Skip to main content

National Bond Market Committee advocates for Municipal Bonds establishment


By Fred Yaw Sarpong
The National Bond Market Committee (NBMC II) is advocating for the introduction of Municipal Bonds in the country, in order for Municipal, Metropolitan and District Assemblies (MMDAs) to access funds from the capital market to meet their developmental needs.
The committee included this in their recommendations to the government, after it was tasked to review the bond issues in the country.
The NBMC II committee met some selected financial journalists in Accra last week and explains that is important that the government allows the MMDAs to raise funds from both internal and external markets for development rather than always depend on the central government for funds.
The Chairman of the committee, Michael N.A. Cobblah found Accra Metropolitan Assembly (AMA) to be rich municipality. ‘Look at all these nice houses we see. Take a look at Airport residential area, Cantonment, East Legon and see how much property rates people are paying. People are paying GHc100 for these kinds of properties,’ he emphasized.
‘In London or any of these civilize countries where you high network of people staying they pay good property rates and they have good collection system. So because they have a good collecting system they can go to the market and borrow at least US$10 billion for any development,’ he stated.
He indicated that with a good collecting system from AMA or Kumasi Metropolitan Assembly (KMA), they can sell all those rates they will be collecting in future today. So AMA for instance does not have to wait for 10 years to undertake a development. They can start a development today if they streamline the way they collect their revenue sources.
What we saying is that the danger is that if those institutions borrow and they fail, it means that people will go back to the government to say pay back our money because they are government related. But if they streamline their activities and their revenue flows are harness in a way that they can re-fence them, it can be use to borrow for development.
‘So instead of these assemblies collecting GHc10 billion in future they can rather collect that amount today. They have to make sure that people pay economic rates and put a proper collection system in place to ensure they have much revenue to allow them borrow,’ said Cobblah.
A member of the committee, Reginald N. France also added that there should be a change in the local government Act, adding that when that is change the committee is stressing that the capacity should be build for local government authorities and the enable environment should be created.
‘There should be a back stock in this kind of system, so that if there is a failure government will pay. So the develop of the municipal bonds will enable the locality have ability to access funds internally or international,’ said France.
‘We are also calling for a pilot to be started by either Accra Metropolitan Assembly (AMA) or Kumasi Metropolitan Assembly (KMA).
The committee, however, called for changes in the Local Government Act. He indicated that there are limitations in the ability to borrow and that limitation is like no assembly can borrow more than 20 million old cedis (GHc2, 000), according to the Act. ‘As you know GHc2, 000 limitations cannot do any development for any of these assemblies,’ he added.
The understanding is that when these limitations are removed or amended, it will allow the municipalities to consider bonds as some of the means to raise more funds for development.
In 2010, the government suspended the issuance of municipal bonds due to the Ministry of Finance and Economic Planning (MOFEP’s) point that the assemblies were not ready.
The Finance Ministry was of the view that it does not want to rush the municipal bonds since it was most likely to jeopardize the work of the central government.

Because the various District Assemblies were not ready earlier, the Finance Ministry withdrew the Municipal Finance Bill from Parliament.
The NBMC II is tasked to recommend policy measures and reforms to address the remaining weakness and deficiencies in the legal and regulatory framework, market infrastructure and other important mechanisms that will help to target the mobilization of domestic resources through the promotion of attractive policies to grow and develop the corporate bond market.
The NBMC II is also expected to identify the constraints to the development of a corporate bond market among others.
It’s also to review and monitor the performance of the government bond market and recommends legal and regulation, issuance and market development and infrastructures and proposes changes to improve its effectiveness as an anchor for the corporate bond market.
Also, the  committee it to identify the constraints to the development of a corporate bond market; and assist the private sector to participate in the bond market by proposing appropriate financial or technical mechanisms.

Comments

Post a Comment

Popular posts from this blog

Vodafone sells 45% shares in Verizon for US$130 billion

Vodafone has sold its 45% stake in Verizon Wireless to US telecoms group Verizon Communications in one of the biggest deals in corporate history. The US$130 billion (£84bn) deal was announced by Vodafone after the close of trading on the London Stock Exchange. The company will return £54 billion to its shareholders, of which £22 billionn will go to shareholders in the UK. Vodafone will also invest money in its business, with funds earmarked for high speed mobile phone networks. It said that by 2017 its main five European markets would have almost complete 4G coverage. Possibly it would be wrong to carp and wring hands that Vodafone won't be paying a penny of tax to the British taxman” Vodafone group chairman Gerard Kleisterlee said: "The transaction will position Vodafone strongly to pursue our leadership strategy in mobile and unified communication services for consumers and enterprises, both in our developed markets and across our emerging markets businesses." The...
Post a Comment
Read more

Shortage of weighing cards hit major hospitals in Accra

By: Fred Yaw Sarpong- Daily Express There is scarcity of Child Health Records Book (weighing cards), in some major public hospitals in the capital, information reaching the Daily Express indicates. Checks by this paper revealed that while some of the hospitals have being encountering the shortage for about a year now, others started experiencing it six months ago. In place of the Child Health Record Book (weighing card), the nursing mothers are given a single card on which information of children are recorded on it. Those hospitals identified are the Korle Bu Teaching Hospital, Korle Bu Polyclinic, Kaneshie Polyclinic, Adabraka Polyclinic and the Ridge Hospital. At the Korle Bu Teaching Hospital, the nursing mothers are given yellow cards in place of the weighing cards. The Public Relations Secretariat at the Korle Bu Teaching Hospital said such information has not come to their notice and for that matter they cannot comment on it. “We do not have some ...
Post a Comment
Read more

ABL launches chibuku super in Bolgatanga

By: Fred Yaw Sarpong sarpong007@gmail.com Accra Brewery Limited (ABL) has officially launched the Chibuku Super drink at Bolgatanga in the Upper East region with the aim of reaching a lot of customers. Mr. Thomas Nii Ponku, Supervisor in charge of Chibuku Super at ABL told Daily Express that the management decided to launch the Chibuku Super drink in the Upper East region because they’ve realized it is similar to a traditional drink in the region. “Chibuku is like a well developed pito, a traditional drink made from fermented millet or sorghum in the Northern part of Ghana. So the idea is to provide them with similar drink,” he added. Mr. Nii Ponku disclosed this when members of the Institute of Finance and Economic Journalists (IFEJ) toured the facility of ABL to acquaint themselves with the expansion project at the factory. He mentioned that after a feasibility study, they realized there is a potential market for the product in the northern part of Ghana ...
Post a Comment
Read more