USAID's Strategy in Ghana

While Ghana's political situation remains stable and projected economic indicators for 2002 show some progress, Ghana continues to face daunting challenges. In 2002, inflation rates remained around 16 percent, a major improvement over the 26 percent rate of the year before. The cedi, Ghana's currency, was relatively stable for the whole of 2001 and most of 2002.

Although interest rates remain high at 36 percent, the rates have improved markedly over the year before where they hovered above 50 percent. In an effort to raise revenues, the Government of Ghana (GOG) increased water and energy tariffs in 2002 with no apparent political backlash. Yet, at approximately 4 percent, the growth rate has fallen short of the GOG's projections. With budget deficits consistently higher than planned, the GOG has borrowed heavily on the domestic market to fill the gap, diminishing available credit for private investment.

Politically, Ghana continues to enjoy a stable political environment despite increasing instability in the region. The deteriorating situation in neighboring Cote d'Ivoire is cause for serious concern. To date, the numbers of returning Ghanaians and foreign refugees have been manageable. However, Ghana is not equipped to handle large refugee flows and could easily be overwhelmed if the situation were to worsen. The Government of President Kufuor is committed to supporting the Economic Community of West African States (ECOWAS) peacekeeping operations in Cote d'Ivoire. On the domestic front, there are literally hundreds of chieftancy disputes from one end of Ghana to the other, and many are prone to violence. A state of emergency has continued in the Dagbon traditional area in the Northern Region after the killing of the Yendi traditional leader and 29 of his factional supporters. Other areas of tension include the Wa, in the Upper West, and Bawku, in the Upper East, over traditional leadership and political loyalties. Both have seen violence this past year and intervention by the security forces.

Although basic reforms are in place for acceleration of decentralization and delegation of responsibility for provision of many social services to district governments, commitment at the national level is missing. Key ministries, such as health and education, have yet to relinquish many central/national authorities to the districts and planned levels of resources are not yet available to district assemblies and local authorities. Local staff capabilities to administer and implement such programs are still low, as are the number of personnel available to carry out the work.

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