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Business News of Thursday, 23 September 2021

Source: thebftonline.com

Government sets up system to prevent project stagnation due to financing

Dr. Kodjo Essien Mensah-Abrampa, Director General NDPC Dr. Kodjo Essien Mensah-Abrampa, Director General NDPC

Government has instituted a stringent legislative mechanism to ensure that before any project of interest begins, there is a full regime of financial flow secured for its completion, Director-General of the National Development Planning Commission (NDPC), Dr Kodjo Essien Mensah-Abrampa, has said.

According to him, the move is aimed at preventing the stagnation of government capital projects which end up escalating the original price meant for the execution, and invariably in some instances, render the projects uncompleted for decades.

Speaking to the B&FT in an interview, Dr Mensah-Abrampa said due to this worrying development, a Legislative Instrument (LI) has been passed by government to impose some binding responsibilities on the Ministry of Finance to help prevent future occurrences.

“Resource flow has become critical for government. A system has been put in place to look at the resource regime available for the execution of a project from start to finish. This is to ensure that when a project is started, it will come to an end and not stagnate to increase the cost of completion by government.

“Once an asset is initiated but not completed, it becomes a liability. This has been a huge problem, but with the passage of a Legislative Instrument by parliament on this matter, we are confident that going forward, there will not be any instance when capital projects are begun and not finished,” he said.

Elaborating on the issues, Dr Mensah-Abrampa noted that the system that has been put in place is robust. “There is a committee which is chaired by the Ministry of Finance, and the Director-General of NDPC is on it; there are various directors at the Ministry of Finance on it. Also, a representative from the Ghana Institute of Engineers sits on the committee.

“There is also the Central Review Tender Committee that looks at every capital project government has an interest in; they assess, and the full regime of funds for the project is ascertained before it is started.”

In 2018, it was estimated that the nation lost up to US$25million annually through unfinished projects. This amount was equivalent to 667 additional three-unit classroom blocks per year, which would accommodate an estimated 70,000 students, a study has shown.

The study was conducted in Ghana between 2014 and 2017 by Dr Martin J. Williams, Associate Professor of Public Administration at the Blavatnik School of Government, University of Oxford, in collaboration with the National Development Planning Commission (NDPC) and Local Government Service Secretariat (LGSS).

The study shows that about a third of projects started between 2011 and 2013 were never completed. The study also found that contrary to popular opinion – those unfinished projects were due to corruption and politics or elections – the findings showed that neither of these was the cause. It said more work had been done on the projects than had been paid for, and project completion rates were also consistent across the years.

Rather, districts were spreading their resources for projects too thinly on too many projects than they could afford to complete every year. This notwithstanding, projects were more effectively delivered through local government than central government.