Posted:Daily Guide |Friday, 04 June 2010
By Charles Takyi-Boadu
There are indications that all is not well with the deal between the Government of Ghana and South Korean construction firm, STX, in relation to the financing of some 30,000 housing units under the Security Services Housing Project.
At a stakeholders’ forum put together by the Danquah Institute and Imani Ghana in Accra yesterday, speaker after speaker questioned the prudence of the deal.
Chief among the critics was Policy Analyst Kofi Bentil who questioned the rationale behind the agreement which will see 20 years of Ghana’s oil proceeds mortgaged.
He was optimistic the deal would have serious ramifications for the nation since, according to him, “Ghana does not have $4.5 billion to spend.”
More so, he said, “even if we borrow that money and spent it, we will be financially bankrupt”.
Mr Bentil cannot fathom why a clause in the agreement stipulates that Ghana’s oil revenue will be mortgaged for 20 years to defray the cost of the construction, stressing “that is unacceptable.”
Per the terms of the agreement, it is envisaged that each house will cost $60,000.
Kofi Bentil and his colleague, Franklin Cudjoe, Executive Director of Imani, believe the amount involved would serve the country better if the contract was awarded to local contractors.
Franklin Cudjoe thus stressed the need to get local players to drive the project.
Though it welcomes government’s decision to undertake this huge project to deal significantly with the gross housing deficit in Ghana, estimated at one million houses, Imani believes the deal raises serious questions.
“It seems to be more of an agenda for a better Korea than a better Ghana,” was how Mr. Cudjoe put it.
On his part, Sammy Amegayibor, who represented the Ghana Real Estate Developers' Association (GREDA), also lamented how government has refused to sit down with them to explore the option of getting the GREDA to undertake the project since, according to him, local contractors are more than capable.
On May 4, 2010, the Government of Ghana sought to push through several loan agreements under a certificate of urgency when Parliament was on recess.
One was a Suppliers Credit Financing Agreement between the Government of Ghana and STX Engineering and Construction Limited (subsidiary of the STX Group, Korea) for an amount of US$1,525,443,468.00 to construct 30,000 housing units for the security services - with 20,000 units for the Police Service (including 10,240 units), and the remaining 10,000 to be spread among the other security agencies, including the Military and the Prison Service.
Vice President John Dramani Mahama led a government delegation to South Korea to complete agreement formalities on the housing project and sign another MOU on an infrastructure establishment project with STX, targeting Ghana's oil.
However, Frank Tackie, the President of the Ghana Institute of Planners, who represented the Ghana Institute of Architects, the Ghana Institute of Engineers and the Ghana Institute of Surveyors, said alternative local building materials, local expertise and better value for money can be achieved if Government had focused on Ghanaian firms, materials and expertise rather than Korea.
Also at the forum, Robert Ahomka Lindsey, the former CEO of the Ghana Investment Promotion Centre (GIPC), made the point that foreign direct investment is to supplement local initiatives rather than as substitute.
He charged local industry players to come together and offer a viable option to both Parliament and Government so that they have a practical alternative to look at.
Under the terms of the agreement, the government will have to pay an amount of $4.5 billion upfront before the construction will begin and an amount of $12.5 million as management fee.
Meanwhile, the President of the Republic of Korea (or South Korea), Lee Myung-bak, is scheduled to visit Ghana somewhere in July 2010, as part of an investment-promotion tour to selected African countries.