Ghana is set to complete all criteria for its $547 million Millennium Challenge Account pay-out within the next month; ahead of speculation that funds for the American government scheme may soon dry up.
Even if MCA funds are significantly reduced this year, as is being predicted, "once we have completed certain steps, we will be assured of funding and the money will be set aside - regardless of whatever else happens,” says Paa Kwesi-Nduom, Minister of Public Sector Reform in Ghana and the man overseeing the MCA project.
“Now, we are just three or four weeks short of meeting those requirements,” he told The Statesman Saturday, describing himself as “optimistic” for the projects in Ghana despite recent political changes in the US which could affect the scheme.
Following a Democratic takeover of Congress after November's mid-term elections in the United States, support in the House has swung firmly away from President George W Bush and his various schemes.
These include the genuinely innovative Millennium Challenge Corporation, under which poor countries with a track record of good governance, investing in people and encouraging economic freedom would be rewarded for their efforts, and under which Ghana was set to become the largest recipient to date: with a $547 million compact for rural development projects signed on August 1 last year.
On January 22 a leading financial newspaper in the US, the Wall Street Journal, predicted that the MCA may run out of money altogether this year, “leaving in the lurch several poor countries that have labored to meet its strict eligibility standards.”
In his State of the Union address, delivered January 23, Bush appealed for funds.
Even when Bush faced a more favourable House, his requests for MCA cash have never been granted in full. For financial year 2006, for instance, Bush"s request for $3 billion was slashed to only $1.75 billion – which even then had to be pushed through a House of Representatives suspicious of the programme.
Why should they approve more funds for a scheme which has not yet disbursed most of what it already has? The answer is that a number of countries, such as Ghana, have not yet received their disbursements; whilst others including Senegal, Mozambique and Mozambique are still putting together their proposals.
Now there are rising concerns that the project could fold entirely – and that those countries which have yet to apply could miss out.
“I cannot speak for other countries, but I am hopeful that Ghana's projects will not be in jeopardy,” said Dr Nduom.
But Nancy Pelosi, Speaker of the House of Representatives, is a strong advocate of the Millennium Challenge Account, as Dr Nduom pointed out, and a sizeable body of support for the MCA within the Democratic Party, too. “A number of Democrats supported us when we went to the US to make our proposals for MCA funds,” he said.
For Ghana, at least, the compact was signed in 2006 and the funds should shortly be available: already $10.2 million was released in August and another $3.3 million since. The “criteria” Ghana was asked to meet before further release of cash were mostly logistical arrangements: recruiting key people to run the project in Ghana; certain legal and administrative requirements, including Act 709 which created the Millennium Development Authority; a detailed disbursement plan and work programme.
This is all complete, Dr Nduom told The Statesman, and is now before the Board of the MCC. They will meet on February 7 to hopefully approve all the preparations. The first quarterly installment of funds should be available by the end of February – and the first projects will be demonstration farms for mango and banana farmers in the Southern Horticultural Belt and in the North.
Over the five year period, the released funds will finance three integrated projects – agricultural development, transportation, and rural development – with the greatest proportion ($241 million) going towards agriculture.
With between 60 and 70 percent of Ghana's labour force working in the agricultural sector, this support for farming initiatives is expected to act as a significant boost for the economy as a whole, which derives around 40 percent of its Gross Domestic Product and over half its foreign exchange earnings from agriculture.
Over one million Ghanaians will benefit directly from the projects, which will operate in the northern area, the central Afram Basin area and the southern horticultural belt.