Development Challenge

With a population of 22 million, Ghana is a stable, democratic country with a free press, independent judiciary and an active civil society, and possesses considerable growth potential. Over the past few years, the Government of Ghana has pursued aggressive economic reforms, which have resulted in a significant decline in inflation and a steady growth in the Gross Domestic Product (GDP). These are two significant factors needed to strengthen the economy and improve the private sector.

Key development trends are positive and include: GDP growth of 6.3 in 2008 up from 5.2 percent in 2003; a decline in the poverty rate from 51.7 percent in 1992 to 28.5 percent by the end of 2006; HIV/AIDS adult prevalence rate around 2 percent over the last decade and currently 1.7 percent, down from 2.2 in 2006 and well below levels in neighboring countries; and primary school enrollment in 2007 of about 92 percent compared to 80 percent in 2002. In June 2007, two companies discovered offshore oil. The Ghana National Petroleum Company has estimated that when production begins, the country will receive at least US$120 million per year for a ten-year period, assuming an oil price of US$65 per barrel. This could bring considerable revenue to Ghana's budget and increase the government's capacity to invest in people and reduce poverty.

Ghana held its fifth consecutive democratic presidential and parliamentary elections in December 2008, another promising step towards consolidating democracy in this West African nation. In spite of this, Ghana continues to experience challenges in governance institutions and growing corruption that have the potential to rapidly undermine these gains. Ghana’s governance systems and practices also remain highly centralized, with limited citizen participation. Key local governance structures -the district, municipal and metropolitan assemblies- remain weak, severely under resourced and lack management and oversight capacity. Local governments receive the majority of their resources from the central government. These resources are earmarked for centrally determined infrastructure development or region-wide projects, leaving the local governments with modest input into the central budgetary process.

Since 2002, Ghana has made a significant list of reforms aimed at improving good governance and efficient public financial management, reducing energy subsidies, and improving the business climate. Over the past two years, the World Bank and International Finance Corporation have ranked Ghana among the top ten global reformers. However, with the international financial crisis, remittances which are a key source of foreign exchange, are shrinking. The Ghana Cedi depreciated approximately 40 percent since July 2007 and inflation has jumped to 20 percent annually. In addition, the average agricultural growth since 2002 was 5.2 percent, which is below the target of 8 percent necessary to meet the country's poverty reduction goals. In Ghana, agriculture employs 56 percent of the labor force and contributes 37 percent of the gross domestic product.

Health care delivery in rural communities presents a critical challenge to development. Maternal and infant deaths are high, though under-five mortality has declined appreciably in the past five years, following ten years of stagnation. In addition, the use of a skilled attendant at birth as well as use of family planning methods remain low. Currently, the mortality rate of children under-five is 80 per 1,000 live births, down from 111 per 1,000 live births in 2003. Malaria is the cause for 38 percent of outpatient visits, 36 percent of hospital admissions, and 33 percent of deaths of children under five years of age. The HIV/AIDS prevalence rate among high-risk groups, such as some groups of commercial sex workers is up to 50 percent. Additionally, tuberculosis and neglected tropical diseases like elephantiasis, as well as limited access to safe drinking water and sanitation facilities contribute heavily to deaths and illnesses among most-at-risk populations. 

Another critical development challenge is in education. The ability of Ghana's basic education system to contribute to the development of the country's human resource base and sustain its progress is undermined by non-universal enrollment, high drop-outs, and low achievements. Only 16 percent of students have achieved reading comprehension at grade level. In addition, girls make up 60 percent of the primary level students who are out of school.

Combating food insecurity is another challenge for Ghana, especially in the three northern regions. Low and erratic rainfall, poor soils, and low agricultural productivity are key factors to food insecurity in Ghana. These factors are worsened by the subsistence nature of farming practices. Low incomes, inadequate education and poor health status also contribute to food insecurity. Most households lack stable foods for several months of the year, leading to high rates of malnutrition.

To accelerate equitable economic growth and deepen democratic gains, Ghana must modernize agriculture, strengthen citizen participation in local governance, improve access to quality education, lower maternal and child mortality rates, and improve security along its borders. Oil revenue management, expenditure control, and institutional capacity are challenges which the Government of Ghana is addressing.

USAID/Ghana's Response

The United States of America through USAID supports Ghana's Poverty Reduction Strategy by strengthening decentralized governance systems, promoting private sector competitiveness, improving health care delivery, enhancing access to quality basic education, and increasing food security to benefit all Ghanaians. In developing a Country Strategic Plan (2004-2010) to achieve these objectives, USAID/Ghana worked closely with the Government of Ghana and development partners. Funding levels have averaged around $37 million per year from 2004 to 2007, plus an additional $22.5 million in food aid. However, levels jumped to $61 million in 2008, with additional resources to prevent and control malaria, and to increase access to quality basic education. Funding levels continued their steep climb upward in 2009 to approximately $114 million, with the inclusion of resources to respond to the global food crisis.