IMANI Alert: Parliament SHOULD NOT Approve Shady Housing Deal
Upon reviewing the ‘order paper’ laid before the current session of Parliament on the 16th of August 2012, IMANI has concluded that item F(II) on the order paper should not have advanced from committee level in the first place much less laid before the full House.
Item F (II) – Report of the Joint Committee on Finance and Works & Housing
This report refers to a Supplier’s Credit Agreement between the Government of Ghana and the Snecou Group of Companies, which is apparently partnering the State Housing Company on the project in question. Readers may recall that a ‘supplier’s credit agreement’ was the same instrument used to design the STX deal. The terms of the deal are as follows: Snecou will raise $77.3 million for the construction of 1000 houses for the police and military. Government of Ghana shall however be responsible for settling this debt.
Clearly, the average cost of unit ($77,000) is exorbitant in this scheme of things. In cost terms, the deal is worse than the STX one.
Of even greater concern is the fact that the company purporting to raise the funds for the project and to partner the State Housing Company has been the subject of numerous corruption-related controversies and inquiries in Nigeria.
In October 2010, the Economic & Financial Crimes Commission of the Republic of Nigeria indicted the Chairman of Snecou, Prince Nicholas Ukachukwu of using four of his companies to loot $40 million of public funds belonging to the State of Nasarawa. The 171-count charge (charge sheet – FHC/LF/CR/8/2010) preferred against Prince Ukachukwu in the Federal High Court in Lafia contains several references to Snecou. The EFCC accused Snecou and its Chairman of collecting huge sums of money from the state for various projects and failing to execute. In total, $80 million of embezzled funds were evidenced in the report.
Similar concerns have been raised about Snecou in connection with billions of Naira in construction contracts in Bayelsa state. In one case, Snecou won a contract to build a hospital valued at $120 million in the state. After huge payments had been made to the company, the project was finally abandoned.
It is extremely important that the report laid for adoption before Parliament in respect of the Government of Ghana – Snecou deal be returned to the committee or the respective ministry for the appropriate investigations to be conducted into the background and track record of Snecou and its Chairman, Prince Ukachukwu.
Post-script
We have also taken cursory note of item A (II), which refers to a Buyer’s Credit Agreement between the Republic of Ghana and Italconstruct Limited, a Ghanaian real estate company, for the supply of 4000 houses at the cost of $200 million.
We fully acknowledge that Italconstruct has some track record providing mortgage-financed houses in the Ghanaian real estate market, and there have been no notices of wrong conduct regarding any member of its management.
Though at this stage there is nothing to indicate that there is anything untoward in this arrangement, our position, however, is that the terms of the Italconstruct offer does not improve on the one made by STX. At $50,000 base cost per unit, it is likely that the final price per unit will hit $60,000 or more. This is considerably above the ministry’s own threshold of $10,000 for affordable housing in Ghana. Italconstruct offers two-bedroom houses for sale on its website at just a little above $25,000. We cannot understand why the company should be quoting more than $50,000 per unit for a large-scale project whose capital costs are being fully underwritten by the state.
It would be recalled that in July 2010, the Ministry of Works & Housing signed an MOU with Italconstruct for the delivery of 12,000 houses. To date, no report has been provided with respect to that arrangement. It is important for public policy to strive to be consistent, transparent, and rigorous.
We would like to reiterate our full support for the use of public-private partnerships to address the housing shortage currently facing the country. We are also in strong support of any efforts to boost local entrepreneurship through direct and indirect assistance to Ghanaian-owned enterprises.
We are only advocating for the judicious use of public resources, and a greater commitment to due diligence on the part of public purse holders.
IMANI Center for Policy & Education (www.imanighana.org) &www.Africanliberty.org
