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Ghana is expected to sign the largest MCA compact to date--upwards of $500 million over 5 years--by the end of July. It will be the most ambitious and complex MCA compact yet, a test of whether the MCC can deliver transformative development. Ghana is a star among MCA countries, having passed all six governance criteria three years running, and it serves as an anchor of economic and political stability in West Africa. The proposal apparently takes seriously the MCA's raison d'être--poverty reduction through economic growth. In the words of a senior MCC official, the Ghana proposal, "is one of our most directly linked" in terms of ensuring that economic growth involves and benefits the poor. Success in Ghana could be a boon for poor people there and for the MCC. Failure could undermine US development assistance more broadly.
In the context of a rapidly evolving proposal, the imminent signing date, the large stakes riding on Ghana's success, and its potential to serve as a model for future MCA compacts, this report looks at three key elements of the MCA process in Ghana:
An Overview of Ghana's Process
Ghana's MCA process started slow, with inadequate commitment from the Ghanaian government and poor guidance and leadership from MCC. (These issues are consistent with other countries' early experiences, as described in the Mozambique and Malawi field reports.) In recent months, however, the process has been strengthened. Thanks largely to new teams in both Washington and Accra, and the MCC’s overall effort to staff up with a larger and more diverse set of experts, there is now stronger country engagement through Ghana's MCA team (MCAG) and more substantive feedback from Washington. As a result, the proposal has changed significantly. The following milestones highlight this evolution:
Fall 2004 - Program Focus Set
Drawing heavily on its newly-revised Poverty Reduction Strategy (GPRS II), Ghana focuses the MCA proposal on modernization of the agriculture sector through improvement of the environment for private sector investment.
Early 2005 - First Major Submittal
MCAG submits its first serious proposal for $300 million, directing major agribusiness investments toward three districts.
August 2005 - Pre-compact Agreement Signed
On the basis of Ghana’s initial $300 million proposal, it signs a $3 million pre-compact agreement with the MCC to enable it to more fully develop the proposal.
October 2005 - Expanded Draft Proposal
Ghana submits a new draft proposal that has evolved to $517 million of investments (over five years) in both agribusiness and food crops and targeted to 19 districts in three regions.
February 2006 - Beefed-up Social Infrastructure Introduced
Ghana adds a substantially beefed up social infrastructure component (schools, clinics, water and sanitation) to its proposal – from $50 million (proposed in October) to $500 million.
February/March 2006 - Newly Expanded Proposal Under Negotiation
The proposal currently under negotiation is said to total over $500 million for the investments in agricultural "transformation" plus part of the new component for social infrastructure. The MCAG and MCC are in discussions about what portion of this new component will be covered by the MCA compact. The MCAG is trying to encourage other donors to support the pieces not funded by the MCC.
July 28, 2006 - Compact Signing Date
A July 28 signing date was decided as early as January 2006 and set the pace and the content for the compact and the due diligence assessments.
MCA Monitor Reports from the Field are a snapshot in time, on-the-ground assessment of the MCA process. The Ghana Report from the Field is based on a field visit and interviews conducted in early-to mid-March, including interviews with MCC staff in Washington. Subsequent missions occurred in late March and April which may have addressed some of the issues raised in this report. The author wishes to recognize the substantive contribution of Jonathon Kass in the preparation of this report.