It is unquestionable that our roads and highways are in a state of disrepair, despite efforts of previous and present governments’ interventions. These interventions have largely been borne on the back of private contractors who, the government owes over sixteen billion Ghana cedis (GH₵16bn) on highway projects.
As it could be deduced, pronouncement such as ‘‘we have authorized GH₵2bn to be paid to highway contractors’’ do not address the problem. Interestingly, more necessary contracts are being awarded and swelling up the debt burden. Ironically, much of the debt owed by the government to the contractors are being carried by the banks. Some of the banks have folded due to this cancer and others are being reorganized by the government using public funds. Maybe if the government has not forfeited its obligations to the contractors, the banks would have not failed.
The debts owed by the government to these contractors carry huge interest rate payments which eventually have to be paid by the taxpayer. Some as high as 36% per annum. A cursory look at debts owed by Ghana highway Authority (GHA) dates as far back 2012, with accruing interest.
The normal practice in public improvement projects is periodic payments to contractors . Private companies have invested several sums of money in public improvements projects, expecting to be paid and when this obligation on the part of the government is not forthcoming the projects are abandoned. These uncompleted works do not benefit the public, yet we are required to pay for what has been done with interest.
Apart from the obligation to pay interest, the consequences of the government inability to pay is horrendous. This avoidable risk has future implications, efficient firms refuse to take GOG funded projects and those who do, do so at a very high price to cover for non-payment and tardiness in paying risk.
Indeed, stories about foreclosures of contractors guaranteed by the banks have caused serious psychological problems for the contractors including suicides. It appears that there is no single contractor in the country that the government does not owe.
Lawsuits against the government to collect these payments are mounting, with the recent story of a contractor seizing GHA vehicles pursuant to a court’s garnishment order. The consequences of lack of adequate funds to maintain the highway infrastructure and pay contractors for the little intervention they have made is serious and space will not allow to enumerate them all.
PRESENT FUNDING SYSTEM
There are currently five major sources of funds for road and highway improvement:
GoG budgetary allocation
Loans through CMB (cocoa roads)
Direct loans finance
The budgetary release from government for payment of operational activities of Ministry of Roads and Highways (MRH ) and Ghana Highway Authority (GHA) is woefully inadequate and in recent years very tardy. Funding for developmental projects have been dwindling over the years due to inadequate budget allocation. The government itself is struggling to mobilize funds for the myriad responsibilities it has to undertake. Providing for public goods is a serious challenge for our democracy.
Donor funds for highway improvements have also been drying up and with the advent of ‘’ Ghana beyond Aid’’ concept it will further exacerbate the demise of this source.
The road fund Act, 1997 establishes the road fund. The object of the road fund is ‘’to finance periodic maintenance and rehabilitation of public roads in the country the monies to populate the road fund are from:
Proportion of government levy on petrol, diesel and refined fuel oil as may be determined by cabinet with the approval of parliament;
Bridge, ferry and road tolls, collected by the authority Vehicle license and inspection fees.
International transit fees, collected from foreign vehicles entering the country ;
Monies as the minister of finance in consultation with minister of roads and highway may determine subject to approval from parliament.
A review of the amount accruing into the fund shows a gross inadequacy to meet the object of the Act. The current toll rates are very low compared to that of any developing and developed countries. Hon Kwasi Amoako – Atta during his confirmation hearing alluded to this fact and it is hoped that the Government will have the political courage to initiate the process to increase the tolls and construct more tolling plazas to harvest funds for the road fund to improve highway infrastructure.
In October 2014, a transaction advisory team led by PricewaterhouseCoopers (GH) Ltd (PWC) conducted a willingness – to – pay (WTP) survey as part of assessing a proposal to dualize Accra – Kumasi road. The object was to find out from road users if they would be willing to pay for a higher service, should the current Accra to Kumasi road corridor be dualized. They concluded among others that:
Users will be willing to pay for a high-class service that will reduce travelling time, accident and a decrease in road user cost. However, the ability to pay will depend on how the benefits translate into income. Raising prices too high will deny services to most road users and maintaining needlessly low prices will perpetuate reliance on GoG and/ or external donors for infrastructure development.
Hardly a week goes by without a major accident on our roads and highways resulting in loss of life and property. To do nothing is not only a dereliction of duty but criminal. The Minister for Roads and Highways is wisely advocating for dualization of major trunk roads, he needs support to achieve this objective.
Improved highway infrastructural facilities promote rapid economic growth. In Ghana, road transport is one of the most important and heavily used mode of transportation.
The upgrading and modernizing our road and highway infrastructure will provide many benefits to Ghanaians including a faster and safer mode of transport resulting in;
Vehicle operating cost savings to road users, Reduction in travel time, Major reduction in accidents
Improving the standard of living of the people in the influence areas thereby contributing to government’s effort of bringing development to the country in general.
OUR WAY FORWARD
Apart from increasing tolls and plazas; several options are available for consideration for increased funding. The following are clearly not exhaustive but have been tried elsewhere with positive results.
According to Act 540 (1997), the GHA is responsible for the administration, development and maintenance of trunk roads and related facilities in the country. The authority is charged among other responsibilities;
To plan, develop, maintain and administer the trunk road network, ferries, traffic devices and any related works
To control traffic on trunk roads with the aim of providing safe and adequate infrastructure for road transportation commensurate with the economic development of Ghana.
To collect toll and other revenue on behalf of the government on the trunk road network
To carry on any other activity as appear to the Authority to be conducive or incidental to the attainment of its responsibility.
With such authority, two issues come to mind which can help GHA to raise internal generated funds to pay for its day – to – day administration and workers’ salaries such as providing:
Private services from its material laboratories
Leasing of right of way
Secondly, does the act accord the authority ability to borrow directly from open market for road construction, maintenance and related works base on her balance
sheet? GHA owns more real assets than it recognises.
A positive answer to the forgoing grants GHA the ability to initiate highway improvement bonds. The coupon can be repaid using budgetary allocations and leveraging road funds. This will bring in quantum funds to pay off old debts and take care of current road improvement without the excessive interest payments which some have been accruing since 2012.
If GHA can’t, then the Ministry of Finance (MoF) which definitely has such authority should consider such approach on behalf of GHA.
The writer, Professor Henry Boaten is a multi-modal transportation planning engineer and a legal practitioner.