Most Africans unacquainted with loan processes – AFRODAD

BankingAFRODAD, a Pan African anti-corruption Non Governmental Organisation, has observed that majority of citizens on the continent are denied relevant information on how loans are secured, utilized and repaid.

It said the practice raises questions about the transparency and accountability in relation to loans contraction and managements by African governments.

Mr Dakarayi Matanga, a Senior Policy Officer, responsible for Domestic Debt at AFRODAD, said even though loans contraction forms an integral part of national budget funding by most governments, citizens are always deprived of information on loan utilisation and terms of payments.

Mr Matanga raised the concern at a validation workshop on “Ghana’s Public Loan Contraction and Management” in Accra on Thursday.

He said the situation is compounded when African governments are unable to service such loans, resulting in debts relief initiatives adding that despite the approval of debts reliefs for African governments, many still rely on more loans to finance their development needs.

He called for the implementation of debts management policies and strategies to minimise the rate of failed projects and programmes.

Mr Matanga said there is a growing realisation that although external factors are contributing to the debt crisis in many African countries, equally their inability to manage the loans needs attention.

“The causes of this problem are also attributed to poor debt policy, a weak institutional and legal framework, lack of accountability and transparency as well as inclusiveness of the involved institutions or stakeholders in the loan contraction process.

“The loans contraction processes in many African countries are quite weak and lack transparency and this largely affects the subsequent management of such loans”, he said.

Mr Matanga said some African governments have secured loans using internal regulations within key ministries and government departments without due regard to the loans contraction procedures.

He said many governments also lack a structured way to handle political and economic issues pertaining to debt management and in some cases the loan contraction process are found to be focused mainly on the Finance Ministries on one hand, and the lenders on the other.

The Civil Society Organisations, Mr Matanga said, also have legal obstacles preventing them from engaging on issues pertaining to loans acquisition and debt management, while the watchdog institutions are also generally not empowered due to weak legislation.

Mr Agyemang Manu, Chairman of the Public Accounts Committee of Parliament, said Parliament is deprived of debt sustainability report for decision-making before approval of loans.

He urged the Ministry of Finance and Economic Planning to always attach critical agreement documents on loans to Parliament for vetting.

Mr Kan Dapaah, former Chairman of the Public Accounts Committee of Parliament, called for active participation of Civil Society Organisations in loans contraction and debt management.

He said there should always be clarifications on evaluation and viability of loans before they are contracted for the implementation of projects.

Some participants at the forum suggested that Parliament engage lawyers to vet comments from the Attorney General on loan agreements before they are approved.

Financial experts, representatives from the Ministry of Finance and Economic Planning, development partners, Members of Parliament, civil society organisations and the media among others attended the forum to validate the findings of the study.

Source: GNA

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