Proud Ghana still depends on aid
BBC News is investigating how Africa is faring one year on from the promises of increased aid made at the G8 summit in Gleneagles.
Orla Ryan reports from Ghana, where the government is heavily reliant on international donors.
Ghana’s capital, Accra, is in festive mood as the World Cup gets under way.
Ghanaian flags hang from roadside bars or "spots", where the television is switched to the football and hopes remain high the country can defeat the Czech Republic and the US.
There are plenty of signs of money in Accra. New hotels are going up, while half-built houses dominate the outer suburbs of the capital, often funded by money sent home from relatives overseas.
But for many on the lower rungs of society in a poor country, opportunities are limited, work is insecure and rising fuel prices have hit hard.
It is nearly a year since Ghana’s President John Kufuor met leaders of the world’s most powerful countries in Gleneagles in Scotland.
Since then, Ghana has benefited from hefty debt relief. But despite promises to increase aid to Africa, there has been scant evidence of aid flows from the UK increasing.
Ghana, a stable country with often chaotic neighbours, meets many of the criteria donors look for.
With President Kufuor expected to stand down after two terms in office in 2008, the country’s days of military coups seem long behind it.
Its main export earners include commodities such as cocoa, gold and timber. It has seen steady growth in recent years and enjoys economic stability.
Ghana’s reward from Gleneagles has been multilateral debt relief of $4.2bn, a sizeable chunk of the country’s $6bn debt.
"The big win for Ghana is multilateral debt relief," says Mike Hammond of the UK government’s Department for International Development (DFID).
"Certainly, you have $156m [in 2006] that you don’t have to pay to someone else."
Ghana already receives about $1bn in aid a year, a figure which accounts for 10% of the country’s gross domestic product (GDP), the country’s central bank says.
The UK is Ghana’s biggest bilateral aid donor and if aid flows to the West African country are to rise, the issue is twofold, Mr Hammond says.
Ghana needs to show it uses aid money well and to make its case against worse-off African countries.
"Ghana by African standards is heavily aided, so what Ghana still has to do is to demonstrate efficiency and effective use of aid money," Mr Hammond says.
"Any increase is going to be based around efficiency of use and how the government uses the money to move itself forward. We need to hear how they are going to use the money from multilateral debt relief."
Ghana’s Finance Minister Kwadwo Baah-Wiredu wants more aid.
The gains from debt relief – which will be spread over 40 years – are a "fraction of what the country needs," he says, putting a $6bn price tag on the cost of developing the country’s infrastructure.
If Ghana is to reach its growth targets of 8% by 2008, more investment and donor flows are needed, Bank of Ghana governor Dr Paul Acquah says.
Ghana has already seen hefty investment from mining companies and is now Africa’s second-biggest exporter of gold, after South Africa.
Money also flows in from the Ghanaian diaspora, with remittances reaching $1.5bn in 2005.
Some may see this as evidence that Ghana is not in urgent need of donor help. But Dr Acquah is confident that donors will commit more funds when they meet Ghanaian officials later this month.
He says that donors would be providing "indications of additional flows that could be made available" at the meeting with the Consultative Group.
"We have not seen any topping up in that context [post-G8]," he adds.
Ghanaians are proud, aware of their cultural heritage and status as the first African country to gain independence. Not all Ghanaians assume they should look outside for money.
Independent analysts say Ghana needs to look at ways of reducing its dependency on aid.
Debt relief buys the government some breathing space, but the real issue for Ghana is how to increase its tax revenues, Databank analyst Daniel Ogbarmey Tetteh says.
The vast majority of the country’s economically-active people make their money in the informal, or grey, sector, and while tax revenues are rising, they still only account for 20% of GDP, he says.
"The solution is to really explore innovative and aggressive ways of increasing tax revenues," Mr Tetteh adds.
"More than aid, we are interested in trade. Aid is good, but we can’t rely on it forever."
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