Daakye Trust PLC Saga: GETFUND fast becoming a debt machine.

The Daakye Trust PLC Saga: What do we know?

We have been doing a preliminary review of the Daakye Trust PLC arrangement by Ministry of Education (MoE) through GETFund which the minority in Parliament has raised red flags over. Let me try and simplify this:

1. As you may be aware, in 2018 MoE obtained Parliamentary Approval to secure a syndicated loan of GHC 6.9 billion (then $1.5 billion) to finance education infrastructure projects and outstanding debts to contractors. Part of GTFund’s future receivables was used as a security. Since then, up to 60% of GETFunds annual allocations have gone into debt financing. CAL Bank and Stanchart were involved.

2. In 2020, it became difficult for CAL Bank and Stanchart to alone raise the first tranche of GH 2.3 billion of the syndicated loan. Only GHC 1.5 billion was raised, while other qualified banks did not find the terms of the syndication attractive. This was delaying the execution of infrastructure projects, including SHS expansion projects.

3. GETFund Trustees then went ahead in 2020 [without notice to, or approval by Parliament] to set up a Special Purpose Vehicle [Daakye Trust PLC] to raise funds through Bonds at a lending rate of 20.5% and re-finance the syndicated loan. This approach had the benefit of allowing other entities and individuals, instead of only qualified banks in the earlier syndicated arrangement, to participate in the Bond Market. Infact, Daakye Trust had already issued GHC 1.3 billion in bonds as at December 31, 2020, and is continuing, through 7-10 year fixed rate bonds.

4. A challenge, as expressed by Parliament is that GETFund is fast becoming a debt machine. Instead of using its inflows (our tax revenue) to directly finance its projects, as mandated by the GETFund Law, it has become an agency for rather raising loans to finance development. Parliament wondered why GETFund would not use its little resources to finance its projects systematically, instead of always borrowing, which ends up consuming up to 60% of their allocation (In the case of 2021).

5. GETFund however, believes that, persistent delays in the release of funds from Ministry of Finance (MoF) causes a 40% cost overrun on projects, therefore, subscribing to a Bond Financing Scheme with a 20.5% lending rate was better than incurring 40% cost overruns on projects due to delayed release of fund allocations from MOF. Indeed, as at now, only 64% of GETFund allocations for 2020 has been released by MoF; and this has been the trend over the years.

6. The minority says it is a Create, Loot and Share arrangement. They insist that, if GETFund wasn’t capped by MOF, and was given all its funding, as paid by the tax payer, there wouldn’t be the need for all this. According to them, about GHC 4.5 billion of GETFund’s revenue for 2021 was re-allocated to other sectors through government’s capping policy, leaving only GHC 1.4 billion for allocating to the Fund, thereby creating this debt circus.

7. The majority claims it is the best way to raise funds to finance education projects.

This is a summary of the Daakye Trust PLC matter. In the next two weeks, Africa Education Watch will be reviewing the Daakye Trust PLC’s governance and strategic framework to determine its efficiency, effectiveness, and accountability.


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