The World Bank in Ghana

Ghana sits on the Atlantic Ocean and borders Togo, Cote d'Ivoire, and Burkina Faso. Its population is about 29.6 million (2018). In the past two decades, it has taken major strides towards democracy under a multi-party system, with its independent judiciary winning public trust. Ghana consistently ranks in the top three African countries for freedom of speech and press.

President Nana Akufo-Addo’s re-election after the Supreme court dismissed the opposition’s election petition, gave the governing New Patriotic Party a second term. The success of President Akufo-Addo's second term will depend on his ability through consensus building with the opposition on major legislation (including revenue-mobilizing bills) towards achieving debt sustainability, and reaching an agreement with external creditors on external debt restructuring in order to conclude the IMF program under preparation.

Recent economic developments

GDP growth is estimated to have slowed to 3.2% in 2022, down from 5.4% in 2021. The slowdown affected mostly the non-extractive sectors, as the recovery in gold exports supported extractives growth. The agriculture and services sectors experienced slower growth in 2022 than the year before. High inflation and interest rates depressed private consumption and investment. Government demand was weakened by lack of access to capital markets and high debt service obligations.

The 2022 fiscal deficit was well above target. The overall fiscal deficit (on a cash basis) reached 9.9% of GDP against a target of 6.7%.

Inflation accelerated throughout the year. In 2022, average CPI inflation was 31.5%, (up from 10% in 2021) and reached 54.1% in December (y-o-y). The Bank of Ghana (BOG) responded by increasing the monetary policy rate from 14.5 to 28 % over the year. However, these efforts were undermined by the government’s extensive use of its overdraft facility with BOG (estimated at 6.7% of GDP in 2022).

Overall, the balance of payments recorded a deficit of 5% of GDP, from a surplus of 1.9% in 2021. As a result, international reserves fell to $5.6 billion (2.5 months of import) in December 2022 from $9.1 billion (4.2 months of import) a year earlier. After remaining stable in 2021, the Cedi lost over 40 % of its value against the US dollar in 2022.

Banking sector vulnerabilities have increased because of the cedi depreciation and the impact of a domestic debt exchange (DDE) concluded in February 2023. Implementation of the DDE will impact Ghana’s financial sector due to the heavy exposure of banks, insurance companies and pension funds to government debt. It is estimated that 42.1% of government domestic debt is held by these entities.

Poverty reduction slowed. The “international poverty” rate is estimated at 20.5% in 2022. Currency depreciation, increased price of electricity and water, and an increase in the VAT have driven up the cost of living, particularly for food. This places considerable strain on household budgets, especially for those who devote more than half of their budget to food. Rural farmers were also affected by increases in the prices of fertilizer and other inputs.

Outlook

Growth is expected to slow further to 1.6 % in 2023 and remain muted in 2024, before returning toward its potential. Non extractives growth is expected to remain slow, with agriculture affected by high input prices and a disease affecting cocoa trees. Extractives growth is expected to be robust thanks to new gold mines and a recovery in small-scale mining.

International poverty is projected to decline slowly from 20.5 to 19.5% by 2025, consistent with a muted outlook on growth for the country and high inflation. In the shorter term, poverty is expected to increase slightly, due to the cumulative effects of increases in electricity and water tariffs, rising food prices and an increase in VAT. The revised electricity tariffs could be less regressive and reduce poverty if a portion of the increased revenues were targeted to the poor in the form of cash transfers.

Risks and Challenges: 

The main risks to the outlook are related to delays in reaching an agreement with external creditors on external debt restructuring and delays with concluding the IMF program under preparation, increased financial sector vulnerabilities, and the realization of contingent energy sector liabilities.

Last Updated: Mar 31, 2023

Ghana CPF: The Ghana Country Partnership Framework (CPF) for FY22-26 was presented to the World Bank Group Board on February 22, 2022. Consistent with the WBG COVID-19 Response Framework the CPF seeks to support the government in managing the impact of the COVID-19 crisis through preserving critical human capital and capabilities while taking the opportunity to build back better for a dynamic and diversified economy, creating job opportunities for a greener, more resilient, and inclusive society. The three focus areas are: (i) enhancing conditions for private sector development with quality job growth; (ii) improving inclusive service delivery; and (iii) promoting sustainable resilient development. digital transformation is a cross cutting theme. 

The World Bank program in Ghana is worth $3.8 billion in credits and grants across 22 active projects and one Global Environment Facility ($3.28 billion) and six regional operations ($668.7 million). Cumulative disbursement is $1.32 billion (34.7%) while the undisbursed balance is of $2.49 billion as of March 161, 2022.  Sector specific trust funds have been instrumental in financing innovative programs on climate change resilience including sustainable land and forest management, promoting emissions reductions, and increasing the viability of climate or “green” oriented businesses

International Finance Corporation (IFC) Country Strategy and Operations

A member of the World Bank Group, IFC is the largest global development institution focused on the private sector in emerging markets. As of March 2023, IFC’s investment portfolio in Ghana was $446 million in financing and $12.5 million in advisory services, spanning sectors such as agribusiness, education, energy, financial services, health, manufacturing, real estate, transport, and tourism. In addition, IFC has provided technical assistance to improve the investment climate and trade logistics in Ghana.

Under IFC’s current strategy for supporting Ghana’s economic growth and resilience, priority sectors are agribusiness, export-oriented manufacturing, and access to finance for micro, small, and medium enterprises. The most recent transactions include an investment in LMI Holdings to support the installation of a rooftop solar plant and water treatment facility in the Tema and Dawa industrial zones.

Since 2020, IFC has deployed various tools to help Ghana survive and rebound from the COVID-19 pandemic with greener, more inclusive growth. From 2020 to 2021, IFC provided close to $11 million in financing to three healthcare service providers key to Ghana’s fight against the pandemic and ramped up its support to the Government of Ghana on digital financial services. An investment in DTRT, West Africa’s biggest apparel manufacturer, in 2022 is expected to generate 6,000 jobs over six years. And IFC’s Excellence in Design for Greater Efficiencies (EDGE) is the leading green building certification standard in Ghana.

Multilateral Investment Guarantee Agency (MIGA) Operations

A member of the World Bank group, MIGA’s mandate is to promote cross-border investment in developing countries by providing guarantees, political risk insurance and credit enhancement, to investors and lenders. MIGA currently insures four active projects in Ghana, supporting power, telecoms, clean water, and oil and gas supply, with total active gross exposure of $448.2 million.

Last Updated: Mar 31, 2023

The World Bank, under the Ghana Emergency Response Preparedness Support continues to support the delivery of essential health and nutrition services and health systems strengthening efforts. Under Case detection, confirmation, contact tracing, containment, isolation, and treatment, it has ensured that all designated points of entry were equipped with port health and holding room to support pandemic response. The project has helped to increase the number of designated laboratories with COVID-19 diagnostic equipment, test kits, and reagents from 68 in 2021 to 178 in 2022. All these designated laboratories can now diagnose suspected COVID-19 cases within 24 hours.

A national laboratory network has also been established to coordinate and enhance capacities for laboratory testing. Fifteen (15) Treatment and Holding Centers are being remodeled and equipped with 10 practically completed (progress >95%) and 5 ongoing (progress between 73% and 84%). Whilst relevant health staff have been trained in Infection Prevention and Control at health facilities and supplied with face masks, coveralls, goggles, hand hygiene facilities, and consumables.

Under Social and financial support to vulnerable groups, the project provided 400 electronic, 20,000 manual wheelchairs, 100,000 5-liter gallons of liquid soap, 30,000 packs of paper towels and 10,000 mattresses were procured to support persons with disabilities. 2,600 Blind and Partially Sighted persons, Persons with Albinism and sighted assistants were educated on COVID 19 prevention, management, and vaccination.

Vaccines have been deployed across all regions, as of December 31, 2022, the total number of COVID-19 vaccine doses administered was 22,384,226, with 70.4% of the target population receiving at least one dose and 53.7% and 40.5% to the total population being fully vaccinated. With 3,102,301 having received 1st Booster dose.

The Greater Accra Metropolitan Area (GAMA) Water and Sanitation project has increased access to household sanitation by supporting the construction of 33,000 household toilets to serve over 332,456 people as of April 2022. It has also under its institutional sanitation component supported the construction of 398 new sanitation facilities and rehabilitated 105 (in 260 different schools) providing 232,000 school pupils with improved sanitation facilities. The project helped provide access to improved water supply to more than 368,000 people through 281 km of distribution pipelines and delivered 10,200 new service connections. 51,5 % of Project beneficiaries are women.

The now closed Ghana Commercial Agricultural Project (GCAP) which was to improve agricultural productivity and production of smallholder and nucleus farms has benefited 14,264 farmers of which 4,876 are women. The project helped them surpass the target for yield of maize, rice (under rainfed conditions) and soya in the Savannah Accelerated Development Authority (SADA) zone. GCAP successfully rehabilitated, modernized, and expanded the three irrigation schemes and brought in commercial partners to work with smallholder farmers in the project regions to produce rice, maize, and vegetables all-year round and reduce dependence on rain-fed agriculture. The rehabilitation of the Tono Irrigation Scheme made available 2,490 hectares for cultivation twice a year. At the Kpong Irrigation Scheme which had about 1,000 hectares of irrigated land cultivated under GCAP, the rehabilitation increased the irrigable land size to approximately 2,000 hectares.

The eTransform project supports digital entrepreneurship program through three tech hubs—the Ghana Tech Lab, the Ghana Innovation Hub in Accra, and the Kumasi Business Incubator in Kumasi. To date, they have helped boost entrepreneurial skills for over 11,000 young people. In total, 49 startups have been formed, and more than 1,200 businesses have been supported through access to workspace, mentoring and training. They also help individuals and teams with business ideas progress from the concept stage to entering the market. The project is inclusive. The Ghana Tech Lab alone has trained more than 5,400 youth in digital skills—half of whom are female. Over 18,000 youth have been trained at the tech hubs; Out of which 51.8% are females. 3582 jobs have been created out which 55,4% are females. The establishment of operational infrastructure and support for Cyber Security Authority contributed to Ghana obtaining a higher score (86.69%) and ranking in the 2020 Global Cybersecurity Index ranking Ghana 3rd in Africa after Mauritius and Tanzania and 43rd globally. This is from a base score of 32.6 in 2017.  Under the e-Justice component Case management system has been automated at 51 High Courts in Accra. Over 61000 cases have been processed through the system. The project has contributed to the reduction of average days to process a birth certificate from 15 days to 7 days, it has also helped in the reduction of average days to process a company registration from 4 days to 2 days and increased the number of e-services available to the public from 8 to 16.

Last Updated: Mar 31, 2023

The World Bank country program in Ghana was coordinated with other development partners through the preparation of the Systematic Country Diagnostic (SCD) and of the Country Partnership Framework. The consultations brought together partners in civil society, development partners, academia, the private sector, and government. The WBG is working closely with other partners to offer coordinated support to the Government in the recovery from the COVID-19 pandemic. It is also coordinating support on macroeconomic management and debt sustainability with the IMF. It actively engages with other development partners in dialogue and coordination around emerging topics and participates in several thematic working groups with the government and other Development Partners (DPs) in key sectors including health, education, social protection, climate change and energy.

Last Updated: Mar 31, 2023