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 (about 37 active sector and thematic working groups, a multi-donor budget support group pulling the work of the working groups into a common matrix, a Heads of Missions group who provides political guidance, a Heads of Cooperation who provides operational guidance on priorities and trade-offs, and the MDBS which focuses on budget support. The number of players in this structure is large - about eight donor organizations as well as most government ministries participate in this process. Leveraging the strong complementarities within the World Bank Group 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. But the need to mobilize increasing volumes of non-concessional financing for infrastructure and to mobilize domestic and external private investment capital and expertise to propel economic growth and diversification will take on increased importance. At the same time the role of development partners, including the World Bank Group, in helping Ghana expand and strengthen social service delivery and strengthen institutional capacity to manage the economy and safeguard against risks and shocks will continue to be critical. IDA, IBRD, IFC, and MIGA are ideally placed to work together to support Ghana in this respect with concessional IDA resources to be targeted primarily towards activities with high social returns, while resources from IFC and MIGA will be targeting more commercially viable activities.
In fiscal year 2014, the Bank 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.
As of end-March 2014 Ghana has 55 trust funds, 66% of the currently active trust funds are Bank-executed, the majority of which are funding analytical work, IFC advisory services and, in some cases, supervision of major programmatic trust funds. Major programmatic trust funds going into the CPS period include multi-donor trust funds for energy, education, fisheries, land, transport, and the REDD.
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.
The power sector project guarantees a loan provided by Société Générale Canada Branch (SGCB) to the government to finance the completion of the Takoradi 3 Power Plant which will expand the existing Takoradi T1/T2 power plant complex in the Ghanaian district of Sharma Ahanta facility. The expansion of the Takoradi 3 Power Plant will allow it to feed more electricity to Ghana’s national grid, allowing broader and more reliable access to power.
Efforts to bolster the energy sector are essential to avoid blackouts, such as the ones Ghana experienced in 2008. As such the project fits into the government’s power sector plans, which specifically seek to increase installed capacity from 2000 megawatts to 5000 megawatts and enable Ghana to become a net exporter of electricity to neighboring countries by 2015. MIGA’s support for the project is also aligned with the World Bank Group’s Country Partnership Strategy for Ghana, which urges the strengthening and expansion of the country’s power generation and distribution systems The manufacturing project supports the establishment of a greenfield company, Takoradi Renewable Energy Ltd. in Ghana, that will produce biomass from rubber trees in plantations in the country's western region. The woodchips produced from the trees will be exported through the Takoradi port to European markets for biomass power generation. The project is expected to benefit the local community by providing about 70 additional jobs and alleviating primary forest deforestation. In addition, the introduction of biomass to Ghana's economy will introduce new business opportunities.
The project also facilitates the replanting and rehabilitation of rubber trees, thereby improving the sector's sustainability. MIGA's support is aligned with the first pillar of the CPS, 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 project was underwritten through MIGA's Small Investment Program. The telecoms project, underwritten in 2005, provided insurance coverage for a $110 million equity investment into Scancom Ltd. of Ghana by Investcom Holding S.A. of Luxembourg for the expansion and upgrade of Scancom’s network in Ghana, with the goal of increasing population coverage and alleviating network congestion. The project is expected to provide positive development impact through increased coverage and more affordable rates that also facilitate small business development, as entrepreneurs gain access to a critical communications medium as well as direct impact through the creation of create additional jobs and opportunities for professional development.
MIGA currently supports the construction and operation of a seawater desalination plant in Accra by Befesa Desalination Developments Ghana Ltd. which aims to improve the security and quality of the water supply in the Teshie-Nungua area of the city. MIGA is currently considering two new projects to support access to water and sanitation, consistent with the government’s strategies and priorities.
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. Moreover, this project supports ongoing efforts to increase economic integration in West Africa and was the first in the region to develop regional exports of natural gas. The Multilateral Investment Guarantee Agency (MIGA) guarantee is accompanied by an International Development Association (IDA) partial risk guarantee to the West African Gas Pipeline Company for $50 million in respect to Ghana’s obligation to make certain payments. In addition, MIGA currently has proposed two new projects in the oil and gas and the water sectors for FY13.
IFC Country Strategy and Operations
The International Finance Corporation (IFC) in Ghana has a strategy in place that seeks to increase competitiveness of the private sector, and committed exposure is $871 million for IFC's own account, or $925 million including B-loan and syndicated loan exposures. Disbursed and outstanding exposure in Ghana is $535 million for IFC's own account, or $590 million including B-loan and syndicated loan exposures. The investments and advisory services include infrastructure services, such as power, water and sanitation, financial sector, small and medium enterprise (SME) access to finance, and it also includes the development of commercial agriculture. It also has investments in the real sectors, such as manufacturing, tourism, mining, and health and education. It also includes investments that have a positive effect on the climate change agenda.
Last Updated: Apr 10, 2014