Business News of Tuesday, 19 March 2013
Government has been urged to revisit and fast-track passage of the Municipal Finance Bill in order to strengthen Metropolitan, Municipal and District Assemblies (MMDAs) and ensure infrastructural development at the grasssoots.
The bill, which proposes the creation of a Municipal Finance Authority, was laid in parliament in 2008 to complement the Municipal Finance and Management Initiative (MFMI) of the government at the time.
It is currently being reviewed by the National Bond Market Committee (NBMC) to address various challenges that have stalled its passage.
“Accra, Tema, Takoradi, and Kumasi are municipalities whose projects can easily pay for themselves; though there is a genuine concern about the management of funds,” Adu Anane Antwi, Director-General of the Securities and Exchange Commission (SEC), told Business & Financial Times.
“But we think that we could pilot it. Just give one or two, or a maximum four, and let them start. I don’t see why if Accra wants to issue bonds to build some shopping mall or market, they would not be able to generate enough funds to pay.”
A strong regulatory framework that prevents MMDAs from engaging in multiple borrowing and running into debt – which will ultimately be passed on to the Central Government – and the ability of MMDAs to identify and invest in revenue generating projects are the major challenges being addressed.
There are currently six Metropolitan, 40 Municipal and 124 District Assemblies within the 10 regions of the country. If they are authorized to raise private funds for infrastructure projects, it would draw investors – who critically consider the availability of certain amenities before deciding where to locate their business – to their localities.
The NBMC was set up to among others identify constraints in the development of a corporate bond market, and study and recommend legal, institutional and process changes needed to overcome them.
The increasing demand on central government’s scarce resources has necessitated the need for MMDAs to consider alternate sources of funds for infrastructure projects.
Revamping the infrastructure of the hinterlands will take pressure off the capital city and other major regional capitals where companies compete for space due to the relatively good infrastructure available.