Thursday, 25 November 2021

Road Fund Levy: recalibrate the system to ensure value for money

Adnan Adams Mohammed Civil Society Organisations (CSOs) in the country have called on the government to consider rethinking through the Road Fund instrument which they believe the sources are spread on too many government revenue elements. They CSOs believe the Road Fund levies can be reconstituted and charged against one revenue element to ensure proper tracking, accountability and transparency. They also want the government to reconsider its decision to introduce the Electronic Transactions Levy (E-levy) of which a part will be used to support the Road Fund in place of the road tolls which it proposes to be abolished. Already, there are component of the Road Fund Levy on fuel prices, Driver and Vehicle License fees, the newly proposed E-levy and parts of the Annual Budget Funding Amount which goes to road infrastructure development as well as cocoa roads fund. All these are geared towards roads infrastructure development and maintenance. Despite all these sources of funds, the citizens do not see value for their money as most of the roads are in deplorable states including major trunk roads and highways and feeder roads. “The E-levy is receiving backlash because there are too many other levies and taxes that are intended to service the roads and we are not seeing accountability for those roads”, Dennis Gegyir , NRGI African Policy Advisor said during CSOs post-budget reaction on yesterday in Accra. “Talk about the 48pesewas levy on fuel prices, ABFA allocation to the road sector mostly used to settle road arrears payment among others.” “So what we are calling for is a recaliberation. What we mean is for government to sit back and indicate the financial needs for the road sector. That should be done comprehensively. We should know how many kilometers of roads we have and what we need more. What are the funding requirement. Then we come back to discuss how to raise funding for that with timelines for execution. That will be understood and citizens will be able to monitor how implementation is done”, he noted. Mr Gegyir speaking to the media after the CSOs engagement with the media retorted that, “Now the problem is, if you have an already mess up system where many of the road cost goes to interest on arrears for not paying interim payment certificates raised by contractors, cost demobilization and remobilization of contractors from and back to site which are avoidable with proper management and funding system in place, then citizens will not be willing to pay more to such funds.” Dr Alex Ampaabeng, Fiscal Policy Specialist at Oxfam, also speaking at the event on the fiscal policies in the 2022 budget reiterated that, the road tolls abolishment and the E-levy need critical rethinking and reformulation of those policies for better results in terms of revenue generations. In a recent research work by Richard Ofori, a Master of Business Administration candidate at the University of Ghana on the topic: “Financial Effects of Ghana Road Fund Misappropriation: A Case Study on the Ghana Highway Authority”, it indicated that, the “..causes of the misappropriation of road funds include the delays in monthly payment of vital projects, Inflation rates, Project disputes/project litigation, schedule completion slippage and government interference. In comparing developmental projects to rehabilitation road projects respondents indicated that the later was less expensive- over GHS 99,135,117.27 was lost through developmental projects alone. Also government role in misappropriating road funds can lead to corruption.” The Road Fund is a statutory fund dedicated to financing the routine and periodic maintenance of the nation's road network, including road safety activities and selected projects. Sources of revenue for the fund are the fuel levy, road tolls, vehicle and licence inspection fees and levies from international transit vehicles. The board was established in 1985 to secure sources of funding for the preservation of the roads. Some provisions in the Road Fund Act, 1997 (Act 536) mandate the board to ensure that the nation's trunk, feeder and urban roads are regularly maintained. The fund was initially managed collectively by the ministries of Finance and Roads and Highways and the Controller and Accountant General’s Department. But, following some administrative problems, the fund was restructured through the Road Fund Act, 1997(Act 536), leading to the setting up of a 13-member board with five representatives from the private sector and eight from the public sector. The current board is chaired by Mr. Alexander Afenyo-Markin, the Deputy Majority Leader in Parliament. The Minister of Roads and Highways, Mr. Kwasi Amoako-Atta, at the inauguration of the current board, charged the members to be innovative and work hard to turn around the fortunes of the fund, said to have been saddled with debts since 2016. “You need to continue to work hard and put yourself together to be creative and innovative to raise new funds. You have the support of government because the government itself is initiating a lot of activities to revamp the fund, but you still have to generate more money into the Fund to meet the payment schedule of our hardworking contractors”, the Minister told the Board members. This therefore supports the CSOs call for the government to be innovative and reconstitue the road fund instrument to ensure efficiency, enough accountability and value for money.

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