United Kingdom reviewing its aid policy on Ghana

The UK Government is reviewing its aid to Ghana in the light of the country’s achievement of lower-middle income status in 2010.

It covers all UK official development assistance (ODA) to Ghana from 2011 to the end of the 2018/2019 financial year.

Over the last 20 years, the UK has given over £2 billion in aid to the West African country.

This is the first country portfolio review being undertaken by the Independent Commission for Aid Impact (ICAI), which scrutinizes UK aid spending.

The UK government has now acknowledged the changing nature of its aid to Ghana.

The ICAI notes: “Since 2012, the portfolio has been reoriented towards helping Ghana overcome its economic and governance challenges and mobilize the resources to finance its own development.
“However, Ghana’s persistent poverty and growing inequality suggest there is still a role for UK aid to play in delivering better human development outcomes and protecting the results of past assistance.”

In its Portfolio Review Approach paper released this month, the ICAI commended Ghana for maintaining political stability since returning to democracy in 1992.

It also noted Ghana’s achievement in becoming the first Sub-Saharan African country to meet the UN Millennium Development Goal (MDG) 1 target of halving extreme poverty.

By 2015 Ghana had halved the number of hungry people and had also halved the proportion of people without access to safe drinking water, achieved universal primary education and gender parity in primary education, reduced HIV prevalence, and increased access to information communications technology, in line with the MDGs.

But from 2012, Ghana began to experience deteriorating macroeconomic conditions, with fiscal and balance of payment deficits over 10 per cent of gross domestic product, the ICAI paper noted.

“By 2014, the macro-economy had developed large fiscal and current account deficits, high inflation and a sharp depreciation of the currency.

“In April 2015, an International Monetary Fund Three-year Extended Credit Facility of about $916 million was approved, assisting economic recovery, but economic growth during the 2014 and 2017 period was considerably slower, even though the country kept its middle-income status.

“By 2016, the number of people living below the international extreme poverty line had increased again and income inequality overall had worsened slightly,” the paper said.

It continued: “Over the review period, Ghana has continued to face development challenges. “It has made only slow progress in improving the quality of education, reducing under-five and infant mortality and improving sanitation.

“Governance concerns, an inefficient public sector, rising debt and over-reliance on commodities are among the risks to Ghana’s continued development.

“Ghana continues to face substantial challenges in improving agricultural productivity, managing rapid urbanization, adapting to climate change and other environmental stresses on its economy, and addressing hunger and other forms of malnutrition.

“There are inequalities in development outcomes between the north and south of the country, and there is a growing urban/rural divide.

“Inequality within regions has also increased.

“Women and other vulnerable groups face inequality of opportunities and resources and, too often, they face violence,” the paper added.

The ICAI acknowledged President Nana Akufo-Addo’s Ghana “beyond aid” agenda, noting that it was a sign of a strong commitment towards growth and the reduction of poverty.

It said that this was “generally understood as a policy of reorienting Ghana’s external partnerships towards increased self-reliance in addressing development challenges”.

However, the ICAI pointed out, overall aid to Ghana had been declining.

In the five years between 2008 and 2012, donors committed on average $1.79 billion a year in constant 2016 terms to Ghana.

In the subsequent five-year period, from 2013 to 2017, the equivalent commitment was $1.35 billion on average a year, or a drop of 25 percent.

The Review is seeking to find out how well UK aid has responded to Ghana’s development needs and UK strategic objectives; how effective this aid has been in achieving its strategic objectives in Ghana; and how likely the results of UK aid will be sustained in the future.

An ICAI team will be in Ghana in June to “conduct a stakeholder consultation to solicit feedback from key institutional informants and Ghanaian citizens across the themes of interest for the review”.

Preliminary finds will be presented in August, with the final report being released in December.