Ghanaian University took $64m loan to pay $250m but now can’t meet up on obligations

Ghana’s prestigious and oldest tertiary institution, University of Ghana Legon Accra is set to lose its assets or stand being privatized if it fails to repay a $64 million loan. Ghana’s Minister for Education, Mathew Opoku Prempeh made this known in an interview with Peacefm.

According to Prempeh, in 2015, the University of Ghana (UG) collected a loan of $64 million form a private firm based in the United States of America, Africa Integras by signing a Public-Private Partnership agreement. The loan was expected to be used for the construction of 1,000 new students’ hostel beds for undergraduate and post-graduate students on the Legon campus and Faculty offices on campus. The project also consisted of the construction of an expanded facility for the College of Humanities, a complex for the new College of Education, a new building complex for the College of Basic and Applied Sciences, a complex to house the Institute of Technology and Applied Science and a building for the College of Health Sciences to aid the university in relocating the medical school to the UG campus from its present location in the Korle Bu Teaching Hospital.

However, Prempeh revealed that the project has stalled and the money cannot be accounted for. Under the partnership, the University is expected to pay back $10 million a year over a period of 25 years for the principal of $64 million. He also revealed that the school had in recent times defaulted in the payment – a situation he believes could lead to the school’s assets being seized.

“UG needs to pay 10million dollars a year for 25 years and by the time they redeem themselves, they would have paid 250million. If they are not able to pay, their assets will be confiscated,” Prempeh said.

The 25 years project was structured as a Build, Operate and Transfer (BOT) contract and it was signed by the then Vice-Chancellor of the University of Ghana, Professor Ernest Aryeetey on behalf of the University, while Andrea Pizziconi, Managing Partner at Africa Integras, signed on behalf of her Organization.

This deal which is the worst contract the school has signed since its inception in 1948 has been termed a fraud.

The former Vice-Chancellor of the University of Ghana, Prof Aryeetey in 2017 denied this fraud claim when the issue came up. He explained that the university had gone through the right procedure with relevant stakeholders being informed and the deal was transparent.

“I can assure the public that nothing untoward took place. The processes that were followed were very transparent. It’s being suggested that there was something corrupt, but there’s no such thing. I was never offered any money by any of the persons we dealt with. I have never asked for anything nor have I taken money from anybody in relation to this or any other project. Any suggestions of wrongdoing will be completely misplaced,”  Prof Aryeetey said.

“There is no scandal at all in relation to the $64.4 million contract. Africa Integras signed an agreement that they were supposed to spend that money. As far as I know, by the time the project stopped, they had spent about $28 million. How does a phony company come and spend $28 million? You can see the buildings coming up and yet it has been written that I have signed an agreement with a phony company. We haven’t spent any money ourselves, it’s the ‘phony’ company that’s spending the money; how does a phony company put up buildings?,” Professor Aryeetey asked.

The President of the University Teachers Association of Ghana (UTAG), Henry Agbanu, in an interview with Point Blank said that once the school was not receiving financial support from the government, it had no option than resort to loan agreements from external sources. He also explained that the Minister’s decision to discuss the matter publicly is rather unfortunate and he thinks that the Minister wants to score political points with a rather sensitive issue such as this.

“So far, all that government does is to pay emoluments of workers. No capital investment; no administrative cost, nothing; and so universities are left to struggle and cope with the problems they have. At a point at the University of Ghana, there were about six, seven students in a room and it was an eyesore when you came to the campus and you went to the students’ room, you will never want your child to be educated in such an environment so the University in its wisdom thought it will be necessary to build hostels for students to occupy,” Henry said.