[Ghana] Poverty Fund Impoverished

From Graphic Ghana

Provisional figures submitted by various district assemblies have revealed that the Poverty Alleviation Fund (PAF) has been plunged into a massive debt in excess of ¢45 billion by recalcitrant borrowers.

The fund grants soft loans to small-scale entrepreneurs to finance their own ventures but its sustainability has been threatened by the failure of beneficiaries to pay back.

To avert the threat of its total collapse as a result of this low recovery rate, the standard for accessing money from the fund will soon shift from individual applications to membership of groups and associations.

Disclosing the details in an interview in Accra yesterday, the Administrator of the District Assemblies Common Fund (DACF), Mr Joshua Magnus Nicol, said the provisional figures could be more staggering because many of the affected districts were now compiling the exact amounts owed them by individuals.

He stated, for instance, that the Tolon- Kumbungu District Assembly had as of December 31, 2004, given out ¢856.6 million as micro credit to individuals, but had recovered ¢83.4 million, representing 10 per cent recovery rate, while the Obuasi Municipal Assembly gave out ¢231 million and had recovered ¢80 million.


He indicated that Cabinet had given approval for a review of the methods of disbursing the fund as part of measures to improve its recovery rate.

Under the new strategy, instead of giving money to individuals, people would be encouraged to form groups and associations to qualify for the loans.

District assemblies would also be encouraged to shift from micro financing to undertake joint ventures with private enterprises.

He said the Ministries of Employment and Manpower Development, Local Government and Rural Development and Private Sector were currently mapping out strategies for the resumption of the disbursement of the fund.

He said the move was also aimed at increasing youth employment in the country.Mr Nicol cited some districts which were currently undertaking such productive ventures as in the Yilo Krobo District, which had embarked on mango production, Mpohor Wassa East, oil palm plantation and Offinso District which had also embarked on productive ventures.

Mr Nicol emphasised that district assemblies had the responsibility to recover the moneys.He also encouraged beneficiaries to make strenuous efforts to pay back the loans they were given to enable others to also benefit.

Despite the hiccups, Mr Nicol disclosed that the DACF had released ¢30.4 billion to district assemblies for disbursement, while the DACF was waiting for the submission of the new modalities for disbursement in order to benefit a larger section of society instead of few individuals.