The United States government has suspended Ghana from accessing $190 million in Millennium Challenge Corporation (MCC) energy-sector funding, marking a major setback in a two-decade development partnership.
The ruling follows Ghana’s recent ineligibility announcement by the MCC, effectively halting the disbursement of funds originally earmarked to support ongoing reforms in the electricity distribution system.
A 20-Year Partnership Slows
Ghana has been one of MCC’s key African partners since 2004 and has benefited from three major engagements:
1. Threshold Programme (2006–2008) – $55 million
The programme strengthened governance and revenue mobilisation—particularly through support to the Ghana Revenue Authority—and advanced financial-sector reforms that expanded access to credit. Analysts say this phase laid the groundwork for later, larger MCC investments.
2. First Compact (2007–2012) – $547 million
This compact focused heavily on agriculture and rural development. Smallholder farmers received irrigation support, improved seeds, and training, boosting productivity nationwide.
The compact also delivered major infrastructure, including the rehabilitation of the six-lane N1 (George Bush Highway) in Accra, and new schools, water systems, and health facilities—widely viewed as transformative in linking infrastructure to poverty reduction.
3. Power Compact (2014–2022) – $316 million + $37 million GoG counterpart funding
The second compact sought to reform Ghana’s electricity sector, enhance ECG’s operational performance, and attract private sector participation.
However, the 2019 collapse of the Power Distribution Services (PDS) concession weakened the impact of the overall programme. The compact officially closed in June 2022.
Impact of the Suspension
The newly suspended $190 million was expected to support further power sector improvements, particularly modernising electricity distribution and strengthening ECG’s operational efficiency.
Experts warn that Ghana will now have to identify alternative financing sources to sustain ongoing energy reforms.
Legacy and Lessons
Despite the setback, analysts highlight that Ghana’s earlier MCC projects—especially the George Bush Highway and agricultural modernisation initiatives—remain visible successes.
Observers say Ghana’s future eligibility will depend heavily on the government’s efforts toward fiscal restructuring, transparency, and governance reforms.
They argue that Ghana’s experience offers an important reminder of the delicate balance between development assistance and sound domestic financial management—an increasingly relevant lesson for other African nations seeking long-term U.S. development partnerships.
Source: africa.businessinsider.com/
