The Committee however noted that actual accrual to the Fund in year 2020 was one billion, eighty- two million, nine hundred and seventy-five thousand Ghana cedis (GH¢1,082,975,000.00). This represents a shortfall of one hundred and forty-five million, sixty-three thousand, four hundred and forty-eight Ghana cedis (GH¢145,063,448.00).
It further came to the attention of the Committee that as at December 2020, only six hundred and ninety- five million, four hundred and seventy thousand Ghana cedis (GH¢695,470,000.00) representing 64.22 per cent of GH¢1,082,975,000.00 that accrued to the Fund had been released to the Fund.
The Committee expressed concern about delays and non-releases of moneys to GETFund by the Ministry of Finance. Taking cognisance of the important role the Fund plays, particularly in the area of infrastructural development in the educational sector of the country, the Committee is of the view that delays and non-releases of funds to GETFund affects the timely settlement of claims by contractors and ultimately throws project completion schedules
and project costs out of gear, sometimes occasioning huge variations.
In order not to defeat the purpose for which GETFund was set up, the Committee urges the Ministry of Finance to ensure that moneys that are expected to accrue to the Fund for the execution of projects and programmes, and other commitments are fully released, and on time.
b. Servicing of GETFund's Debt
The Committee noted that an amount of six hundred and forty m i l l i on , fo u r hu n dr ed an d seventy thousand Ghana cedis (GH¢640,470,000.00) out of GH¢695,470,000.00 that was released to the Fund by the Ministry of Finance in year 2020, was used by GETFund to service part of its debt.
As at 31st December, 2020, the outstanding debt of the Fund stood at six hundred and one million, eight hundred and sixty-three thousand Ghana cedis (GH¢601,863,000.00). This includes arrears of seventy-six million, six hundred and six thousand, three hundred and forty-nine Ghana cedis (GH¢76,606,349.00) one hundred and thirty-seven million,
seven hundred and fifty-two thousand Ghana cedis (GH¢137,752,000.00) from years 2016 and 2019 respectively.
c. Major Projects Undertaken by the Fund in year 2020
In spite of the low releases of monies to the Fund in year 2020, the Committee noted that the Fund was able to undertake some major projects which are at various stages of completion. These include:
Construction and completion of academic facilities in public tertiary institutions;
Construction and rehabilitation of dormitories, classrooms, dining halls and other facilities in various Senior High Schools;
Construction and rehabilitation of basic school classroom blocks;
Construction of kindergarten facilities;
Provision of whiteboard and markers in some Senior High Schools;
Supply of classroom furniture as well as beds and mattresses to various schools;
Procurement of buses and pick- ups for schools and Agencies under the jurisdiction of the Ministry of Education; and
Procurement of Teaching and Learning materials for schools.
4.2 Securitisation of GETFund Receivables
In the year 2018, the House gave approval to the Ministries of Education and Finance to securitise a portion of GETFund receipts to raise a US$1.5 billion loan facility for the provision of educational infra- structure. The GETFund through the Ministry of Education, was to access the loan facility in three tranches of US$500 million over a period.
The Committee was informed that the Fund was only able to raise a total of GH¢1.122 billion out of an expected amount of GH¢2.3 billion (1st tranche of US$500 million) through the CAL Bank and Standard Chartered Bank (SCB) syndication and disbursed same in the year 2019. An additional GH¢445 million was raised from the CAL Bank syndication in the year 2020, thus bringing the total syndicated loans to GH¢1.567 billion.
092[MR AFENYO-MARKIN] [MR AFENYO-MARKIN]
According to GETFund, the inability of the syndication to raise the expected amount was attributed to the fact that the syndication was restricted to only banks, many of whom did not have sufficient funds to meet the single obligator limit set by the Bank of Ghana in respect of how much a single bank could contribute to the syndication. Furthermore, the terms did not appear attractive enough to many banks.
To overcome the above challenges and to extend the borrowing capacity of GETFund, the Board of Trustees of the Fund established a Special Purpose Vehicle (SPV) -- Daakye Trust PLC (Daakye) to enable the Fund raise the additional funds through bonds and to consolidate the Fund's borrowings into a single debt structure.
The Committee expressed concern about the fact that GETFund failed to seek approval from the House when it decided to enter into a Bond Programme. The Committee is of the view that the creation of Daakye to administer the Bond Programme, serving as intermediary between GETFund and contractors for payments of GETFund commitments to contractors, runs contrary to the
GETFund Act which requires GETFund to utilise its accrued inflows to pay its commitments directly to its debtors without an intermediary.
In response to this concern, GETFund indicated that the SPV was an integral part of the prospectus approved by the Securities and Exchange Commission, and had the objective of creating the needed investor confidence for the success of the programme.
In addition, the arrangement was underlined by the fact that GETFund as an institution did not have the requisite expertise to manage the bond issuance and debt servicing processes, and therefore required an intermediary entity for that purpose.
4.3 GETFund Bond Programme
As indicated earlier, the inability of GETFund to raise the required amount through the securitisation of a portion of GETFund receipts, necessitated the establishment of Daakye to secure an amount of GH¢5.5 billion Bond Programme to issue cash and to convert the syndicated loans into the Bond Programme. As at the end of December, 2020, the Bond Programme had issued GH¢1.392
billion in bonds which have been listed on the Ghana Fixed Income Market.
According to GETFund, the bond was issued through a 7-year Fixed Rate Bond and a 10-Year Fixed Rate Bond. Through the Bond Programme, GETFund was able to raise an additional amount of GH¢259 million from a pool of investors, including individuals and local institutions. Part of this amount was utilised to re- finance the syndicated loan, which had a rather tight repayment schedule.
GETFund further informed the Committee that following the refinancing of the syndicated loans, an amount of GH¢443 million was freed up from the Debt Service Account and was immediately transferred to the SPV for disbursement to contractors. The Bond Programme enabled GETFund to achieve a number of outcomes including the following:
Reduced Debt Service Coverage Ratio from 1.5 x and 2x under the terms of the syndicated loans to 1.25x;
Extended the principal amortisation period from the 2nd year of the syndicated loans to the 5th year of Tranche 1 and the 8th year of Tranche 2 issued under the Bond programme, thus reducing the payment burden on GETFund cash flows in the early years; and
Reasonably budget for its commitments and debt service requirements during the tenure of its liability in view of the application of fixed interest rate structure for the bonds, as compared to the variable interest rate for the syndicated loans.
Table 2 shows the pricing of the GETFund Bonds as compared to the syndicated loans and other alternatives. Table 2 is depicted at the top of the page that follows.