Consider municipal bonds to build our inner roads

The government of Ghana through the Ministry of Roads and Highways, Urban Road and Feeder Roads has been building the road-networks in the country over the years. Every year, budget allocations are made for road construction.

Some of the roads are constructed, some abandoned halfway whilst others are not touched at all. We have witnessed this phenomenon over and over again.

At times, without foreign aid or loans, major roads cannot be constructed in this country. Most of us who live in not – endowed and visible communities, hardly see good roads in our neighborhoods. If you happen to live in Cantonments, Airport Residential Area, East Legon, Labone, Osu in Accra or Nhyiayeso, Adum, Asokwa, etc, in Kumasi,  your roads will frequently be upgraded with asphalt after a small scratch or pothole.

However, if you live in other Municipalities which are less endowed and are not close to the city centre, it will take years or decades before the inner roads are constructed. I am focusing on inner city roads in locations like Nungua, Teshie, Okpoi Gonno, Madina, Chantan, etc., in Accra. In such places, though located within the national capital, some of the communities have not seen any tarred road since their establishment.

They have nicely built residential areas but road networks are so poor that residence find it extremely hard to get to their homes especially during heavy downpour. Some urban communities from time to time have been demonstrating to draw government attention to tackle their bad roads.

Such demonstrations are bound to increase as new communities spring up and the government finds it hard to construct more roads in our unplanned cities.   It is very obvious that increasingly, the government is finding it very difficult to construct durable inner roads.

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It is now time for us to look within for local funds to build our inner city roads. The former Minister of Finance,  Seth Terkper made an attempt to establish Municipal bonds for the development of the various municipals but could not materialize.

This is an opportune time for the government through the Ministry of Finance and the Local Government and Rural Development take a good look at Municipal bonds seriously, otherwise, a time will come when it will be difficult to develop our communities.

If there is no law guiding the issuance of Municipal Bonds, the government should enact one as a first step. Such a law, among other things, will indicate the criteria that must be fulfilled by a Municipal Assembly before it can issue a bond, especially the ability to pay for periodic interest and principal payments when they fall due.

I am proposing that for Municipal and District Assemblies that are endowed with resources, especially residential properties and businesses, appropriate taxes and property rates can be collected to pay for the bonds.

Such Municipal and District Assemblies can issue bonds specifically to construct the inner roads in the communities. The Municipal Assemblies will then collect property rates regularly to pay for the bonds. Let us use LEKMA (now Ledzokuku and Krowor Municipal Assemblies) in Greater Accra as an example.

The Assembly is among the districts with very deplorable roads including the infamous uncompleted LEKMA Hospital – Manet – Spintex road. However, the Municipal has well-constructed residential building which are mostly inhabited.

Most of the streets in LEKMA are not named despite government directives for district assemblies to name and number all houses. Even in typical rural areas, streets have been named with erected signage but not in LEKMA. With the current digital address system, it will be easier to name streets and provide house addresses that can be uploaded unto the google maps to keep track of residential properties.

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According to the 2010 Population and Housing Census, the housing stock of LEKMA was 21,366 representing 4.5 percent of the total number of houses in the Greater Accra Region. If LEKMA raises say a GHS20 million 5-year bond to construct inner roads, property rates can be collected annually to pay for the municipal bonds.

Assuming that 10,000 of the housing stock in the municipal can be targeted to pay property rate of GHS500 a year on average, this will rake in GHS5 million. This amount will be collected every year and in 5 years, a total amount of GHS25 million will be collected.

The GHS25 million will be used to pay for the bonds. Discussing this proposal with some residents, they are willing to even pay GHS1,000 per year payable on quarterly basis if and only if the money collected will be used to build their roads. For such a proposal to work, the administration of the funds will be very crucial.

The fund should be managed by an administrator appointed by the Ministry of Finance and a board made up of distinguished, knowledgeable and honest people from the Ministry of Finance, the District Assembly and community leaders with a clear and specific mandate.

The Government of Ghana can deliberate the proposal with key stakeholder and pilot the bond issuance starting with some of the municipal assemblies. Residents are suffering from bad roads with the accompanied high vehicle maintenance cost but together with a sense of purpose and good innovative financing strategies, they can be fixed.

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