6 December 2001

Ghana: ADB Freezes Cash Flow, Mismanagement Cited

The African Development Bank (ADB), major financiers of the multi-billion cedi Kpong Irrigation Project (KIP) has withheld further disbursement of the remaining Revolving Fund (RF) to the Ghana Irrigation Authority (GDA)and its subsidiary company, the KIP.

ADB took the action after the GDA\KIP woefully failed to comply with principles guiding the disbursement of funds released by the bank.

In July, this year, Chronicle published another story about a threat by ADB to freeze a ¢56billion remaining loan to Ghana for the execution of the Kpong Irrigation Project due to the non-release of counterpart funds by the former NDC government, five years after the multibillion project took off.

Despite persistent warning by officials of ADB, GIDA\KIP has not put their house in order for the Abidjan-based African financial institution to release the remaining RF for the administration of the the project.

Currently, GDA\KIP has about ¢160million still waiting to be had from the coffers of the ADB for the project.

Some of the conditions ADB spelt out as criteria for replenishing the Revolving Fund include the employment of a competent Agricultural Engineer, Environmental Management Plan and an effective Internal Auditing System.

The rest are the installation of the re-lift pump and the rehabilitation of existing storing and drying facilities.

But GIDA\KIP has failed to fulfill these requirements.

Submissions of quarterly progress reports to the bank has also not been adhered to, Chronicle recently learnt.

Chronicle investigation established that instead of employing a competent Agricultural Engineer as prescribed by the bank in the appraisal report, a common electrician has been employed KIP\GIDA to fill that position.

Mr. Oduro Kwadwo Gyarteng, Chief Executive of GIDA in an interview with Chronicle early this year on the threat by the ADB to discontinue funding of the project, blamed the government for failing to provide the counterpart fund for the completion of the project.

In that interview, the GIDA boss also praised the project's consultant, Mott-McDonald, which has Mr. Tonnis Sierevogel as it leader, claiming that they had lived up to expectation and should not be blamed for any shortcoming on the project.

His observation runs contrary to the observation of anADB team which advised that the consultancy be terminatied last year.

In a draft investigation report (dated October 29, this year) into allegations of financial mismanagement and misuse of KIP resources, the Auditor General uncovered mismanagement of the project funds by the management of KIP led by the consultant.

The report said that: "Forty-four payment vouchers involving a total amount of ¢75,954,866.42 expended on hire of equipment, repairs and maintenance, electricity bills, spare parts etc. were not supported by receipts nor the name of payees indicated on them.

As result, the authenticity of the transactions could not be vouched," the draft report pointed out.

Following the recalcitrant position by GIDA\ KIP, an ADB team from the headquarters of the bank in Abidjan led by Mrs M. W. Karuri, a Senior Financial Analyst, which visited the project site in September, last year, called for the termination of the consultancy contract with Mott-McDonald.

The team recommended that KIP\GIDA should rather recruit local qualified people to continue from where the consultant had reached.

But with the help of the Ministry of Food and Agriculture and Honourable Asiedu Nketiah, then Deputy Agric Minster with direct responsibility for the project and some officials of GIDA, the NDC government renewed the consultancy contract before they left office.

Chronicle has gathered that due to the mismanagement of the KIP, the nation has still not been able to reap the full benefit of the investment.

Currently, the farmers expected to benfit from the projecty have been asked to pay ¢700,000 per hectare as irrigation services charge: something they are finding it difficult to do.

Besides, there is also low yield at KIP compared to that of the Dawhenya irrigation project, where a yield per hectare is much higher.

These setbacks can be attributed to lack of proper management of the KIP, Chronicle can report.

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