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Ghana

Situation and cooperation

Elmina beach in Ghana just before sunrise

Ghana has gone through an exemplary democratisation process in recent years and has successfully implemented economic reforms. Following a recalculation of its gross domestic product (GDP), this West African country managed to move up into the group of lower-middle-income countries in 2010. By 2015, the average gross national income per capita per annum amounted to 1,480 US dollars.

Ghana's achievements encouraged its long-standing development partners to continue to support the country in its efforts to undertake necessary reforms. During this time, Ghana has also sought to build relations with new partners such as China, India and Turkey.

Foreign policy

For many years now, Ghana has successfully pursued a policy of good neighbourliness and is committed to greater regional cooperation. It is one of the most active member states of the African Union (AU) and the Economic Community of West African States, ECOWAS.

Within ECOWAS, Ghana has come out strongly in favour of signing an Economic Partnership Agreement, EPA, with the European Union. This Agreement gives Ghana and the region easier access to the European single market. The West African countries are hoping that this will lead to more dynamic growth and the creation of new jobs in their region. The European Union signed the Agreement in December 2014, and it is now in force pro tempore until all ECOWAS member countries have signed.


Economy

Production of fruit juice for export to the European market (Asamankese, Ghana)

In the medium term, the economic outlook for Ghana is good. In recent years, major oil and gas reserves have been discovered off the Ghanaian coast. Since then, oil has become the country's second most important export and, in the coming years, production is to be increased considerably. The sale of cocoa also generates considerable income, for Ghana is the world's second largest cocoa producer, after Côte d'Ivoire.

In the short term, however, Ghana faces significant challenges. Economic growth has declined significantly since 2013. In 2014, it stood at 4.2 per cent, in 2015 at 3.9 per cent. Foreign direct investment has also declined significantly since 2013, after having risen significantly in the previous years following the expansion of the oil and gas industry.

This sudden restraint by foreign investors could have been caused by new legislation and regulations which were viewed as potentially detrimental to investment. Further obstacles to investment are bureaucratic and logistical hurdles, uncertainties relating to the acquisition of land and the enforcement of legal claims, and the lack of fully trained workers and adequate transport infrastructure. The World Bank report "Doing Business 2017" placed Ghana 108th out of the 190 countries it reviewed.

It remains a problem that large sections of Ghana's population still do not benefit from the positive economic development brought about by the export of oil. And labour-intensive domestic businesses, in particular in manufacturing, are stagnating. Even the agricultural sector has barely grown in the last few decades. Some 80 per cent of Ghana's population works in the informal sector.


Millennium Development Goals

Ghana's success in reaching some of the Millennium Development Goals was remarkable. Ghana was the first sub-Saharan African country that achieved the MDG on halving poverty compared to 1990 levels. The country also managed to halve the proportion of people living without access to clean drinking water, and it made substantial progress in the field of basic education and gender equality. Compared to other African countries, Ghana’s literacy rate of 77 per cent is very high and is rising year on year.

The HIV and Aids infection rate in Ghana has remained low for years. Improved health care for and education of pregnant women, as well as extensive immunisation programmes, have led to a continuous drop in mortality rates amongst children and mothers. However, there is still room for improvement in the health care system.


Environmental issues

Cultivating orange trees in Asamankese, Ghana

Among Ghana's pressing environmental problems are the loss of its rain forest, droughts, the desertification in the North and the threat being posed to a number of animal and plant species. In addition, pollution caused by mining, industry and oil extraction is damaging the environment. But, so far, no adequate environmental action has been taken.

It is unlikely that Ghana will be able to halt the large-scale deforestation taking place in the country within the timescale that has been envisaged. In order to curb the widespread practice of slash and burn and the illegal logging, Ghana signed an agreement with the EU in February 2010 on the export of sustainably-grown timber.


Development potential

Children in school uniform on a street in Accra, Ghana

According to the United Nations' 2015 Human Development Index (HDI), Ghana ranks 139th out of 188 countries – a good position for an African country. Ghana therefore falls into the category of countries with "medium human development".

Besides the extraction of gas and oil, cocoa production and gold mining, further growth sectors are the construction industry and the production of consumer goods. However, the huge potential offered by the agricultural sector and other types of mining currently remains largely untapped.

A precondition for positive economic development in these sectors is the sustainable use of natural resources. To ensure this condition is met, Ghana has been a member of the Extractive Industries Transparency Initiative (EITI) since 2010.

The Petroleum Revenue Management Bill brought in in April 2011 stipulates that the revenues from oil production must be used in a development-oriented way. Furthermore, the Bill provides that 70 per cent of the oil revenues is to flow into the general national budget, with the remaining 30 per cent going into a stabilisation fund to offset fluctuations in oil prices and to establish a heritage fund (similar to Norway's) that will provide protection to future generations.

Civil society in Ghana is making active use of its freedoms and is playing its part in the country’s further democratisation. There are around 6,000 registered non-governmental organisations (NGOs) in the country. The 2016 World Press Freedom Index, compiled by the organisation Reporters Without Borders, ranks Ghana 26th out of 180 countries evaluated.


Priority areas of German cooperation with Ghana

Germany is one Ghana's most important bilateral development partners alongside the USA, Japan, Canada, Denmark and the United Kingdom.

The Federal Ministry for Economic Cooperation and Development (BMZ) pledged a total of 71.4 million euros for bilateral development cooperation with Ghana for the period from 2015 to 2018. This level of funding underscores the German government’s goal of granting particular support to partner countries with good governance. During the visit of Federal Minister Müller in Ghana and the governmental consultations in Berlin in June 2015, both sides agreed to explore working together on waste management, in particular with regards to electronic scrap.

The following have been agreed as priority areas of cooperation:

  • Governance (decentralisation and improving public finances)

  • Agriculture

  • Sustainable economic development and vocational training

Germany is also supporting Ghana in its efforts to use renewable energies by placing the focus of its advisory services on helping the government to frame a forward-looking act on granting priority to renewable energy sources. In addition, Germany is providing support for the planned construction of a large-scale solar power plant.


Governance (decentralisation and improving public finances)

The government of Ghana is firmly committed to establishing democratic structures and further improving governance. By establishing national, regional and local-level administrative structures, it is endeavouring to lay the foundations for sustainable economic growth.

German development cooperation promotes Ghana’s efforts in this context and has been achieving considerable success with this for a number of years. Important areas of activity are decentralisation and local development, promoting civil society and enhancing the performance capability of administrative bodies.

At district level, Germany has supported the introduction and development of an incentive- and performance-based financing system (District Development Fund) for local investments.

It also is backing the Ghanaian Government’s efforts to adapt the tax, finance and budget systems to the principles of good governance. This includes increasing the tax income, modernising the tax systems, an improved budgetary framework and increasing the accountability towards parliament and the court of auditors. Germany is also supporting the transparent use of income from the extractive industries’ sector (EITI process). These activities are particularly relevant in the context of fighting corruption.


Agriculture and food security

Vegetables on offer at a market in Accra, Ghana

In order to help combat poverty in Ghana and establish food security, Germany is engaged in activities designed to increase agricultural productivity. The aim of German involvement is to enable farmers to raise their production above subsistence level and to generate an income for themselves by selling some of their produce.

The objective is to increase the efficiency and profitability of the production, processing and marketing of their products so that these can compete better with other products on national, regional and international markets. Contract farming is to be fostered so that smallholders have long-term planning security and can earn a steady income. To this end, Germany's development cooperation is providing support and advice in Ghana to state institutions as well as major public and private service providers in the agricultural sector.

Germany is also involved in triangular cooperation with Israel to boost development in Ghana. Israel is providing the know-how to help improve the cultivation of citrus fruits in two regions of Ghana.


Sustainable economic development

Building site in Accra, Ghana

Both the government of Ghana and the international donor community have high hopes of the private sector. Germany especially hopes to improve access to financial services and increase employment, in particular in small and medium-sized enterprises.

In order to overcome the lack of skilled labour in micro and small enterprises, and to enable such enterprises to experience growth, Germany is engaging in vocational training activities targeted specifically at labour-intensive industries. For example, training opportunities for young people from poorer areas are being created in collaboration with the private sector. Another innovative idea is to set up a voucher system for advanced vocational training programmes.

And in the field of financial systems development, Germany, among other measures, is fostering basic financial training, the setting up of systems of payment and of a deposit guarantee scheme, microcredit access and the development of micro insurance products.


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