The whole life cost of the Ghana Card Project is estimated at $1.2 billion over 15 years, with NIA bearing $531 million while IMS takes the remaining $678 million.
Ghana needs to raise only $124 million share of the cost as its initial contribution. IMS on the other hand will raise its initial $169 million contribution in a mixture of debt and equity.
All subsequent costs will be covered by proceeds from the project. The technical model on which the project is designed has been developed by the Margins Group on NIA’s requirements and needs.
The key cost elements of the project is as follows:
Card Production and Operations
The combined cost of Card Production and Operations cost account for almost 73% of total cost. A total of 88.9 million cards will be issued over the 15 years, made up of 52.2 million smart cards (at $5.40 per card) and 36.7 million two-dimensional (2D) bar code cards (at $1.50 per card).
The operational cost for the 15 years includes the recruitment and training of personnel for the mass registration and card issuance exercise, the registration of all citizens both at home and abroad, development and implementation of comprehensive communication and public education campaigns, establishment of Regional, District and Zonal Offices across the country and at missions abroad to provide daily registration services.
This is estimated at $108 million covering the Central Site, registration equipment, verification systems, disaster recovery systems, card printers, etc.
There will be periodic upgrades of the technical system every five years in line with good industry practice. This is estimated to cost $59.6 million. Maintenance and support of the system are also estimated at $18.1 million, consistent with international benchmarks.
Due Diligence and Value for Money
These costs have undergone Value-For-Money (VFM) audits by the Public Procurement Authority (PPA) and have also been thoroughly assessed by the Public Investments Division of the Ministry of Finance. The contract has also been reviewed by the Attorney-General’s Department and the Legal Unit of the Ministry of Finance.
In addition, the contract has been reviewed and given approval by the Public Private Partnership Approval Committee (PPPAC) of the Ministry of Finance, as well as the Economic Management Team of Government. It has also received Cabinet approval.
Copies of the Contract were distributed to all 275 members of Parliament, and appropriate waivers for import duty exemptions were also granted by Parliament.
The contract terms and pricing are consistent with the FIMS Pilot Project agreement executed between NIA and IMS in 2012, and the Feasibility Study Report for the present expanded project, which received two approvals by the PPPAC in 2014 prior to the 2018 Final Approval.
Impact on State Coffers
IMS and NIA will require $169 million and $124 million respectively to commence. Unlike other traditional contracts, IMS will not be given any money by the government. NIA will require the government to fund its part. All further costs will be met from the proceeds of the project.
The state has guaranteed an equity rate of return capped at 17%, which is 6 percentage points above the cost of capital of around 11%.These are to be paid from the revenue models. This means that IMS will be making modest profits for the risks it has taken.
This revenue guarantee only arises in the event of lesser than expected revenues, which are mainly based on government enforcement and will be limited only to the top-up amount required to achieve the equity return rate of 17%.
In view of the favourable value for money assessment, Government of Ghana has negotiated a deal against the backdrop of private sector innovation and risk-taking. On the other hand, the state’s statutory obligation to fund a previously under-funded NIA to effectively and efficiently undertake its mandate has assumed a priority status.
Unlike the situation previously, Government will recoup its funding from the proceeds of the project. NIA’s cost element, captured over the 15 years in the financial model, is therefore much broader and comprises all its funding requirements for its operations as a state entity.
Following the recouping of NIA’s cost contribution, any additional funds will further be shared at a ratio of 60:40 in favour of NIA. This constitutes a reversal of the negotiated position in 2014 by which IMS had 60% while NIA had 40%.
In addition, it is estimated that the cost-savings exclusively to Government outside the PPP financial revenue model – from identity fraud, duplicated data-collection systems, and from other state and private institutions – will exceed $4 billion over the 15-year project life-cycle.
It is clear, based on the foregoing, that Government stands to be in a much better financial position if the mandatory use of the cards is rigorously enforced across all areas of society where identification is required as provided for by law.