The $600m (Ghc3.3bn) AfDB Loan and Matters Arising

The government is seeking a US$600 million loan from the African Development Bank over a 7-year period for the cocoa sector. The agreement which was recently laid before Parliament on behalf of the government, has compositions for the use of the loan which raises serious questions.

A critical look at the main activities spelt out in the usage of this loan, reveals a clear duplicity of expenditure which leaves room for one to spot an attempt to misuse the said facility.

For instance, on page 5 of the agreement brought before Parliament, two separate items costing a total of US$3,941,254.84 have been separated and costed separately. Items 1 & 2, contain “Selection and mapping of pollination centres. Selection of cocoa farms for pollination”. This is budgeted to cost the taxpayer US$1.970 million. The second item, also marked as “Preparation of cocoa farms for Pollination” is also budgeted to cost the taxpayer US$1.970 million. Aren’t these activities similar in nature to be separated and costed individually? If, in the government’s view, these items are not the same, how did their costs run-up to the same estimated figure?

Government is budgeting a whooping US$68.11 the equivalent of Ghc350 million on artificial pollination. What is baffling is that the same government claims it needs a total of US$10.7 million of the said loan sum to gather data on existing cocoa farms in Ghana. the question that arises is, if we are yet to determine the actual number of cocoa farms in Ghana (which I doubt we do not have), how then were we able to determine that we require US$350 million to perform artificial pollination?

It is interesting to note that, while people work as inspectors and extension officers and are paid their due salaries at the end of every month, the government, in this loan agreement brought before Parliament, intends to spend US$4.54 million (Ghc22.42 million) on what it classifies as re-inspection of treated farms. Why must the state pay for inspection and budget separately for what is already part of the recurrent expenditure of Cocobod?

Again, a very ridiculous expenditure item has been spotted in the agreement. For instance, a total of US$10,688,762.21 (Ghc59 million) has been itemised as expenditure for farmers database programme. Item number (a) contains “Biometric registration of cocoa farmers and household members including caretakers and link the farmer information to the cocoa farm”. This is estimated to cost the taxpayer US$4,275,504.88. Item number (b) contains “Creation of farmers ‘electronic account to set up cocoa marketing and payment transactions”. This is also budgeted to take US$3,206,628.66 of the loan amount. Further, item number (c) contains also “Development of transaction platforms for cocoa marketing and input sales”. This is also budgeted to take a whooping US$3,206.628.66 of the total loan amount. The similarity in cost in items (b) and (c) notwithstanding, what is the difference between items (a), (b) and (c) to be budgeted separately?

On top of that, government is estimating a total of US$2,516.488.08 (Ghc14 million) for what it terms promotional activities and an additional US$5 million (Ghc28 million) for the distribution of chocolates for school children. In a country where school children in deprived cocoa growing communities are crying over decent school buildings, with situations that threaten classroom activities, a government’s key intervention and judicious use of a loan, cannot be the allocation of Ghc28 million towards the distribution of chocolates which may not even reach these children in the first place.

In the 2010/11 cocoa season, Ghana attained an unprecedented level of 1,004,194 metric tonnes on August 18, representing the 10th week of the Light Crop season. This is a record that cannot be disputed. That season, did not see such ridiculous expenditure. Today, we are being handed a loan agreement that would place a financial obligation on our nation to the tune of US$600 million (Ghc3.3 billion) with its attendant expenditures to be able to add some 500 thousand metric tonnes up from our achievement in 2011.

The penchant to borrow away our future in this new phenomenon of deferred payment, must be checked to enable fiscal space for future governments and generations to make decisions that are in tune with their vision. The expenditure items spelt out in the agreement aimed at improving the cocoa sub sector, is not beneficial to the Ghanaian taxpayer if the intended usage is allowed to stand. We cannot spend US$45,130,054.05 on training 20,000 pollinators, the equivalent of Ghc12,636.42 per person in this regard and on top of that, proceed on spending another US$1,211,377.10 (Ghc6.8 million) on “Re-training of another 10,000 pollinators”.

Quite interestingly, yet again, without knowing the total number of cocoa farms in Ghana according to government, which has resulted in an expenditure item in this budget for that purpose, we have estimated an amount of US$17,828,425.12 (Ghc99.8 million) on pollinating selected farms. How did we come by this conclusion of determining the cost involved in pollinating farms we are yet to select?

This whole loan agreement would be misapplied, would leave more unwarranted debts in our books, and burden future generations unduly. A whooping Ghc3.3 billion loan of this magnitude must bear the qualities of improving the future of our cocoa sub sector, and not result in depleting the gains we anticipate in this regard.

Rockson-Nelson E.K. Dafeamekpor Esq.

MP, South Dayi