A new finance authority bill, which seeks to improve local government's access to credit for accelerated provision of public services and economic development in the various regions and the districts, is currently being put together by the Ministry of Local Government and Rural Development.
The finance authority bill when it comes into force will reduce risk and lower cost of borrowing for the local government, supporting improved finance and technical management, provision of a focus for the development partners with which to support the infrastructure development in Ghana, as well as foster cooperation among a variety of local government and private institutions.
The BusinessNews newspaper reports that the functions of the authority are to help provide short-term investment opportunities for Metropolis, Municipalities and District Assemblies (MMDAs ) by the establishment and operation of pooled investment, borrowing from domestic and international sources and on-lend to MMDAs and provide a supporting role of providing technical expertise to local governments and other organizations to ensure that the projects are sound.
Other functions of the authority include ensuring that local governments are encouraged to manage their financial affairs well, assisting local governments and other organisations in arranging partnership with private sector companies for management expertise and capital financing, and developing the capacity of the local professionals at all levels to have better capacity to manage local infrastructure programmes.
For the authority to be established and begin operations, BusinessNews was reliably informed that government has to inject an amount between US$30 million to US$100 million as seed money as well as grants from the donor partners. In addition, District Assemblies may also pay part of their Common Fund as a pool investment.
The authority will invest the funds on behalf of all the assemblies like the mutual funds and government bonds, BusinessNews has gathered.
However, the law will allow metropolitan, municipal and district assemblies to borrow only for emergency situation and not build car parks and markets.
BusinessNews also learned that the authority is likely to be a company by a guarantee, which will not be a profit-making organisation but will be ruled by the Company Act.