Business News of 2014-07-21

Parliament endorses Ghana Infrastructure Investment Fund Bill

Parliament has passed the Ghana Infrastructure Investment Fund Bill, 2014 whose purpose is to establish an infrastructure fund that is wholly owned by the Republic of Ghana to mobilise and provide financial resources to manage, co-ordinate and invest in a diversified portfolio of infrastructural projects in the country for national development.

According to the memorandum to the bill, Ghana, as a lower-middle income country, has recorded an impressive growth from 5.1 per cent in 2003 to 14.4 per cent in 2011 and 7.1 per cent in 2012.

Ghana has an advanced infrastructure platform when compared with other countries in the region. The country already spends approximately Ghc3.12 billion, equivalent to approximately 7.5 per cent of the country's Gross Domestic Product (GDP), every year on infrastructure.

However, to support continued growth and also raise it to the infrastructure endowment levels of other middle-income countries in the region, Ghana faces an efficiency and funding gap of GH¢3.9 billion.

The quality of infrastructure services also needs improvement to sustain rapid urbanisation and industrial growth.

There is a clear recognition from the government that public funding alone will not be sufficient to meet the financing gap. Private sector participation has been identified as one of the available options for addressing this financing gap and improving the quality of infrastructural services.

Furthermore, Ghana is currently faced with tasks of optimising its debt stock and reforming its debt management, hence, there is limited fiscal space to provide public sector financing for infrastructure projects.

To meet the growing need of infrastructure investments, the role of private sector financing for infrastructural development is critical.

This has necessitated the establishment of the Ghana Infrastructure Investment Fund, which will partner the private sector to finance critical infrastructure projects.

The establishment of the fund will also enable self-financing projects to be taken off the government’s debt stock and managed as commercial projects, thereby freeing up debt capacity.

Clause One of the law establishes the fund as a body corporate with perpetual succession with the power to acquire and hold property.

The object of the fund in Clause Two is to mobilise and provide financial resources to manage, co-ordinate and invest in a diversified portfolio of infrastructure projects in Ghana for national development.

For that purpose, the fund is to, among other things, undertake investments for the development of infrastructure within the country to promote economic growth and attract investments and manage and invest the initial and future contributions made to the fund

Clause Six of the law provides for a bank account for the fund into which monies are to be paid. Furthermore, the fund is to have its headquarters in Accra and, where it considers necessary for the performance of its functions, open branches within or outside the country.

Clause Eight provides for a governing body of the fund. The governing body, which is a board, consists of a chairperson and eight other persons, at least three of them being women.

The members of the board are to be appointed by the President, in consultation with the Council of State.

The Minister of Finance, Mr Seth Terkper, who moved the motion for the passage of the bill, stated that the establishment of the fund was in Ghana's national interest and urged the House to support it.

In another development, Parliament approved the supplementary estimates of the government for the 2014 financial year.

It totaled Ghc3,196,856,671.

Source: graphic.com
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