Ghana

For Ghanaians in rural areas, it is generally difficult to transfer money, open a savings account or take out loans. Although the financial sector has developed well and many financial institutions exist, many people, especially in the economically weak regions of Ghana, still do not have access to appropriate financial services. Micro, small and medium-sized enterprises as well as low-income households are therefore barely integrated into economic cycles. They are often unable to invest in a way that promotes growth and employment. Gaining access to medium- and long-term credit is also more difficult. This means that jobs cannot be created for the fast-growing population.

KfW is supporting the Ghanaian government with a package of measures to further develop the financial sector, promote private enterprises and create jobs. Programmes include promoting selected microfinance institutions, establishing a deposit insurance system and financing the newly founded Development Bank of Ghana. Specific support for private and public investment to create jobs is also a part of KfW’s involvement. The challenges are huge: many jobs need to be created quickly by private companies. KfW is also working closely with the private sector to provide vocational (further) training for low-income workers, especially those in the informal sector.

Ghana has two levels of administration: the national state with subordinate regional administrations, and the districts with their municipal structures. The latter, however, have deficits: accountability needs to be improved, staff are not yet sufficiently qualified for the services required, and there is a lack of money for social infrastructure. The FC-financed project to support decentralization is now providing the 260 or so districts and towns in the country with additional funds for important investments in basic services and social infrastructure. Projects are only considered if they are deemed particularly important by the municipalities, and only those municipalities that perform satisfactorily and meet the specified minimum requirements receive funding. This is reviewed annually. In addition, financing is provided for a national training programme for all employees of the district administrations. All 260 towns and districts in Ghana are reviewed annually on how their governance and the provision of public services are performing. Well-performing districts then receive additional funds to invest in key infrastructure projects such as schools, health facilities and water supply.

KfW is also supporting Ghana in strengthening its financial administration with two further projects for the political and economic development of the country. One is working with the Ghana Audit Office to improve accounting in Ghana’s district administrations. The other is working with the Ghana tax authorities to reform the tax system. The expansion of IT infrastructure should not only make tax collection more efficient, but also increase tax revenues.

Project information - Governance (PDF, 196 KB, non-accessible)

Ghana’s energy sector is faced with the challenges of overcapacity, high financial obligations, insufficient profitability (high sector indebtedness) and high losses in electricity transmission and distribution, as well as inefficient tariff billing. Subsidies are placing a heavy financial burden on the Ghanaian state and leave no room for the necessary investment. The Ghanaian government therefore wants to deleverage the energy sector and put it on a sustainable financial and economic footing via the Energy Sector Recovery Programme (ESRP) launched in 2019. Expanding renewable energies is also a high priority to enable sustainable development of the energy sector and achieve national climate protection goals. A prerequisite for the long-term provision of affordable, CO2-neutral and reliable electricity is the financial recovery of the energy sector.

This is precisely where KfW’s involvement in the energy sector comes in. The overall package contains a variety of projects aimed at creating viable general conditions for encouraging investment in renewable energies and energy efficiency. KfW’s approaches range from classic infrastructure (power transmission lines, solar power plants) to innovative approaches (hedging instruments, results-based approaches). These are supported by the German government providing additional funds since 2017 as part of Compact with Africa, which are used via KfW within the framework of Financial Cooperation.