of his works have been attached to this profile.

He is a Senior Researcher/Network Member, African Economic Research Consortium (AERC) and has been an IMF-AERC Visiting Scholar as well as an ISSER-Brookings Institution (USA) Visiting Scholar. He currently leads a research funded by the USAID/Social Impact on Governance and Social Accountability Monitoring (GSAM) in Ghana as well as the DANIDA Study on Support for Private Sector Development Project (SPSD II) in Ghana (Baseline and Midline Evaluations) and also the local partner on a Research Consortium between the University of Manchester and Eight (8) African Institutions on New Development Planning in Africa. He played a vital role as the project co-ordinator for the Economy of Ghana Network (EGN) Phase II.

Apart from his academic activities, Peter Quartey has been very instrumental in the raising of funds for various projects. These include the UNU-WIDER PhD Programme Grant; for which he contributed immensely in raising US $1,000,000 and managing these funds over a 4 year period, the Bank of Ghana Auditorium project where he raised additional funds for the completion and furnishing of the project. Together with the Dean of UGBS, funds for the establishment of the Bank of Ghana Chair in Finance and Economics were solicited (worth GH¢ 2.30 million).  In 2014 when the power outages (Dumsor) was at its peak, he raised $60,000 to procure a 60 KVA generator for the Department of Economics.

He is currently a Steering Committee Member of the Econometric Society (Africa Chapter) and also served as the Vice Academic Board Chairman of the AERC Collaborative Masters Programme. Within Ghana, he served as a Board Member of the Institute of Applied Science and Technology as well as an Academic Board Member on the University Strategy Committee. He also served as a Local Organizing Committee Member for the 2016 Times Higher Education Conference. He is a Management Committee Member of the School of Social Sciences and the Academic Board, all of the University of Ghana. He is also a member of the following Boards: University Finance and General Purpose Committee; College of Humanities Finance Committee; College of Health Sciences Finance Board; School of Physical and Mathematical Sciences. He is currently serving as a member of the Local Organizing Committee of the 2017 International Association of Universities (IAU) Conference.

Prof. Peter Quartey also served a 3 year term as the Management Board Chairman of the University of Ghana Credit Union and the vice Management Board Chairman for 3 years.  Outside the borders of the University, he has served on the National Population Council Board and the Ministry of Interior Bureau Steering Committee.  He is the Executive Chairman of Startrite Montessori School Limited. He is also a board member of The Hunger Project (Ghana) and the Chair of the Finance sub-committee. He is a co-founding member of New Life Interdenominational Church. He is currently the Chair of the PTA, Livingstone House, Achimota School.

He has undertaken numerous consultancy roles within and outside Ghana and some of which includes the African Centre for Economic Transformation (ACET) Tullow Impact Project and Looking East Project. He played the role of lead consultant and co-ordinator in the Ghana Millennium Challenge and Account Baseline Survey, Senior Consultant and Local Expert for Jacobs and Associates and has served as a consultant to various institutions some of which include AERC, USAID, UNDP, NEPAD, Ministry of Energy, Ministry of Health, World Bank, Oxford Policy Management and International Council of Mining and Metals and many others.

His exemplary works have been recognised around the world thus receiving awards, some of which include the British Academy Award, the University of Ghana, and Social Security Bank Fellowship Award.  He was also a Global Development Network Medal Finalist

Peter Quartey is married to Mrs. Alice Quartey (Managing Director, Startrite Montessori School Ltd) and they are blessed with four boys, Michael, Carl, Peter (Jnr) and Ian.