Since its return to multi-party system more than two decades ago, Ghana has made major strides towards consolidating its democratic achievements. Its judiciary has proved to be independent and has generally gained the trust of Ghanaians. The Ghanaian Parliament is vibrant, and despite inherent challenges and the dominance of the two leading political parties, has created the avenue for debate and vigorous legislative activity. The National Democratic Party (NDC) which won the first two successive elections since Ghana's return to civilian rule (1993), lost to the New Patriotic Party (NPP), which also ruled for two terms before losing to the NDC, now into the third year of its second term in office.

Ghana is constantly ranking among the top three in Africa for freedom of the press and freedom of speech. The broadcast media is the strongest, with radio being the most far reaching medium of communication. While all these put Ghana in an enviable political position, and provides it with formidable social capital, Ghana's economic course over the past couple of years raises many concerns.

The main threat to the ruling National Democratic Congress (NDC) is discontent at the rate of improvement in living standards and an ongoing energy crisis.  The opposition New Patriotic Party (NPP) led demonstrations on February 18th against the government's handling of an ongoing energy crisis.  

On July 24, 2014, the Trades Union Congress of Ghana organized a nation-wide demonstration and issued an ultimatum to Government to take immediate action to, among other things, address the perceived widespread corruption and halt the depreciation of the national currency – cedi, and the rising cost of living.

On press freedom, Ghana progressed from  30th position 22 out of 1809 countries and 2nd in Africa according to the ‘Reporters Without Borders’ 2015 Press Freedom Index report. Ghana also retained its 2013 ranking of 7th out of 52 countries on the Mo Ibrahim Index, increasing its score by 1.6 to 68.2 per cent. This performance reflects the positive effects of an improving environment for democratic governance, coupled with a gradual improvement in the effectiveness of public institutions.

The real gross domestic product (GDP) growth slowed down sharply to an estimated 4.2% in 2014 from 7.3% in 2013 as domestic activity was hampered by the gas supply volatility from Nigeria, a sharp fall in the currency and rising inflation, which required policy tightening. The inflation was 17% (headline) in December 2014 compared to 13.5% in 2013 following the price adjustments in the petroleum and utilities as government removed the subsidies and sharp depreciation of the cedi. Inflation eased slightly to 16.5% in February 2015.

To tackle the structural imbalances, the government recently announced a fiscal stabilization strategy and reached an agreement with the IMF about a new program. If realized, the program should support fiscal adjustment for the 2015-2017 period.

Recent Economic Developments

Ghana’s overall macroeconomic conditions further deteriorated in 2014 with large twin-deficits lingering, fueling government debt and inflation, a sharp depreciation of its currency, and a weaker pace of economic growth. Macroeconomic challenges continued to be driven by the high wage bill and rising interest costs, the fiscal deficit declined only slightly to an estimated 9.4% of GDP in 2014 from 10.4% in 2013. Despite the slight increase in the revenue, interest cost increased to 6.2% of GDP from 4.6%. The government continued to add to its stock of public debt to finance the fiscal deficit. Ghana’s public debt has reached to an estimated 67.6% of GDP in 2014 through borrowing both domestically (33.8% of GDP) and externally (33.2% of GDP).

The domestic debt financing has become extremely costly as the maturity of domestic debt has shortened with treasury bills rates around 25% (600 bps higher than the levels in December 2013).

Ghana’s external imbalance remained large with current account deficit at 11.7% of GDP. The external financing was particularly challenging during the first three quarters of the year with net outflows of $560 million short-term capital and increased private amortization despite stable FDI flows. As a result, the Ghanaian cedi depreciated against the US dollar by 43% on the forex bureau market and net international reserves plummeted to cover only 4 days of imports of goods and services by August 2014.

Nevertheless during the last quarter of the year, the gross international reserves level was boosted by the Ghana Cocoa Board (Cocobod) loan of $1.7 billion. Ghana also issued a Eurobond of $1 billion in September immediately after announcing the start of the IMF talks but still had to pay a premium of 100-150 basis points over the comparable sovereign bonds of Kenya, Zambia and Tanzania. Despite these two inflows, the Ghanaian cedi recovered only slightly finishing the year with 33% depreciation against the US dollar after already 14.4% in 2013.

The real GDP growth slowed down sharply to an estimated 4.2% in 2014 from 7.3% in 2013 as domestic activity was hampered by the gas supply volatility from Nigeria, a sharp fall in the currency and rising inflation, which required policy tightening. The inflation was 17% (headline) in December 2014 compared to 13.5% in 2013 following the price adjustments in the petroleum and utilities as government removed the subsidies and sharp depreciation of the cedi. Inflation eased slightly to 16.5% in February 2015.

To tackle the structural imbalances, the government recently announced a fiscal stabilization strategy and reached an agreement with the IMF about a new program. If realized, the program should support fiscal adjustment for the 2015-2017 period. Nevertheless, Ghana has significant hurdles ahead, and the adjustment process is unlikely to be smooth.

GDP growth is expected to fall further to 3.4% in 2015 as the energy rationing is expected to continue at least until June, planned fiscal consolidation and slow adjustment in inflation will weigh on domestic demand. The export sector is not expected to be supportive, either. The oil export revenues face downside risk amid significantly lower oil prices even as production is expected to improve. Lower prices for gold—which is likely to be accompanied by weaker output—and cocoa are also likely to also weigh on export growth.

Despite the downside risks in the short-term, Ghana’s growth prospects are positive in the long-term. Under the assumption that current macroeconomic problems will be addressed according to the announced plan under an IMF program, the growth rate is expected to rebound to 7.8% by 2017. Even at low prices, the contribution of oil is expected to increase in tandem with its production levels in the medium-term.

The key risks for Ghana’s outlook is global financial conditions that might abruptly curtail the private capital flows both Foreign Direct Investment and debt flows that Ghana have heavily relied on in recent years, and sustained decline in international commodity prices of gold, cocoa and oil that account more than 75% of its exports. The other risk is related with the government’s ability to control its spending in the light of upcoming general elections in 2016. 

Last Updated: Apr 22, 2015

A new World Bank Group (WBG) Country Partnership Strategy FY2013-2016 (CPS) was endorsed by the Bank in September 2013.The objective of the CPS is to assist government to sustain economic growth, accelerate poverty reduction and enhance shared prosperity in a sustainable manner. The CPS seeks to support Ghana to consolidate its transition to lower middle income status, address sources of inequality, and help pave the way to access to International Bank for Reconstruction and Development (IBRD). The CPS program is based on three pillars; improving economic institutions, improving competitiveness and job creation, and protecting the poor and vulnerable. In turn, these pillars are anchored in the Ghana Shared Growth Development Agenda pillars of competitiveness and employment, vulnerability and resilience, and governance and public sector capacity The CPS is also aligned with the compact between the government and its development partners.

The total WBG exposure is approximately $3 billion. The current portfolio consists of $2.1 billion of credits and grants from the International Development Association (IDA), Close coordination between the members of the WBG will be essential in delivering the agreed CPS program. The strategy incorporates a substantial current IDA portfolio consisting of 22 operations during the CPS period for a total commitment of $2,054 billion in addition to six regional operations with an additional net commitment of $382 million. The six regional projects in West Africa, are in transport, energy, agriculture, higher education and trade. In transport, two regional corridors are being supported jointly with other donors, the Abidjan Lagos corridor along the coast, and the Bamako Ouagadougou Tema corridor. In energy, Ghana is an essential player for the West Africa Power Pool which has laid out a power transmission grid that interconnects the region. In agriculture, the West Africa Agricultural Productivity Program is disseminating innovative approaches to local crops. Also shared with the other members is part of the West Africa Regional Fisheries Project.

Last Updated: Apr 22, 2015

Progress towards the Country Partnership Strategy FY2013-2016 (CPS) outcomes has largely been positive, Through the Land Administration Project, the turn-around time for land title registration has been reduced from more than six months to 2.5 months. Out of 31,643 backlog cases of land title applications, 30,156 have been cleared, with the issuance of 3, 880 certificates. The number of registered land transactions (deeds and Titles) increased from a total of 6,288 in 2011 to a total of 46030 in 2014. As part of the Decentralized Land administration services to ease congestion in the Center; Client Services and Access Units (CSAUs) to enhance speedy response to client needs is being piloted in seven areas across the country. Twenty Customary Land Secretariats (CLSs) under the management of Traditional Authorities to help manage land issues have been established and are operational and have recorded approximately 24, 698 land rights at the end of 2014, reducing the pressure on mainstream land sector agencies. Reforms of the Permitting process for permit issuance has reduced from 3 to 1 month and is being tested in selected districts.  

In energy supply, the national electrification rate increased from 58% in 2011 to 72% in 2014.

In primary education, completion rate increased from 83.2% in 2009 to 91.6% in 2011, but quality remains low. The improvements in access to education across the country have been supported by the World Bank Group-financed Ghana Partnership for Education Project. The Council for Technical and Vocational Education and Training (COTVET) was established to improve skills from workers on a demand driven basis with support from the Ghana Skills and Technology Development Project.

Under the Ghana Social Opportunities Project, the Livelihood Empowerment Against Poverty Program (LEAP) targeting system was put in place to reach out to the extreme poor. A rollout of the pilot phase of the LEAP program has seen an increase from the 39,146 household beneficiaries in 2010 to 74,000 household beneficiaries in December 2013 (70% of whom were female beneficiaries, against a target of 30%).

In the poorest regions of the country, 120 feeder roads of 633 km have been constructed, while 144 small earth dams and dugouts and 180 climate change activities have also been completed. The program has thus effectively increased access to employment and created a total of 6,191,774 person days employment, as against the end of project target of 5,650,000. Labor-Intensive Public Words (LIPW) direct project beneficiaries were 107,985 against the target of 13,000, out of which 61.6% are female, against the target of 15%.

There has been significant progress in the Information and Communications Technology (ICT) sector. The combined efforts of government’s proactive policy and regulatory interventions, support from the WBG and other development partners, and highly competitive private sector is translating into increased investment, impressive telephone penetration rate of over 80% in July 2011 (from 60% in 2010 and less than 3% in 2003), over 50% decrease in local and international call rates. There has also been a substantial decrease in price of internet bandwidth for the Information Technology Enabled Services industry from $10,000 per full circuit E 1 line  in 2006 to $1200 per full circuit E 1 line in December 2014  compared to South Africa $2,000, Nigeria $3500 and Egypt $3000. This has impact significantly a reduction in cost of services provided. ICT jobs increased 92.2% to 8,700 people with an increase in export led revenues generated by ICT/ITES industry rising from $32.5 million in 2007 to $72 million in 2014.  The e-Ghana project has contributed to these achievements by supporting critical applications, skills development, and regulatory institutions.

Last Updated: Apr 22, 2015

Ghana is a leader in the Aid Effectiveness agenda. The government and its development partners renewed their partnership under the Compact for 2012-2021, as an effort to reduce the transaction cost of everyone while delivering aid. For budget support, there is a Multi-Donor Budget Support (MDBS) group that coordinates the matrix of policy action among all development partners. The budget support provided accounts for about 25% of aid currently but as high as 40% in recent years. The coordination architecture for budget support is complex and intensive in transactions. Leveraging the strong complementarities within the World Bank Group (WBG) to support Ghana to achieve and sustain more inclusive growth is essential. Aid dependency is relatively diminishing in Ghana and will likely continue to decline.

Pipeline Projects

In fiscal year 2015, the WBG intends to deliver projects to address the country’s competitiveness challenges, a financial sector reform program, the continuation of the support to the National Health Insurance, modernization of government systems under the Information and Communications Technology (ICT) for transformation, and a program to help deal with issues of youth employment.

Multilateral Investment Guarantee Agency (MIGA) Operations

MIGA currently supports five active projects in Ghana (power, manufacturing, telecoms, water and sanitation and oil and gas) with total net exposure of $309 million.

MIGA's support is aligned with the first pillar of the Country Partnership Strategy, which calls for raising private sector competitiveness through engagements in private and financial sector development, modernization of agriculture, sustainable natural resource management, and investment in infrastructure.

The Gas and Oil Capacity Building Project, also underwritten in 2005, guarantees the equity investments in the West African Gas Pipeline Company Limited, covering a portion of Ghana’s contractual obligations for the West African Gas Pipeline Project. The project is expected to supply cheaper, cleaner energy and improve the reliability of energy systems in Ghana, Benin, and Togo, thus lowering the cost of power and improving the competitiveness of goods and services.

International Finance Corporation (IFC) Country Strategy and Operations

IFC strategy in Ghana aims to increase the competitiveness of the private sector. Its investments and advisory services in the country focuses on physical and social infrastructure, such as power, water and sanitation, the financial sector, small and medium enterprises (SME), access to finance. We are also involved in developing a viable agribusiness sector. IFC invests in the real sectors, such as manufacturing, tourism, mining, and health and education. Our work in Ghana has also served to promote the climate change mitigation, a WBG priority.

Last Updated: Apr 22, 2015


Ghana: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments