Business News of 2014-02-24

Doubtful clouds hung over Ghana Infrastructure Fund

Public Agenda's probe into the current state of other existing statutory funds has revealed government's failure to pay collected revenues into the accounts of the respective funds. The Ghana Education Trust Fund (GETfund), the Ghana Road Fund and the National Health Insurance Fund (NHIF) have since January last year not received any payments, even though the stipulated sources of revenues for these funds have continued to provide the required resources.

Already, government has allocated 40% of the 2014 Annual Budget Funding Amount (ABFA) from petroleum receipts to the Ghana Infrastructure Fund while it continues to collect the additional 2.5% VAT announced in 2014 budget supposedly for the fund which is yet to be fully established and operationalised. The Ministry of Finance and Economic Planning is also yet to present the necessary documentation of the GIF to Parliament for enactment into law; our investigations have revealed.

The objective of the GIF is to help finance critical infrastructure projects needed to accelerate economic growth and development in the country. The primary source of funds for the GIF would be the 2.5 per cent increase in the Value Added Tax (VAT) rate, the Annual Budget Funding Amount (ABFA), a portion from the petroleum revenue meant for amortisation and infrastructure development and other such funds as Parliament may approve.

The Ghana Education Trust Fund (GETFund), for example, is a public trust fund set up by an Act of Parliament in 2000 (ACT 581) to provide funding to supplement the government's efforts to provide education infrastructure from pre-tertiary to the tertiary level. It is specifically to fix the funding gap in education. The Fund is expected to be financed by levies accrued from 2.5 per cent VAT imposed on selected goods and services, but it is currently in arrears of about GHC 687 million. Same is to be said of the NHIF and the Road Fund which are estimated to be in arrears of GHC 850 million and GHC 900million respectively.

When Public Agenda contacted the NHIA, the Authority maintained that it had been paid by government about two weeks ago. It is, however, not certain if the payment came in the wake of the threats from the Pharmacy Council to withdraw their services from the NHIS.

In a related development, the Chairman of the Young Patriots of the New Patriotic Party (NPP), Richard Nyamah, has sued government for blatantly refusing to pay monies into the funds over the past one year. In an exclusive interview with the Public Agenda, Mr. Nyamah stated that the idea of setting up such an infrastructure fund was a laudable one but was concerned that since there was no locus within the country's legal framework to ascertain how the GIF should be utilised and which body has oversight of the fund, it stands the chance of it being misappropriated.

Mr Nyamah, who is currently in court over government's arrears to the GETfund in 2013, expressed uncertainty over government's commitment to transparently pursue the objectives of the GIF. “If the statutory and mandatory funds like the GETfund, NHIF and Road Fund that are located within the legal framework of this country are not being adhered to, and there is a difficulty in meeting the objectives of those funds because the government is saying that the national coffers is dry, then I remain to be convinced that the infrastructure fund, that currently has no locus within the legal framework will have money in it.”

Every year, the government collects various taxes and levies such as income tax, Value Added Tax (VAT), National Health Insurance Levy (NHIL) and petroleum taxes, of which the law requires that some portions be put into specified accounts to pay for specific services to the citizens. Government is required by law to transfer monies accrued from the levies and taxes into the respective statutory funds within thirty days of receipt.