91597 IDA at Work Ghana: Aiming for Middle Income Status… But Will Oil Fuel Development? W ith strong, broad-based economic growth for close to two decades, Ghana today has reason to be optimistic. The coun- try 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 halv- ing poverty by 2015, with economic growth averaging 6–7 percent since 2005. Challenge Yet, Ghana’s economy is also facing some challenges, macroeco- nomic 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, includ- ing 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 strengthen- ing of civic responsibility. Results education across the country have been supported under the IDA-financed Education In addition to significant budget support from Sector Project. the International Development Association (IDA) to help the government address key In the water and sanitation sub-sectors, rural economic and structural issues, there are a access to water has increased to 57 percent number of ongoing and pipeline IDA supported from 53 percent during last two years, but investment projects in Ghana. there remain major challenges in the provi- sion of water to urban populations. Sanita- There has been reasonable progress in the tion, however, remains an under achieving energy sector, with household electrification sub-sector, with Ghana rated among the rates reaching 59 percent in 2009. Distribu- lowest in Africa on Millennium Development tion losses, however, are at a level of about Goal scorecards. IDA support to water and 25 percent and the sector remains financially sanitation has been come through a number challenged. of projects, including: Small Towns Water Supply and Sanitation, Urban Water Project IDA also has provided general budget sup- and the Second Urban Environmental Sanita- port in the area of human development and tion Project. basic services, as well as through investment operations in health, HIV-AIDS, education, Bank Contribution and water and sanitation. At the national level, under-five mortality rates have been In years 2009-2011, Ghana will receive reduced to 80 per 1,000 live births in 2008 over US$1.3 billion in support from IDA. A from 111 in 2003 due to improved provision significant proportion of the assistance will of maternal and child health care. Antenatal be provided through the multi-donor budget care remains high at above 90 percent, and support mechanism. During the last two years women giving birth with the attendance of the budget support mechanism has enabled skilled personnel had increased to 59 percent IDA to respond in a flexible manner to a series in 2008 from 46 percent in 2003. Neonatal of challenges facing the Ghanaian economy. mortality has declined and immunization cov- The Economic Governance and Poverty erage has improved to 79 percent in 2008 from Reduction Credit, approved in June 2009, was 69 percent in 2003. Child nutrition has also designed to provided urgent support to the improved, although malnutrition continues to new authorities’ stabilization program, based be a problem in some parts of the country. All on its commitment to a more prudent, trans- these outcomes have been supported by the parent, and accountable use of the country’s Nutrition and Malaria Control Project. resources. In the education sector, access and completion Under sustainable natural resource manage- rates have improved steadily with primary ment, IDA has provided support through the completion increasing to 86.3 percent in Natural Resources and Environmental Gover- 2009 from 80.1 percent in 2007, but without nance credit to foster the adoption of key poli- an accompanying improvement in quality cies in the mining, forestry, and environment standards. The improvements in access to sectors. This includes the Voluntary Partner- 2 ship Agreement, which seeks to guarantee Moving Forward better regulation of timber exports to the European Community, as well as to improve As in many minerals-endowed countries, the mining regulations and the preparation and arrival of oil in 2011 provides Ghana with both implementation of a Climate Change Strategy. important opportunities, and also substantial The project has also helped the government risks. The government is fully aware of the to improve its sector planning and budgeting need to further pursue economic efforts over processes to ensure that adequate funds are the next several years, while encouraging available to enact the existing environmental growth through reforms in productive infra- policies in the country. structure, agricultural modernization, private sector development and investment in social In the area of land management, significant services. IDA will continue to provide support progress has been made at the country level for all these efforts, while endeavoring to pro- and the Bank has contributed to this through mote the use of oil revenues for development the Land Administration Project. This assis- initiatives. This will require sound legislation tance has also resulted in the strengthening and strong institutional capacity to ensure a and streamlining the institutional arrange- prudent, transparent and accountable use of ments for land administration in Ghana, these new resources. backed with the passage of the Lands Com- mission Act 767 (2008) by Parliament on The role of civil society in influencing policy October 29, 2008. and in shaping well-informed developmental debates, as well as tracking actions, has Partners thus become more crucial, and underlies the importance of establishing access to timely Ghana continues to enjoy the support of a and unbiased information on public spending whole range of development partners, as well and developmental results. The Bank, in col- as nontraditional partners. At present, official laboration with various local think-tanks and development assistance to Ghana (grants and other civil society organizations, will con- loans) finances 24 percent of Government tinue to promote a demand-driven, socially spending and will remain an important, but accountable approach—one that fosters civic decreasing, proportion of revenue with the engagement—to deepen Ghana commitment onset of revenues from oil production. Over to improving the lives of its people. the last several years, development partners have substantially increased their levels Last updated September 2010. of direct budget support, now amounting http://www.worldbank.org/ida to approximately 30 percent of all 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). 3