Business News of 2014-05-29

US$64 million irrigation facility for Accra Plains

The farmlands of the Accra Plains will soon benefit from a US$64million gravity-based irrigation canal to help boost agricultural production in the region.

Under a public-private partnership (PPP) with private sector investors, the 69.8 kilometre facility will feed about 11,000 hectares of farmland that will be developed under the Ghana Commercial Agriculture Project (GCAP).

GCAP is a US$145million five-year project for the development and expansion of commercial agriculture. The United States Agency for International Development (USAID) is providing a grant component of US$45million, while the World Bank will provide US$100million as a loan to Ghana for the project.

The project seeks to develop Ghana’s agricultural sector by promoting inclusive commercialisation of selected commodity value chains under nucleus out-grower schemes and similar contract farming arrangements.

It focuses on commodities including maize, rice, fruit, vegetables and soya, and is making substantial investment into irrigation systems and infrastructure to ensure all-year round production in the targetted areas. A pre-feasibility study has been completed while the process of procuring the services of a transaction advisor is in progress.

“What we are doing is feasibility to select the best PPP model that will be suitable for the project, and then put it out there for tender,” Ben Johnson, Financial Management Specialist of GCAP, told the B&FT at a one-day training workshop for journalists.

“We want to move away from government spending money and putting up infrastructure that will not be well-managed, to dealing with a businessman who will do it and charge the farmers benefitting from the facility and later paying off the equity,” he added.

Communications Specialist at GCAP Eric Addae said under a similar PPP arrangement, the project will finance the rehabilitation and construction of agricultural storage infrastructure and processing facilities in the Savanna Accelerated Development Authority (SADA) zone -- which comprises the three northern regions and parts of Brong Ahafo.

He said this will include the rehabilitation of state-owned agricultural storage facilities and warehouses. So far, a total of US$18.5million has been released to fund some aspects of the project. This is made up of an initial disbursement of US$9.5million for 31 agribusinesses for this year’s cropping season and US$9million for other project interventions.

Sounding very confident about the judicious use of the funds, Mr. Johnson said the processes for accessing and disbursing the fund from the World Bank make it very difficult to misuse funds.

“I am very confident because with the World Bank we go through various processes and stringent procurement processes to disburse funds. So in terms of using it judiciously, at least I am confident. Using it all up is what I am not totally confident about, because the project is a demand-driven one.”

Alabi Bortey, GCAP Project Coordinator, added that the project seeks to develop commercial agriculture nationwide by facilitating access to land, strengthening Ghana’s investment promotion infrastructure for attracting agri-business investors, and promoting public-private partnerships and smallholder linkages in the Accra Plains and the SADA zone.

He said as part of the implementation, GCAP is developing a model lease agreement as the basis of engagement between the communities and investors.

Ram Bhavnani, Technical Advisor to GCAP, said the project will also attract investors with technical know-how, financial depth, and who are willing to work with out-growers and invest in productive enterprises. It is also aimed to increase competition and enhance infrastructural and institutional development, he said.

Source: B&FT
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