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Ghana: Country Results Profile

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Aiming for Middle Income Status…But Will Oil Fuel Development?

Aiming for Middle Income Status…But Will Oil Fuel Development?


Overview

With strong, broad-based economic growth for close to two decades, Ghana today has reason to be optimistic. The country has enjoyed two peaceful democratic transitions, with a strong civil society and media playing active roles. Ghana also remains on course to achieve the Millennium Development Goal of halving poverty by 2015, with economic growth averaging 6–7 percent since 2005.

Full Brief—4 Pages
Ghana: The Challenges of Becoming a Middle-Income Country
—PDF, Sept 2010

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Challenge

Yet, Ghana’s economy is also facing some challenges, macroeconomic imbalances in particular, which need to be addressed in a sustainable way to pave the way for the use of new oil funds to help accelerate development. The advent of new oil revenue reinforces the need for continuous progress on governance and transparency, particularly with growing civil society engagement in the country’s nascent oil and gas industry.


Approach

In Ghana, the Bank is focusing on three main fronts. The first area of focus is improvement of private sector competitiveness, including modernization of the agriculture, transport and energy sectors, and improvement of natural resources management. The second is human development and improvement of basic services delivery. Here the priority is given to education, health, water and sanitation, as well as to social protection. Finally, reforms are underpinned by the work on the promotion of good governance and the strengthening of civic responsibility.


Results

In addition to significant budget support from the International Development Association (IDA) to help the government address key economic and structural issues, there are a number of ongoing and pipeline IDA supported investment projects in Ghana.

There has been reasonable progress in the energy sector, with household electrification rates rising to 58 percent and distribution losses declining to 25 percent but the sector remains financially challenged.

IDA also has provided general budget support in the area of human development and basic services, as well as through investment operations in health, HIV-AIDS, education, and water and sanitation. At the national level, under-five mortality rates have been reduced to 80 per 1,000 live births in 2008 from 111 in 2003 due to improved provision of maternal and child health care.

Antenatal care remains high at above 90 percent, and women giving birth with the attendance of skilled personnel had increased to 59 percent in 2008 from 46 percent in 2003. Neonatal mortality has declined and immunization coverage has improved to 79 percent in 2008 from 69 percent in 2003. Child nutrition has also improved, although malnutrition continues to be a problem in some parts of the country. All these outcomes have been supported by the Nutrition and Malaria Control Project.

In the education sector, access and completion rates have improved steadily with primary completion increasing to 86.3 percent in 2009 from 80.1 percent in 2007, but without an accompanying improvement in quality standards. The improvements in access to education across the country have been supported under the IDA-financed Education Sector Project.

In the water and sanitation sub-sectors, rural access to water has increased to 57 percent from 53 percent during last two years, but there remain major challenges in the provision of water to urban populations. Sanitation, however, remains an under achieving sub-sector, with Ghana rated among the lowest in Africa on Millennium Development Goal scorecards. IDA support to water and sanitation has been come through a number of projects, including: Small Towns Water Supply and Sanitation, Urban Water Project and the Second Urban Environmental Sanitation Project.

Voices


Sometimes it’s difficult to appreciate these statistics but given my experience at the vegetable market over the last year I can feel my personal finances have stabilized too.

— Mike Kottoh


Partners

Ghana continues to enjoy the support of a whole range of development partners, as well as nontraditional partners. At present, official development assistance to Ghana (grants and loans) finances 24 percent of Government spending and will remain an important, but decreasing, proportion of revenue with the onset of revenues from oil production. Over the last several years, development partners have substantially increased their levels of budget support to approximately 30 percent of Official Development Aid. Actual multi-donor budget support in 2009 was estimated at US$425 million, or 21 percent of total assistance, while un-earmarked sector budget support is another US$140 million (7 percent).


Toward the Future

As in many minerals-endowed countries, the arrival of oil in 2011 provides Ghana with both important opportunities, and also substantial risks. The government is fully aware of the need to pursue stabilization efforts over the next several years, while encouraging growth through reforms in productive infrastructure, agricultural modernization, private sector development and investment in social services. IDA will continue to provide support for all these efforts, while endeavoring to promote the use of oil revenues for development initiatives. This will require sound legislation and strong institutional capacity to ensure a prudent, transparent and accountable use of these new resources.


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