Weekend Today understands that many indigenous financial institutions have faced liquidity challenges over the years due to their willingness to finance the activities of contractors also mostly indigenous entities in the areas of energy and infrastructure of all types.
Indeed, it was a result of that, that the liabilities on the energy field nearly collapsed GCB and others. That was the reason the central government put up ESLA, an energy bond, to salvage the situation.
However, this paper has learnt that over the past couple of years, facilities extended to indigenous contractors for state-sponsored housing, roads, bridges, education, etc., have become problematic.
This has precipitated acute liquidity crisis for finance houses, banks and fund managers who pre-financed such projects. But unfortunately, no organised solution has been found. And no bond either!
It must be pointed out that a deal was set up earlier this year through Fidelity Bank for some contractors to “sell” their government project receivables to that bank at a discount. That deal has in fact left many asking very legitimate questions including: Why that bank? How was it selected? Through sole sourcing? And is the government that couldn’t pay the contractors now able to pay Fidelity Bank?
So what happened?
Painstaking investigations by this paper have uncovered that over the past two years, some government agencies in the names of “reform” and “value for money” have made certain decisions.
These decisions, Weekend Today gathered, were made because of “directives from above.”
As a result of that, existing contracts at COCOBOD, GetFund, Road Fund, Roads & Highways, etc., were suspended, put on increased scrutiny, while “independent” committees were set up to certify and re-certify completed projects.
The effect has been that many contractors have defaulted on facilities obtained and have also been unable to work on uncompleted projects.
Some government officials have suspected improperly awarded contracts, shoddy works and over bloated contract amounts awarded by the previous NDC administration as reasons for the additional scrutiny.
All these, Weekend Today established, have put severe stress, the financial institutions who pre-financed the projects. And more seriously, is the fact that some have lost licenses and gone out of business.
The consequence is that the customers who placed their monies with the indigenous financial institutions, now have these monies “locked up.” And the refusal of the central government agencies to honour contracts awarded by the NDC administration is the direct cause of this.
Meanwhile financial experts have told Weekend Today that no amount of pressure, demonstrations, press conferences and insults directed at the financial institutions, their owners and employees will “unlock” these funds.
The only solution, they proffered, will be for government to “pay the contractors.”!
And this is where our investigations have pointed to where the funds “locked up” are.
Incidentally, some concerned customers of certain financial institutions were bracing up to demonstrate against government’s inability to pay its contractors.
And when this paper asked some of the Ghanaian financial institutions why they finance government projects, they pointed to the fact that agencies such as GetFund, Road Fund, etc., issue guarantees for payment and agree to pay in the joint names of contractors and the financial institutions. This business, they confirmed, was an honourable one engaged in by reputable investment banks throughout the world some who finance only state and municipal government projects. Besides, they said that in the past such liquidity challenges only lasted a few months and not years as was being experienced now.
They agreed that it was the right thing to do to support the country’s development.
Recently, the Senior Minister, Yaw Osafo-Maafo, asked the private sector to step up and finance projects to bridge the huge existing infrastructure gap.
This paper is wondering how that can happen when the government agencies and indeed central government continue to place contractors and their financiers at great risk.
When an administration decides to “reform” government finances and the financial system without taking into account that traders, teachers, soldiers, lawyers, judges, nurses and everybody’s hard earned monies will be affected negatively, it leaves many wondering why. This kind of approach acts like a bull in a China shop—it breaks everything in its way.
And the effects are there for everyone to see—the sick dying, education truncated, businesses being destroyed and rising unemployment. Obviously, this is what the central government has accomplished. At the same time, certain financial institutions were being fed new contracts and opportunities to thrive, while government agencies were pretending they owe individual contractors but not their financiers.
So that is where the “locked up” funds are.
In the wake of the above the financial experts who spoke to Weekend Today made it clear that this must not become another opportunity for political football. The customers suffering, they stressed, belong to all political parties, NPP, NDC, PPP, CPP, PNC, etc., religious organisations, ethnic groups etc.
The funds don’t belong to the owners of the companies of their employees. They belong to the customers. This is an economic matter with potential life or death consequence, they further intimated.
However, they stressed that it was a good thing that the current NPP administration brands itself as a private sector ally.
The experts, therefore, entreated President Nana Addo Dankwa Akufo-Addo to begin a special investigation using independent people, preferably those who are non-partisan to determine the negative effects of what some bureaucrats and some political appointees were doing to indigenous companies.
And as 2020 is fast approaching, the financial experts urged the President to pull the breaks on especially his appointees who were misleading him.
But this cannot be a mere political matter, they stressed.
In their view, “Ghana Beyond Aid” requires that Ghanaians find solutions to the perennial problem of financing infrastructure in a manner that benefits locals and not foreigners.
Source: Today Newspaper
