Overview

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 even after the dismissal of 22 justices for being implicated in a corruption scandal. 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.

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, hikes in taxes, utilities and fuel prices. The opposition New Patriotic Party (NPP) has requested a new voter registration system or a transparent cleanup of the electoral register from the Electoral Commission after claiming that the electoral register includes ineligible voters.

Ghana’s real gross domestic product (GDP) growth is projected to rebound to 5.2% in 2016 from 3.4% in 2015 reflecting the positive impact of more a stable energy supply and increased contribution from the oil and gas and agriculture industries. Energy supply is expected to improve following the emergency measures including the use of power barges. The country’s medium-term growth prospect is strong with 8.2% in 2017 and moderating to 7.5% in 2018 under the assumption that fiscal adjustment remains on track with the support of the International Monetary Fund (IMF) and other development partners.

Recent Economic Developments

Ghana has embarked on the second year of its fiscal consolidation program with an ambitious target for 2016. After successfully cutting its fiscal deficit by more than three percentage points to 7.1% of GDP in 2015, Ghana’s 2016 budget aims to further reduce the fiscal deficit to 5.3% of GDP. The target was revised down from 5.8%, given the high level of public debt and the significant financing constraints.

The country’s external balance improved in 2015, despite unfavorable global economic conditions. The international prices of oil and gold, which account for 50% of Ghana’s exports, fell by 47% and 8%, respectively in 2015. Nevertheless, Ghana’s current account deficit narrowed to 7.8 % of GDP in 2015 from 9.6% of GDP in 2014 as the rise in other services exports and private transfers including remittances more than compensated for the increased merchandise trade deficit. Overall, the Ghanaian cedi lost 18% of its value against the US dollar in 2015 while it remained relatively stable following the Eurobond issuance ($1 billion) and disbursement of the Cocobod (short-term syndicated loan for $1.8 billion) in October.

Despite this progress, the country continues to face persistently high inflation, even with efforts to tighten monetary policy. The high inflation rate remain elevated at 18.5% in February 2016 compared to 17.7% in February 2015, even after the Central Bank’s 500 bps policy rate hikes. Ghana’s economic growth slowed for the fourth consecutive year to an estimated 3.4% in 2015 from 4% in 2014 as energy rationing, high inflation, and ongoing fiscal consolidation weighed on economic activity.

The government’s major challenge is to avoid slippage from the fiscal consolidation program in light of the upcoming general elections in late 2016.

Last Updated: Apr 12, 2016

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 total WBG exposure is approximately $3 billion. The current portfolio consists of $2.140 billion of credits and grants from the International Development Association (IDA). The strategy incorporates a substantial current IDA portfolio consisting of 24 operations during the CPS period for a total commitment of $2,140 billion in addition to four regional operations with an additional net commitment of $382 million. The four regional projects in West Africa, are in transport, energy, agriculture, higher education and trade.

Last Updated: Apr 12, 2016

Progress towards the Country Partnership Strategy FY2013-2016 (CPS) outcomes has largely been positive. Through the Land Administration Project, 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 46,030 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 In primary education, completion rate increased from 87.1%in 2009 to 93.7%in 2011/2012, 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 and for senior high schools through the results-based Secondary Education Improved Project.  

Under the Ghana Social Opportunities Project, the Livelihood Empowerment Against Poverty Program (LEAP) has seen an increase from the 39,146 beneficiaries household in 2010 to 164,785 beneficiaries household as of August 2015 (70% of whom were female beneficiaries, against a target of 30%). ‘In the poorest regions of the country, 150 feeder roads of 591.9 km have been constructed, while 134 small earth dams and dugouts and 80 climate change activities have also been completed. The program has thus effectively increased access to employment and created 6,211,242 person days employment, as against the end of project target of 9,5000,000. Labor-Intensive Public Works (LIPW) direct project beneficiaries were 125,424 against the target of 190,000, out of which 60.5% are female, against the target of 50%.

The information and communication technology sector has been supported by progressive policies and regulatory interventions of the government, and by the WBG and development partners under the e-Ghana project. A vibrant private sector bolsters investments in the sector and offers innovative products and services to consumers. By 2014, mobile phone penetration exceeded 100% in Ghana, compared to 1% in 2000. Greater availability of high-speed internet and falling wholesale prices are helping a growing domestic industry of business process outsourcing (BPO) and information technology-enabled services (ITES). The local industry creates jobs for the country’s youth, and economic output and export revenue. Ghana produced 8,700 jobs, and an export revenue of $72 million. 

Last Updated: Apr 12, 2016

The World Bank (WB) country program in Ghana is coordinated with other development partners. There is an established coordination structure for budget support through the Multi-Donor Budget Support (MDBS) process, by which the Government of Ghana (GoG) and development partners (DPs) agree to a set of objectives, reform measures, and indicators.

FY15 Deliverables and FY16 Pipeline Projects

In fiscal year 2015, the WB delivered projects to address the country’s macroeconomic competitiveness challenges, a financial sector reform program, and modernization of government systems under the Information and Communications Technology (ICT) for transformation. In addition, the GoG  was supported with an International Development Association (IDA) policy-based guarantee and Partial Risk Guarantee (PRG) for the Sankofa Gas development with a potential to bring in private investments of up to $8 billion.  Total IDA commitment for FY15 was $380 million. For FY16, the pipeline includes another guarantee to support Independent Power Producers (IPPs).

Multilateral Investment Guarantee Agency (MIGA) Operations

MIGA currently insures four active projects in Ghana, supporting power, telecoms, clean water, and oil and gas supply, with total gross exposure of $319 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.

 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), and access to finance. We are also involved in developing a viable agribusiness sector. IFC invests in 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 12, 2016


LENDING

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

*Amounts include IBRD and IDA commitments