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Ghana Compact

In August 2006, MCC and the Government of Ghana signed a five-year, $547 million compact to reduce poverty by raising farmers’ incomes through private sector-led agribusiness development and major public works projects in the capital of Accra. The compact consisted of a three-pronged series of investments in 30 districts across the country. The Agriculture Project was designed to enhance returns from staple food and horticulture crops produced by low-income smallholder farmers as well as to support the expansion of higher-value commercial agriculture through improved delivery of business and technical services. The Transportation Project was designed to reduce costs related to agricultural commerce at local and regional levels. And the Rural Development Project was designed to strengthen rural institutions providing complementary and supportive services for agricultural and agribusiness development.

This report provides a summary of the tangible outputs of the compact program, documentation of changes in compact activities and the reasons for them, the available information on progress against targets in the monitoring plan, and the status of independent evaluations undertaken.  Given the delivery later in 2017 or in 2018 of some of the evaluations for compact activities, this report will be updated to include that information once the evaluations are final.

Under this compact, MCC and the Government of Ghana completed the construction of a major highway through the center of Accra, delivered commercial skills training to nearly 1,200 farmer based organizations and 67,000 farmers, irrigated more than 500 hectares, and built or rehabilitated 250 classroom blocks[[A school block is a group of three classrooms.]] in 204 communities. Approximately 98 percent of all compact funds were disbursed by compact closure in February 2012.  In addition, all policy requirements related to reform of land administration and land management, national plant protection, and road maintenance expenditures were met on time.

Nonetheless, Ghana faced some difficulties in meeting the intended compact objectives.  Because of the larger than average number of activities under each project, MCC’s 5-year time limit on disbursements, and MCC’s refusal to increase the total amount of the compact,  significant changes and trade-offs in some of the project activities were unavoidable. These re-scopings and reallocations made for a stronger compact, but also made evaluating economic rates of return and performance measurements against original targets difficult. Recalculating estimated economic rates of return (ERRs)  at the compact’s end date  for instance, was not feasible for those projects where the original design assumption no longer applied after program changes were made.


Ghana is an emerging economy and a trade hub for much of West Africa, and agriculture is a mainstay of its economy.  At the time of compact signing in 2006, the agricultural sector accounted for about 40 percent of the country’s gross domestic product and directly employed between 60-70 percent of its workforce. Owing to its ability to produce a wide variety of tropical and sub-tropical crops, Ghana appeared to have the potential to become an important supplier of fruit and vegetable products to both its neighbors in Africa and the European Union. Small farm operations, however, accounted for about 80 percent of total agricultural production and were largely dominated by rain-fed production of crops for local consumption. The average farm size was small (less than 1.2 hectares), and agricultural productivity was limited by low cropping intensity, few market linkages, and limited use of fertilizers, insecticides, high yielding varieties, or irrigation-based techniques.  Additionally, high transport costs restricted access to major domestic and international markets, and poor access to basic services in rural communities reduced the ability to attract and retain entrepreneurs or workers.

To address the issues hindering the agribusiness sector in Ghana, MCC and the Government of Ghana signed a five-year, $547 million compact in August 2006 with the overall goal to reduce poverty through economic growth led by agricultural transformation. To achieve this goal, the program pursued two objectives: (a) to increase production and productivity of high-value cash and food crops in the intervention zones in Ghana, and (b) to enhance the competitiveness of Ghanaian high-value cash and food crops in local and international markets. These objectives were addressed through a set of investments in agriculture, rural development, and transportation implemented by the Millennium Development Authority, or MiDA, established by the Government of Ghana as a condition of the MCC grant.[[Under the MCC country ownership model, MCC’s counterparts are responsible for implementing MCC-funded programs. Partner governments establish entities known as accountable entities (MCAs) to manage implementation for compact projects.  In Ghana, MiDA was created soon after signing the compact to implement its programs.]]

The compact program built on Ghana’s Poverty Reduction Strategy and reflected input from broad and inclusive consultations.  Projects were carried out in three Intervention Zones: the Northern Agricultural Zone, the centrally located Afram Basin Zone, and the Southern Horticultural Zone.  The zones were selected for their high incidence of poverty and their potential as agricultural production centers.

  • Original Amount at Compact Signing:
  • Amount spent:
  • Signed:
    August 1, 2006
  • Entry Into Force:
    February 16, 2007
  • Closed:
    February 16, 2012

Project Results

Agriculture Project

  • $240,984,000
    Original Compact Project Amount
  • $188,731,530.27
    Total Disbursed

Estimated Benefits

Project Description

At the time of investment, farming in Ghana was largely dominated by rain-fed production of crops for local consumption by smallholder farmers using rudimentary technology.  Inconsistency in both the supply and quality of crops hampered Ghana’s ability to compete against other countries to supply regional and EU markets.  Other barriers included poor connectivity to markets, limited access to credit, and insecure land tenure.  The Agriculture Project was designed to enhance returns from staple food and horticulture crops produced by low-income smallholder farmers and improve delivery of business and technical services to support the expansion of higher value commercial agriculture in the Northern Agricultural Zone, Afram Basin Zone, and Southern Horticultural Zone through the following activities:

  • Commercial Training Activity
    The objective of the Commercial Training Activity was to accelerate the development of commercial skills and capacity among farmer-based organizations (FBOs) by providing training in management, business planning, technology applications, and marketing. To provide farmers with start-up capital and an incentive to participate in the training, each farmer was given a starter kit that contained fertilizer and seeds for one acre, protective equipment and a small amount of cash to facilitate land clearing. As a result of the training and starter kit, FBOs were expected to be more efficient in production, gain scale efficiencies in purchasing inputs, and competitively respond to commercial demands with necessary volume and quality.
  • Land Tenure Facilitation Activity
    The Land Title Facilitation Activity (LTF) was designed to increase investment and productivity by strengthening property rights.  With a focus on the Northern and Southern Zones, the activity sought to improve tenure security for existing land users and facilitate access to land for commercial crops through systematic provision of titles.  The activity was designed as a pilot to be executed in phases depending on the performance of the initial phase; however, limited funding and time, as well as local land disputes, led to the activity’s reduction in scope.  More information on the re-scoping can be found below.
  • Post-Harvest Activity
    The goal of the Post-Harvest Activity was to make the Ghanaian horticulture export industry a significant supplier of fruits and vegetables to the European Union (EU) and other export markets. The activity included the improvement of public sector capacity to meet International Plant Protection Convention (IPPC) standards, as well as a series of related investments that were designed to develop post-harvest handling capacity that maintains the quality of product from the farm to the market.

    The Small-Scale Post-Harvest Infrastructure sub-activity was designed to provide small grants to small-holder farmers for the purchase of agricultural storage facilities. Based on experience however, MiDA and MCC later determined that the small-holder farmers would not be able to manage this equipment in a sustainable way.  Instead, private sector businesses interested in grain and pulses storage were procured to partner with FBOs to set up Agricultural Business Centers (ABCs) that were sustainable over the long-term.

    The Public Packhouse sub-activity funded construction of three public packhouses – two for pineapples and one for mangoes – to serve the needs of small-holder farmers who do not produce enough to justify having their own packhouses.

    The Post-Harvest Activity also directly targeted Ghana’s pineapple exporters through the Sea Freight Pineapple Exporters’ Association of Ghana (SPEG) loan program. The program sought to increase the association’s competitiveness in overseas markets by facilitating the purchase and installation of post-harvest facilities and equipment that help improve handling of their export pineapples to achieve better product quality in their targeted markets. The loan was later converted to a one-time grant that would serve as revolving credit to SPEG’s members.

    The construction of the Perishable Cargo Center (PCC) facility at Kotoka International Airport is the final link of an integrated cold chain for the horticultural sub-sector that begins at the packhouses where products are initially cooled. By facilitating the air shipment of high-quality produce to overseas markets, the Center was expected to help generate higher market prices and increased volumes for its normal fruit and vegetable exports.

  • Feeder Roads Activity
    The Feeder Roads Activity sought to rehabilitate or reconstruct up to 950 km of feeder roads to promote development in the agricultural sector.  The intended outcomes were to reduce transportation costs and time, and thereby increase access to major domestic and international markets. It also aimed to facilitate transportation linkages from rural areas to social service networks including hospitals, clinics and schools. Due to escalating construction costs, upgraded design standards and competing needs of other investments, the scope of the activity was changed and MCC rehabilitated or reconstructed 357 km of rural roads and provided designs for 329 km more for future investment.
  • Credit Activity
    The Credit Activity was intended to improve credit services for on-farm and value chain investments and was anchored by the Agricultural Credit Program (ACP) Fund.  It was supported by sub-activities aimed at expediting the flow of credit to identified value chain activities, including building the capacity of bank officials in agricultural credit. In late 2009, it became clear that the ACP faced serious challenges, and a comprehensive review undertaken by MiDA and MCC revealed significant implementation issues.  Despite implementing a series of remedial measures aimed at improving performance, the activity was canceled in 2011 for the following reasons:
    • The ACP loans were not being repaid by the beneficiaries.
    • Management and oversight by the Bank of Ghana did not meet MCC standards.
    • The Private Financial Institutions had poor capacity and poor internal controls over their loan portfolios.
    As a result, MCC required the Government of Ghana to refund back to the U.S. Government all MCC funding disbursed, minus amounts repaid and reallocated under the compact, amounting to roughly $6.7 million. More information can be found in the section below on compact changes.
  • Irrigation Activity
    Originally, the Irrigation Activity was conceived as a way to invest in a limited number of retention ponds and weirs (a low dam built across a river to raise the level of water or regulate its flow) as requested by the local FBOs in their business plans, where access to water was critical to their business success. It was estimated that this activity would cover up to 5000 ha. With additional information and cost estimates, this objective was changed to rehabilitate existing irrigation infrastructure and construct a new irrigation scheme.  The newly defined project was designed to bring a total of 2,290 ha of land under irrigation, and was expected to improve the success rate of farmers who need water for their routine farming activities.  This updated project scope also aimed to ensure sustainable management of all irrigation infrastructure funded by the compact.  To do so, it introduced anchor farmers, large commercial farms that would provide continued technical assistance and ready markets for the FBOs, in the catchment areas.

    At the end of the compact, MCC funded training for 66,930 farmers in 1,242 farmer-based organizations. The compact also funded construction of 10 Agricultural Business Centers for grain storage, processing and marketing and three public packhouses for mangos and pineapples, as well as the construction of a cargo center to store perishable agricultural goods for shipment at the Kotoka International Airport in Accra.  Approximately 360 km of roads connecting farmers to markets in rural areas were rehabilitated or upgraded, and two irrigation systems covering over 500 hectares were rehabilitated or constructed.  Construction of a third irrigation system covering approximately 450 hectares designed by the compact was completed following compact closure using Government of Ghana funding and oversight.

Rural Development Project

  • $101,288,000
    Original Compact Project Amount
  • $76,030,565
    Total Disbursed

Estimated Benefits

Project Description

Rural farmers in Ghana have spotty and often poor access to basic community services such as drinkable water, safe school infrastructure, electricity, and efficient financial services. This limits the economic potential of rural communities, making it difficult to reinforce entrepreneurial growth and retain skilled workers. The Rural Development Project was designed to strengthen rural institutions that provide services complementary to and supportive of agricultural and agribusiness development. The Project consisted of three activities:

  • Procurement Capacity Activity
    The objective of the Procurement Capacity Activity was to strengthen the capacity of public sector entities to carry out transparent and competitive procurements at all levels of government.  Investments included the establishment of a career path system for procurement practitioners, strengthening of local training institutions with curricula, modules and provision of textbooks, and the creation of an internship program for procurement students and graduates.
  • Community Services Activity
    The Community Services Activity was designed to complement the Agriculture Project by providing educational, water and sanitation, and rural electrification infrastructure in the Intervention Zones and enhancing the capacity of local governments to deliver related services.  These interventions were part of a larger effort by the Government of Ghana to expand the provision of basic community services throughout the country, and were specifically expected to enhance the sustainability of the Agriculture Project by providing the necessary infrastructure to improve health of communities, enhance skill development through access to education, and facilitate small-scale post-harvest processing of agricultural products.  The Activity included:

    Education Sub-Activity: This sub-activity sought to improve education delivery in beneficiary communities consistent with Ghana Government policy and support the compact’s agriculture investments in these communities.  It included construction and rehabilitation of school infrastructure and ancillary facilities in farming communities.

    Water and Sanitation Sub-Activity: The water and sanitation component of the Community Services Activity was designed to provide improved water systems to selected communities. The objective was to improve water systems in districts participating in the compact so that the households’ economic productivity and income would increase, and households would reduce unproductive time spent caring for the sick, and/or collecting water.

    Rural Electrification Sub-Activity: The rural electrification component was designed to promote economic activities in crop storage, agricultural processing, and other agricultural cottage industries through the provision of electricity.

    The scope of the Community Services Activity was reduced following a compact-wide restructuring (see details below).  The Rural Electrification component was re-scoped to focus on linking post-harvest facilities to the national electrical grid, and the number of planned education facilities and water supply points were also reduced.

  • Financial Services Activity
    The Financial Services Activity was aimed at improving financial service delivery, operations, and access to information at rural banks to enhance the depth and value of rural financial services and widen access to savings services and cash transfers.  It improved the efficiency of the National Payments and Settlement System through the establishment of an electronic payment system and established a computerized networking system between rural banks and the Apex Bank Server.
At the end of the compact, the project funded the creation of curricula and training for instructors in the procurement sector, as well as placement of nearly 1,300 students in procurement internships to reduce leakage, misuse, and suboptimal use of public resources in local communities.  It also funded the construction and rehabilitation of 250 classroom blocks in 204 communities – making them more accessible for all students and teachers – the construction of water and sanitation facilities in 26 communities, and the electrification of farms and packhouses in rural areas.  Finally, the project strengthened rural financial services, automating and connecting rural banks and providing other improvements intended to bring a large number of unserved community members into the financial system.

Transportation Project

  • $143,104,000
    Original Compact Project Amount
  • $227,710,511.96
    Total Disbursed

Estimated Benefits

Project Description

Farmers in Ghana face high transportation costs when moving their goods to market – a trip that is almost always made on Ghana’s 60,000 km national road network.  The Transportation Project, which supported the Government’s long-term Road Sector Development Program, was designed to promote access to social services and support expansion of Ghana’s export-directed horticulture base by reducing the cost of getting agricultural products to market.  The project included three activities:

  • N1 Highway Activity
    This major public works project significantly upgraded a 14 km stretch of highway between two major junctions outside of the capital of Accra in order to reduce the bottleneck in accessing the International Airport and the city’s primary shipping port.   The activity supported an expansion of Ghana’s export-directed horticulture base.
  • Ferry Activity
    The Ferry Activity was funded in order to facilitate growth of the agricultural sector in the Afram Basin Zone by improving the ferry service of Volta Lake Transport Company that connects Adawso on the southern shore to Ekye Amanfrom on the northern shore.  The compact provided for the construction of two roll-on/roll-off ferries, two ferry terminals, two landing stages, and the rehabilitation of the floating dock at Akosombo Port.
  • Trunk Roads Activity
    This activity was included to facilitate the growth of agriculture and access to social services by improving up to 230 km of trunk roads, important major routes used for long-distance travel.  Feasibility studies, designs and preparation of bidding documents were carried out on 243.71 km of roads.  As a result of funding constraints, only 75.21 km were improved under the compact, with the remaining 168.5 km falling to the responsibility of the Government of Ghana to finish upon availability of funding.
At compact end, the project redesigned and funded construction of a key 14 km section of the N1 Highway, the major urban highway connecting horticulture production areas to the west of Accra through the city to a deep-water sea-freight port in Tema; rebuilt or upgraded 75 km of trunk roads throughout the compact intervention zones; and upgraded ferry services on Lake Volta to facilitate growth of the agricultural sector in the Afram Basin Zone.

The rehabilitation and construction of a critical section of the N1 Highway was one of the most significant infrastructure projects in the country.  Handling up to 30,000 vehicles per day, this stretch of the N1—a two-lane undivided road—was often congested and lacked the operational capacity required to serve such high volumes of national, transnational and local traffic.  Following the completion of the compact, the highway was transformed into a six-lane, divided road with four overpasses, one elevated circle interchange, street lighting, drainage, bus stops, extra-wide sidewalks with graded ramps, pedestrian walkovers, and stoplights at all major intersections.  The new highway reduced peak travel time from one hour to less than 20 minutes on the new 14 km stretch and increased average daily traffic from about 27,000 vehicles per day to over 51,000.

While the project activities were largely complete at the end of the compact, the Government of Ghana funded and supervised completion of some outstanding works following compact closure, including the construction of two landing docks, one ferry, and a floating dock.