The World Bank in Ghana

Ghana sits on the Atlantic Ocean and borders Togo, Cote d'Ivoire, and Burkina Faso. Its population is of 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 to fulfill his electoral promises through consensus building with the opposition and implementing diversification of the economy amidst increasing debt.

Recent Economic Developments and Outlook

Ghana’s rapid growth (7% in 2017-19) was halted by the COVID-19 pandemic, the March 2020 lockdown, and a sharp decline in commodity exports with an overall GDP as low as 0.4%. The economic slowdown had a considerable impact on households. The poverty rate is estimated to have slightly increased from 25% in 2019 to 25.5% in 2020. Ghana’s economy has effectively rebounded from the COVID-19 induced slowdown. Growth is estimated to have reached 4.1% in 2021, is expected to be broad-based in 2022 and projected to reach 5.5% in 2022.

The overall fiscal deficit doubled to 15.2% in 2020 and public debt increased to 81.1% in 2020, placing Ghana at a significant risk of debt distress. While some consolidation happened in 2021 with the deficit declining to 11.3%, more significant effort will be required to alter the debt dynamics meaningfully. Provisional fiscal data for first half of 2021 suggest that the authorities cut spending to make up for revenue shortfalls. The overall fiscal deficit was 5.1% of GDP.

Headline inflation averaged 7.8% in the first half of 2021 and ended at 10% as full year average. This was due to exchange rate, food and non-food price hikes and has continued in the first quarter of 2022. As of end-February 2022, inflation reached 15.7%, the highest level since December 2016.

Fueled by the domestic recovery, imports expanded faster than exports in early 2021 while external demand for commodities remained subdued. As a result, current account deficit is estimated to narrow 2.4% of GDP compared to 2.3% in 2020.

Outlook

Ghana’s economy is projected to remain relatively strong over the medium term, supported by higher prices for key exports and strong domestic demand. Growth is projected to reach 5.5% in 2022 and average 5.3% over 2022. Growth is expected to be broad-based led by agriculture and services and relatively stronger industry sector.

The government’s 2022 budget set forth an ambitious consolidation plan as it aims to raise revenue from 16% in 2021 to 20% in 2022. Fiscal measures would reduce the deficit from 12% in 2021 to 4.5% by 2024. However, the main revenue measure (an e-levy estimated at 1.4% of GDP in 2022) has faced steep opposition, preventing its introduction so far, while targets for other revenue measures may be too optimistic. A more conservative projection suggest that the fiscal deficit could be closer to 7.5% in the medium-term (2022-2024), compared to the government’s target of 5.8%.

Risks and Challenges 

Ghana’s economy continues to suffer the impacts of the pandemic as growth is yet to get back to pre-pandemic levels, and this could be compounded by the war in Ukraine. The developments are expected to raise global prices for several key commodities, including food, fuels, fertilizers, and metals used in manufacturing, adding to prior inflationary pressures in Ghana.

Last Updated: Apr 07, 2022

The FY22-26 Country Partnership Framework (CPF) was approved by the World Bank Group Board on February 22, 2022. It is anchored in the government’s ‘Ghana Beyond Aid’ vision, its Coordinated Program of Social and Economic Development Program (CPSEDP) and the Coronavirus Alleviation and Revitalization of Enterprise Support Program (CARES). Consistent with the World Bank Group COVID-19 Response Framework, the CPF seeks to support the Government in managing the COVID-19 crisis’s impact 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 proposed focus areas are:

• improving equitable access to services for improved human capital development
• enhancing conditions for diversified growth and quality jobs
• promoting resilient development.

The World Bank program in Ghana is worth $3.2 billion in credits and grants across 26 active projects (19 national IDA projects, 2 regional projects; and 5 Recipient Executed Trust Funds). Of the total financing committed, 91% is from IDA (national: $2.9 billion; regional: $210 million) and the remaining 9% is from sector-specific trust funds. The portfolio has a balanced spread across all sectors with the largest investments in education (13%), finance & competitiveness (16%), social protection & jobs (12%) and health (12%). Several projects and analytical work have integrated and complementary activities with IFC. 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 aims at encouraging the growth of private enterprise in developing countries. As of February 2022, IFC’s investment portfolio was $1.8 billion in financing and $21 million of advisory services for agribusiness, education, energy, financial services, health, manufacturing, real estate, transport, tourism, among others. IFC’s areas of priority include manufacturing, agribusiness, and access to finance with a cross-cutting approach leveraging digitization

In addition, IFC has provided technical assistance to improve the investment climate and trade logistics. On financial inclusion, it has supported the Government with creating the optimal environment for digital financial services/mobile banking and implementing financial infrastructure, such as a credit bureau and collateral registry to encourage banks to lend to small and medium size enterprises (SMEs).

IFC’s key activities in Ghana since the beginning of the pandemic include a rapid assessment of the pandemic’s impact on the private sector and over $85.7 million investments in health, agribusiness, SME lending, and manufacturing.

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: Apr 07, 2022

The World Bank, under the Ghana Emergency Response Preparedness Support supports the Government’s Covid-19 vaccines rollout through the acquisition of 16.9 million J&J vaccine doses through the AVATT together with UNICEF. The World Bank’s contributions accounts for 74% of the national target of 22.9 million people to be vaccinated.

The World Bank is also supporting scaling up COVID-19 vaccination through training vaccinators and supervisors. As of March 10, 2022, Ghana had received 27.4 million doses of vaccines (5.8 million financed by IDA), of which 13.2 million doses have been administered which represents 39.6% and 22.9% of vaccinated people respectively with at least one dose and fully vaccinated.

The World Bank continues to support the delivery of essential health and nutrition services. Social mobilization activities for COVID-19 vaccination, reaching the hard-to-reach and the vulnerable populations, are also part of these health systems strengthening efforts.

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 259,585 people as of April 2021. It has also under its institutional sanitation component supported the construction of 398 new sanitation facilities and rehabilitated 105 (in 260 different schools). 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.

The Ghana Commercial Agricultural Project 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.

With support from the Secondary Education Improvement Project (SEIP), Ghana has increased the number of seats available to students in senior high schools in underserved districts by at least 43,000 seats and provided over 20,000 low-income students with scholarships between 2014 and 2021. It has helped deliver quality secondary education to nearly 568,000 children and provided scholarship and bursary support to over 20,000 children, 60% of whom are girls. SEIP has contributed to an increase in transition rates from lower to higher secondary schools in the poorest districts from 39% in 2014 to 72% in 2019. Completion of higher secondary education increased in the two poorest quintiles in the targeted districts from 8.4% in 2014 to 13.5% in 2017. 23 new senior secondary schools have been constructed and 125 rehabilitated, increasing the number of spaces available in targeted schools by over 43,000 seats between 2014 and 2021.

With the onset of the COVID-19, the government rolled out the I-Campus which allows all SHS students to access learning modules online. I-Boxes –which provide offline access to a range of curriculum-based video lessons, virtual laboratories, and summary notes ­– have also been installed in all beneficiary secondary schools. In 2020, it enabled at least 1.1 million secondary school students to be provided logins to I-Campus modules.

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. Its base program starts with a 3-month training period for digital skills. Some trainees are selected for the incubation program, which combines more advanced digital skills with business education. Some startups receive seed money, while other trainees are offered internships with partners.

Last Updated: Apr 07, 2022

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 World Bank Group is working closely with other partners to offer a coordinated support to the Government in response to the COVID-19 pandemic. It is also coordinating support in the macroeconomic area closely 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, and energy.

G20 Compact with Africa

Launched in March of 2017 under Germany’s G20 presidency, the Compact with Africa (CWA) is the central pillar of the G20-Africa Partnership, and its mission is to support private investment, sustainable infrastructure, and employment in African countries. The Compact comprises 12 members: Benin, Burkina Faso, Côte d’Ivoire, the Arab Republic of Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Tunisia, and Togo.

Last Updated: Apr 07, 2022