News Guide Africa

Tag: World Bank Ghana

  • Ghana gets $150m IDA loan for coastal resilience investments

    World Bank Ghana

     

    Adnan Adams Mohammed

     

    The World Bank’s International Development Association is ready to disburse US$150 million loan for the West Africa Coastal Areas Resilience Investment Project 2.

     

    The initiative aims to fortify the socio-economic resilience of coastal communities by implementing effective coastal management practices.

     

    It aligns with the government’s commitment to diminishing the vulnerability of coastal regions and the well-being of local communities along Ghana’s coastlines.

     

    Mr Kwaku Kwarteng, Chairman of the Finance Committee of Parliament, emphasised the loan’s crucial role in addressing challenges such as tidal waves, particularly in coastal areas like Keta in the Volta Region. Additionally, the house endorsed a separate $200 million loan from the World Bank Group to finance the Ghana Tree Crop Diversification Project.

     

    Some weeks ago, the World Bank empathised with victims of the recent flood disaster in areas along the Volta River following the spillage of excess water from the Akosombo and Kpong dams.

     

    About 30,000 residents were displaced and their farms decimated by the flood waters.

     

    At the 3rd Conference on Fisheries and Coastal Environment in Accra, the Operations Manager of the World Bank in Ghana, Liberia, and Sierra Leone, Ms Michelle Keane, said: “We can’t speak about flooding today without conveying the World Bank’s sincere empathy and concern for the ten thousand of people who have been impacted by the recent floods along the Volta River”.

     

    “The World Bank would want to express its readiness to support the government in its response to this crisis”, she said.

     

    She added: “In the longer term, developing a sustainability and risk management strategy for the Volta River and Volta Delta among other areas will be crucial to determine where it is safe for people to live and how their livelihoods can be sustained and grow along the Volta River supported by a healthy ecosystem”.

     

    “We hope that the government and its partners will take full advantage of the $150 million approved by the World Bank for Ghana under the West Africa Coastal Areas Management Programme (WACA)”, she noted.

     

    She said the financing is expected to become available “very soon after parliamentary approval”.

  • WB outcry worsening food security and poverty in Ghana due to untamed inflation 

     

    Adnan Adams Mohammed

     

    The World Bank has said Ghana’s hyperinflationary trend being experienced by economy since 2022 has heightened food security and poverty levels.

     

    The Bank is alarmed with the rate of increase in prices across all consumer categories, which are significantly impacting the living standards of Ghanaians, especially the poor.

     

    The latest Ghana Economic Update released by the World Bank, last week, took cognizance of how the Ghanaian economy is grappling with a severe inflation crisis that has unleashed devastating consequences on the vulnerable. It further indicated that, the erosion of purchasing power resulting from inflation has led to a decline in living standards for Ghanaian households.

     

    “In 2022, the minimum wage in Ghana saw a 10 percent increase. However, this increase was overshadowed by the staggering inflation rate, causing real incomes of minimum-wage workers to plummet by nearly 44 percent. Consequently, the average purchasing power of these workers declined by 15.7 percent throughout the year”,

     

    The report reveals that 20 percent of the population experienced a significant loss of purchasing power, amounting to 16.1 percent in 2022.

     

    “Surprisingly, the richest 20 percent also suffered a notable decline in purchasing power, losing 15.5 percent. While the wealthy lost more purchasing power in absolute terms, the impact was less burdensome compared to their total expenditure.”

     

    The Economic Update highlights that average prices for all Classification of Individual Consumption According to Purpose (COICOP) categories experienced a stark increase in 2022 compared to the previous year.

     

    While non-food inflation was notably high, at an average of 29 percent in 2022, food prices soared even higher, escalating by an average of 34 percent.

     

    This disparity has disproportionately affected the poor, who allocate a larger share of their budget to food and are thus more severely impacted by the rising prices.

     

    Simulations conducted in the report indicate that approximately 850 thousand Ghanaians were pushed into poverty in 2022 due to the combination of rising prices and the loss of purchasing power.

     

    Furthermore, food security in the country deteriorated considerably. The number of food insecure individuals jumped from 560,000 to 823,000 in the last quarter of 2022.

     

    By the end of the year, one-quarter of the population were classified as food insecure, a trend expected to persist into 2023.

     

    To combat the adverse effects of inflation on food security, the World Bank’s Ghana Economic Update highlighted several policy recommendations.

     

    “The government must prioritize investments in agriculture, including research, development, and technology transfer, to enhance productivity, reduce production costs, and improve food quality and safety. Diversification of income sources, improved connectivity, and market access can help households better cope with shocks and seize opportunities.”

     

    The report additionally emphasised the importance of investing in climate-smart agriculture initiatives.

     

    Furthermore, the Economic Update recommends allocating resources towards developing rural infrastructure, including better roads, irrigation channels, and improved primary education.

     

    To alleviate the immediate impact of high food prices on vulnerable households, the report emphasised the need to enhance social protection programs.

     

  • Strengthening the Capacity for Measuring and Valuing Natural Capital in Ghana

     

    Ghana, a West African country rich in natural resources, is in the midst of a transition to holistic landscape management to benefit national wealth and the livelihoods of its people.

     

    Ghana’s wealth and sustainable development is strongly linked to natural capital – the plants, animals, air, soils, water and minerals on which the country and its people depend. Nature has been a major contributor and driver of economic growth and development.

     

    In the past 40 years, Ghana’s real GDP has quadrupled. Yet, The Changing Wealth of Nations (2021) showed that natural capital per capita peaked at $9,000 in 2014, falling more than 30% to $6,000 in 2018. Likewise, the cost of environmental degradation due to the unsustainable use of land alone was 2.8 percent of 2017 GDP. If this trend continues, it will amplify destruction of the natural resource base, disproportionately impacting the poor and increasing exposure to climate risk.

     

     

    Going beyond GDP

     

    The Government of Ghana (GoG) recognized that, despite impressive GDP growth, the degradation of nature is having an impact on the future they want for their people. As a result, they are taking strategic action, in cooperation with the Global Program on Sustainability (GPS) and the United Nations Statistics Division (UNSD), to implement the System of Environmental-Economic Accounting in order to integrate the value of nature and its services into development and investment planning.

     

    To successfully mainstream natural capital accounting, GoG found it was not necessary to start from scratch. It was possible to build on existing alliances by first identifying active tools, structures and partnerships that were already working well, like the Cost of Environmental Degradation Working Group. They then boosted collaboration across institutions to help spread best practices and leverage knowledge among ministries. This made it possible to build capacity more quickly among the technical officers inside the different ministries.

     

    With the right structures in place, the next step will be to improve reliability and timeliness of data. This would provide the basis for indicators required in planning, policy, and implementation programs.

     

     

    Preliminary results

     

    Already there are several promising results. Ghana is developing land and ecosystem extent accounts, ecosystem services accounts and deriving environmentally adjusted macroeconomic indicators. As a result, GoG will be able to better target landscape restoration interventions, inform land-use planning and conservation policies, and derive key indicators for monitoring and reporting.

     

     

    Transitioning towards a sustainable future

     

    As Ghana continues to make steady progress, institutional capacity to generate quantitative and qualitative information is impacting policy decisions at all levels. It is also contributing to the success of other projects like the Ghana Landscape Restoration and Small-Scale Mining Project, financed by the World Bank, with funding from IDA, PROGREEN and EGPS.

     

    This brings Ghana yet another step closer to its national objective of strengthening the country’s foundation for a more sustainable future.

     

    Source: https://www.worldbank.org/en/news/feature/2023/06/13/strengthening-the-capacity-for-measuring-and-valuing-natural-capital-in-ghana

     

  • Ghana economy to grow at 1.6% in 2023 – World Bank projects

    Adnan Adams Mohammed

     

    The Ghanaian economy is projected to record a 1.6 percent Gross Domestic Product (GDP) growth in 2023 according to the World Bank latest projection.

     

    This is in line with the International Monetary Fund’s projection of a 1.6% growth rate. The projection is far lower than the expected 3.2% for Sub-Saharan Africa and places Ghana in the 42nd position in Sub-region.

     

    The June 2023 Global Economic Prospects Report says Ghana’s economy is however projected to expand by 2.9% in 2024.The report stated that the slowdown in the economy is due to the challenges facing the economy, as the Ghana government is undertaking an International Monetary Fund support programme.

     

    “In Ghana, more timely data highlight the weakness of economic activity amid the deleterious global shocks and heightened macroeconomic instability”.

     

    Five African countries, Malawi (1.4%), Sudan (0.4%), South Africa (0.3%), South Sudan (-0.4%) and Equatorial Guinea (-3.7%) are expected to grow lower than Ghana in 2023.

     

    World Bank said its baseline projections remain subject to multiple downside risks amid uncertainty about developments in global commodity markets, the degree of additional global and domestic policy tightening needed to subdue persistent inflation, and the resilience of the world economy and global financial system to a prolonged period of tight monetary policies.

     

    It pointed out that commodity prices may remain unusually volatile and vulnerable to further shocks if disruptions to the supply of major commodities worsen—for instance, due to intensifying geopolitical tensions or conflicts. Furthermore, global activity may decelerate faster than envisioned if the reopening of China’s economy fails to generate a durable recovery.

     

    Growth in Sub-Saharan Africa (SSA) is expected to slow from 3.7% in 2022 to 3.2% this year—a 0.4 percentage point downgrade from January forecasts—with a moderate improvement to 3.9% next year.

     

    Over half of the 2023 downgrade, it said, is attributable to an abrupt slowdown in South Africa. However, downgrades are widespread across energy and metal producers, and non-resource-rich countries.

     

    Excluding South Africa, the Bretton Wood institution, however, said growth in SSA is expected to slow from 4.2% in 2022 to 3.9% this year.

     

  • Ghana to receive first tranche of $1.1bn by September – World Bank

    Adnan Adams Mohammed

     

    The World Bank office in Ghana has disclosed that Ghana is likely to receive the first tranche of the US$1.1billion budget support by September ending.

     

    This will be possible only if the two are able to reach a final agreement on the conditionality.

     

    In accordance to this, World Bank wants the government to present a strong reform package to enable the World Bank release the $300 million facility which is expected to serve as budget support extended to Ghana over a four-year period  while under the IMF programme.

     

     

    “Our plan, our hope is we can bring this to the board by September. But it will all depend on how fast we reach agreement with government on the pro-actions. The Country Director, Pierre Laporte, noted. “It may be September, it may be October, but we’re hoping we need to do it this year because IMF has factored it into its financing gap,” he said in an interview last week.

     

    He explained that, “But this US$300 million, I want to be very clear is not acquired, is not given, is not taken that World Bank will come and give. We need to have a strong reform package from government that accompanies as prior actions for the release of this US$300 million and these have to be in areas where us and government agree these areas that have caused problems for the budget or for the sector.”

     

    He noted that there are four key pillars in Ghana’s economy that need urgent reform.

     

    “One is the whole aspect of domestic revenue mobilization…because as we all know Ghana’s revenue to GDP ratio is quite low, and we’re hoping to accompany IMF reforms there, government reforms, to raise revenues and there’s a whole aspect on fiscal management, PFM, expenditure management.

     

    “The second aspect is private sector development and financial sector to accompany our financial sector project. We will also push for some reforms in the financial sector because it’s one thing to put money to address the problems now but there are some long term issues that remain outstanding and it will be important for Ghana to resolve and we will support that reform in the project,” he said.

     

    He continued, “As I said before, when you have a kind of very severe consolidation as you’re having now it’s important to consider the growth agenda also. Because one thing is to squeeze the budget for you to realign and pay your debt in the future, protect the poor which we do through the social protection project but also how do you keep the economy going.

     

    “You need to maintain your growth agenda, you need to maintain economic growth because the faster you grow the faster the ratio of revenue improves, your ability to pay your debt improves and the economy will recover faster. And we want to discuss with government certain reforms in the investment climate, because what brings you FDI is a good sound investment climate and today there are areas that Ghana needs to do more.”

     

    He further noted that government will need to introduce huge reforms in the energy sector, and fast.

     

    He is hopeful that the IMF-World Bank programme will accelerate those reforms.

     

    “But the other two is energy, as I’ve said before energy is a huge burden on the fiscal framework. Government is subsidising the energy sector over 1 billion dollars a year and something needs to be done urgently. And I must say that unfortunately reform in that sector has been slow. We’re hoping with the programme it will accelerate.

     

    “And finally the whole show of building resilience, we have a pillar that will bring support to build social economic resilience and improve your social protection framework…and finally climate resilience,” he said.

  • Pursue efficiency in spending – WB advises Ghana 

    Pursue efficiency in spending – WB advises Ghana 

    Adnan Adams Mohammed

    The Economic Management Team and the finance ministry have been advised to ensure efficiency in spending amidst the current crisis that the country faces.

    A multilateral institution, the World Bank, has urged the government to restore fiscal sustainability going forward in order to facilitate debt reduction to a sustainable level.

    It also wants the country to pursue structural reforms, particularly in the energy sector, address economic imbalance and the financial issues that are putting lots of stress on the fiscal framework. Speaking at the 6th Ghana Economic Update, World Bank Country Director said, addressing these sectoral reforms is critical for Ghana, adding, managers of the economy must pursue efficiency in spending.

    “So addressing these sectoral reforms will be critical and at the same time expenditure side should be measured – that is pursuing efficiency in spending”, Pierre Laporte said.

    “Ghana also needs to pursue structural reforms particularly in the energy sector, the imbalance and the financial issues that are putting lots of stress on the fiscal framework.

    “But focusing on fiscal sustainability alone and too much of drastic adjustments may be harmful to Ghana. That is why the country needs to focus on other areas and in this case we have selected youth employment as a special theme”, Mr. Laporte pointed out.

    Today, Ghana’s youth population is estimated at 36%.

    Mr. Larpote said “over the last 30 years or so despite several policies introduced to address the youth employment issues, the challenges remain. What should be done is that policies should be introduced to provide opportunities for the youth through several means.”

    “One to increase access to financing which is a major constraint to development. Another one is to provide opportunities for SMEs to grow, for instance, the African Continental Free Trade Agreement is a better platform that will not only enable Ghanaians, but Africa youth, in general, to take advantage of the opportunities this initiative will bring.”

    Besides that, Mr. Laporte urged government to continue to look at other aspects of support for the youth including digitalisation.

  • LEAP beneficiaries to receive arrears as WB supports Ghana with GH¢42mn

    LEAP beneficiaries to receive arrears as WB supports Ghana with GH¢42mn

    The World Bank has released GH¢42 million through the Ghana Productive Safety Net Project 2 (GPSNP 2), to support the Government of Ghana (GoG) to pay two cycles of arrears—75th and 76th cycles—of the Livelihood Empowerment Against Poverty (LEAP) for 344,000 beneficiary households.

    The ongoing global economic challenges, which have been worsened by the COVID-19 pandemic, have increased the economic strain domestically, leading to progressive delays in LEAP payments. This has in turn impacted LEAP beneficiaries, notably the poor and vulnerable, who naturally suffer the most in Ghana.

    “We are happy to support in the interest of beneficiaries to assist the government [of Ghana] with the LEAP payments to avoid eroding gains made over the years and safeguard beneficiary households’ wellbeing and their resilience to shocks. These payments will be completed in April 2022 and will help cushion GoG in the interim as efforts are made to identify and provide sustainable, and reliable funding for the LEAP program and social protection interventions, in general,” sPierre Laporte, World Bank Country Director for Ghana, Liberia and Sierra Leone said, last week.

    The LEAP program is one of the Government of Ghana’s flagship social protection programs, initiated in 2008.

    The program seeks to smoothen consumption of targeted extreme poor households, specifically focusing on the poor within the following categories: orphans and vulnerable children, the elderly (65 years and above) severely disabled, and pregnant women or mothers with children under one year.

    The program also aims to increase access to basic social services like healthcare through the enrolment on the National Health Insurance Scheme, as well as boost human capital by encouraging beneficiary households to enroll their school-going aged children in school.

    Per the GPSNP 2 program design, beneficiary households receive cash grants through electronic payments every two months. The cash benefit sizes differ, depending on how many persons in the household are considered eligible to receive the grant.

    The benefit ranges from GH¢32 to GH¢53 per eligible beneficiary, per month. Over the years, the Government of Ghana has progressively increased the program’s beneficiary reach from 1,645 beneficiary households in a few districts at initiation in 2008, to a current reach of 344,023 beneficiary households in all districts across the country.

    Additionally, Government has demonstrated its commitment to the program’s implementation by progressively increasing its contribution to the program. It is currently funding approximately 80 percent of the total funding of the program, with development partners’ support comprising the remaining 20 percent.

    Particularly within global economic downturns, such as the current one on the back of the COVID-19 pandemic, it will be important for the Government to identify ring-fenced funding to ensure regular payments of social welfare programs. The World Bank remains committed to working with the Government of Ghana, through both technical and financial support, in its agenda to support the poor and vulnerable populations, through needed social assistance programming.

  • Ghana gets New Country Partnership Framework from World Bank   

    Ghana gets New Country Partnership Framework from World Bank   

    Adnan Adams Mohammed

    The Government of Ghana and World Bank Group’s (WBG) Board of Executive Directors concluded a discussion on a new five-year Country Partnership Framework (CPF) for Ghana for 2022 to 2026. 

    The CPF prioritizes investments in human capital, job creation, economic diversification, building a resilient health system, and fostering a greener and more inclusive society.

    Ghana has achieved considerable economic and social progress in the past 30 years. It achieved middle-income status in 2011 because of strong, sustained economic growth, averaging over 5 percent since the early 1990s. This was supported by a stable democracy and driven largely by gold and cocoa exports and the development of substantial oil and gas reserves.  It achieved the first Millennium Development Goal (MDG) of halving poverty from 52.7 percent (1993) to 23.4 percent (2016). However, the pace of poverty reduction has slowed in recent years, and inequalities in some areas continue, particularly in some northern areas of the country.

    “The World Bank Group is happy to support Ghana’s economic recovery plan. The CPF is aligned with Ghana’s Coordinated Program of Economic and Social Development Policies and will support the Government of Ghana in creating a competitive environment for the private sector to flourish and play a greater role in job creation particularly for youth,” said Pierre Laporte, World Bank Country Director for Ghana, Liberia and Sierra Leone. “The World Bank Group, through the CPF, will also support policies and programs that aim to strengthen digital transformation for improved service delivery and productivity, improve governance, and promote greater inclusion, including strengthening women’s economic empowerment.”

    The CPF will support Ghana in its COVID-19 and medium-term development agenda.  It is designed around three mutually reinforcing focus areas, namely: Enhancing Conditions for Private Sector Development and Quality Job Creation; Improving Inclusive Service Delivery; and Promoting Resilient and Sustainable Development. Exploiting the opportunities of digital transformation will be a cross-cutting theme. The $4.5 bn CPF was prepared jointly by the World Bank, the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).

    The social and economic impact of the COVID-19 crisis has been significant. Ghana was one of the earliest countries in Africa to announce social distancing measures, including school closures and cancelling of mass gatherings, complemented by aggressive testing and recently a strong vaccination program. These measures – while saving lives – came at a heavy economic cost in the immediate term. The CPF will address the immediate as well as medium-term implications of the COVID-19 crisis in line with the Ghana Coronavirus Alleviation and Revitalization of Enterprises Support program and lay a path on how the World Bank, IFC, and MIGA, will leverage their relative strengths to partner with Ghana for stronger development outcomes.

    “To stimulate diversified private sector growth and create secure jobs, the World Bank Group will support a competitive environment for enterprise development,” said Kyle Kelhofer, IFC Senior Country Manager for Benin, Ghana, Liberia, Sierra Leone, and Togo.  “IFC will continue to work closely with the Government of Ghana and the private sector to provide investment and advisory services to expand access to finance for small businesses and entrepreneurs, enhance agribusiness productivity, and support Ghana’s sustainable industrialization.” 

    “The CPF focuses on improving the investment climate and enacting regulatory reforms. Succeeding in these reforms would be critical for accelerating private sector development,” said Merli Baroudi, MIGA’s Director of Economics and Sustainability.

    The CPF will move towards larger and more cohesive and transformational interventions, potentially across multiple sectors, that align closely to strong government programs and with greater use of results-based financing, where appropriate. It is designed to be flexible, especially during its early years of implementation, with an early review of progress to accommodate needed changes for a post COVID-19 recovery.