Parliament approves 28m Euros credit facility … To support district assemblies

Parliament on Friday unanimously approved a credit facility agreement between the Government of Ghana and Kreditanstalt Fur Wiederaufbau (KfW) of Germany for an amount of thirteen million Euros (€13,000,000.00) in support of the District Development Facility (DDF).

Aside the credit facility, an additional amount of one million nine hundred thousand Euros (€1,900,000.00) was issued as grant by KfW to the Government of Ghana (GoG).

The House also by resolution unanimously approved another credit agreement between the GoG and Agence Francaise de Development (AfD) of France, for an amount of fifteen million Euros (€15,000,000.00) in support of the District Development Facility.

Article 181 of the 1992 Constitution states that; “Parliament may, by a resolution supported by votes of a majority of all members of Parliament, authorize the Government to enter into an agreement for the granting of a loan out of any public fund or public account”.

It goes further to note in Article 181 (3) that “no loan shall be raised by the Government on behalf of itself or any other public institution or authority, other than by or under the Authority of an Act of Parliament.

Article 181 (7) also states that “The Minister of Finance shall, at such times as Parliament may determine, present to Parliament any information concerning any discrepancies relating to (a) the granting of loans, their repayment and servicing; (b) the payment into the Consolidated Fund or other Public Fund of moneys derived from loans raised on institutions outside Ghana.

The amount aims at deepening decentralization for accelerated development in the country, which comes in two fold; to provide financing support to District Assemblies for the implementation of district development plans that will provide infrastructure and services at the local level (provision of schools, hospitals, markets among many others), based on the need of the individual District Assembly, and to provide performance-based grant where access to development funds is linked to regular performance assessment criteria called the Functional and Organizational Assessment Tool (FOAT).

The credit facility (€13,000,000.00) has a 0.7% interest rate with ten (10) months grace period, a thirty (30) years repayment period and forty (40) years maturity period with a 66.39% grant element.

The DDF is an additional funding stream by the GoG that seeks to complement the District Assemblies Common Fund (DACF) provided by the Central Government to District Assemblies.

The Chronicle was informed that the total amount involved in the District Development Facility over 10 years period is ninety million dollars (US$90,000,000.00) which would be provided in tranches by the contributors to the fund.

Four international institutions are currently co-financing the DDF. They include; the Canadian International Development Agency (CIDA), Danish International Development Agency (DANIDA), Agence Francaise de Development (AFD) of France and Kreditanstalt fur Wiederaufbau.

However, The Chronicle learnt that the AFD's support to the basket funding would be over a three year period (2009-2011), and that continuation of AFD support to the facility would thereafter be subject to evaluation and funding availability.

So far, twenty five million dollars (US$25,000.000.00) has been disbursed to District Assemblies under the facility, including a GoG contribution of ten million dollars (US$10,000,000.00), a source at the Ministry of Finance told The Chronicle.

The chairman of the Finance Committee, Mr. James Klutse Avedzi, who laid the motion in Parliament for the approval of the credit facility told members of the House that funds under the DDF would be managed by the Controller and Accountant General's Department (CAGD), whilst the Ministry of Local Government and Rural Development (DDF Secretariat) would be in charge of the performance assessment of the Metropolitan, Municipal and District Assemblies under the FOAT.

Mr. Avedzi, who is also the Member of Parliament (MP) for Ketu North Constituency, further told the house that some members of the Finance Committee raised concern about the allocation formula, bemoaning situations where some Assemblies that did not perform well, and still benefited from disbursements due to other criteria such as population size. This, he said, was communicated to the technical team of the Ministry of Finance, who promised to have a re-look at the disbursement formula.

Hon. Avedzi later told The Chronicle that the idea behind setting up the DDF was to motivate District Assemblies to perform better, in order to improve living conditions of the people.

According to him, a district which does not qualify for development grant after the assessment, would be assisted with a capacity building program in order to help it qualify for subsequent disbursement.