• Context

Ghana is one of the most stable democracies in West Africa, with above-average economic growth, especially in its southern part. Ghana has been a privileged partner of the EU for its political stability and rule of law, for its conducive business environment and security, and for its multilateralism.

Macro economy

Ghana’s rapid growth was halted by the COVID-19 pandemic, and a sharp decline in commodity exports. The economic slowdown had a considerable impact on households. The poverty rate is estimated to have slightly increased from 25 percent in 2019 to 25.5 percent in 2020.

The country is currently facing a high risk of overall and external debt distress, adding to worrisome developments on the fiscal and monetary sides. In an unfavourable international context, dominated by the war following the invasion of Ukraina, the macroeconomic imbalances could have significant political and economic consequences, also for the EU - Ghana partnership, and in particular in the area of investments and infrastructure. In this context, the existence and implementation of strategies to increase domestic revenue mobilization and improve the fiscal autonomy of local authorities will be even more essential.

Security and regional disparities

Although Ghana has featured in the last two decades a dynamic economy with a GDP growth above 5%, the wealth distribution has been uneven. Economic growth has not been fully inclusive and has led to increased inequality, mainly between the richer south and the poorer north of the country, feeding insecurity and violence, particularly in the latter regions. The country shows significant development gaps, underlined by a lack of services and infrastructures, and a poverty rate doubled in the northern regions.

In recent years Ghana experienced a rise of radicalisation and violence, notably in the northern regions, including local conflicts related to land tenure, chieftaincy and religious disputes. The spill-over of the terrorism from Burkina Faso remains one of the most serious concerns for the authorities, which have decided to strengthen collaboration with armed forces and law enforcement agencies of neighbouring countries, in the framework of the “Accra Initiative”.

Geographical disparities have led to north-south migration for economic reasons (livelihoods, lack of jobs and resources) but also environmental (notably the effects of climate change), social, political and more recently stability and security. As a response to the current situation, the EU – Ghana partnership will focus in the coming years on the northern regions of Ghana, thus reinforcing an approach already partially implemented under the 11th EDF. The new actions under preparation will seek complementarity with ongoing actions. 

Decentralisation

In line with Ghana’s commitment to decentralisation (1993 Local Governance Act), the country has seen its number of districts more than doubling (currently 261) since 2000. Unfortunately, the reforms to confer a sufficient level of autonomy to the Metropolitan, Municipal and District Assemblies (MMDAs), along with appropriate capacities to provide services, are slow to materialize locally. In particular, fiscal decentralisation remains limited, with most MMDAs unable to exercise genuine expenditure autonomy. This is reflected in their heavy dependence on the District Assemblies Common Fund (DACF) due to their inability to generate sufficient internally generated revenue.

Further key challenges remain embedded in the systemic and institutional deficiencies, such as yet unclear patterns of devolution processes, local governments remaining chronically underfunded and understaffed, local administrations demonstrating low capacities to undertake their tasks and, at times, blurred division of responsibilities in crucial sectors between different administrative levels and bodies.

State of urbanisation

With a total population of 30.4 million people in 2019 and more than 55% living in cities, Ghana has a dense network of urban areas mostly concentrated along the Atlantic coast and in the Ashanti Region. The urban network of Northern regions of the country represents though an opportunity to balance spatial distribution of urbanisation and development across the country.

The country is halfway through urbanisation, and has benefited from an urban economic network more advanced than other countries in West Africa. While the first period of urbanisation has generated dividends in job creation and opportunities, improved living conditions and reduced poverty for many Ghanaians, the country now faces the challenges of economic efficiency and social inclusion within its urban areas, where globally basic services are still lacking. In addition, unplanned spatial expansion of urban and metropolitan areas and their limited connectivity within and across Ghana’s cities is a challenge, increasing social and environmental costs, unequal and inadequate access to basic services, health risks and ecological damages.

Urban policy framework

Several laws and policies have a direct impact on decentralisation and on functioning of the MMDAs. In parallel, three interrelated policies are governing the development and management of cities: (i) the National Urban Policy (2012), (ii) the National Housing Policy (2012) and (iii) the National Spatial Development Framework (2015). However, despite the comprehensive legal framework, local authorities and cities are still struggling to gain their technical and financial autonomy, and their resources remain too limited to face the current challenges.

The effective implementation of these policies largely depends on the institutional, technical and financial reinforcement of “decentralized entities”. One of the remaining obstacles for institutional coordination and local capacity building is the relative obsolescence of administrative boundaries that define municipalities (and urban, rural settlements generally). Operational implementation is still lacking at the local (MMDA) level because of lack of capacity, lack of anticipation in land acquisition by local governments and poor integration of strategies in local plans.

Demographic growth

A projection shows that the population of Africa will nearly double in size by 2050 and could quadruple by the end of the century. Globally, the number of urban dwellers is growing by two per cent a year and the figure is four per cent in Sub-Saharan Africa. With this trend, the number of people in the region’s cities will double within two decades.

Since 1984, Ghana’s urban population has quadrupled. The three most populous cities, Accra, Kumasi and Sekondi-Takoradi, account for almost a fifth of the country’s population. This development has initially coincided with rapid GDP growth and decreasing poverty. However, this trend has inversed throughout last decade, in particular in the urban centres of the northern half of Ghana. Recent reports (UNICEF 2019) revealed for the first time that health conditions of newly born babies in rural areas are on average better than in the cities. This is only one aspect of the large range of alarming challenges posed by climate change, economic transformation and demographic shifts, with government and city mayors facing increasing pressure to find sustainable solutions.

Gender and inclusiveness

Social norms in Ghana identify men as property holders and economic decision-makers. Women are caretaker. This is even more visible in Northern Ghana. Limited responsiveness to gender-based violence limit women’s rights and ability to participate in and benefit from economic activities. Consequently, women’s economic activities are predominantly in vulnerable employment, concentrated in low-wage jobs, and unpaid labour.

There are no laws in Ghana prohibiting women from opening bank accounts or taking out loans in their own name, but only a third of women report having a formal bank account in the country. In the past years, the opportunity of digital financial services (DFS) has supported a lot of low-income female customers, as it reduces the time and costs to make financial transactions and improve the security of those transactions. DFS are an increasing factor of poverty reduction, and savings and entrepreneurship are the two pillars for women financial empowerment in Ghana. However, the impact of the e-levy introduced by the Government (tax applied on transactions made on electronic or digital platforms) has yet to be fully analysed.

Women in Northern Ghana face not only limited access to financial services and business training to start and grow businesses, but also limited access and control over productive resources including land. Owning land in Northern Ghana is crucial for empowerment. Due to patrilineal inheritance systems, women primarily access land through their husbands or by renting land from other men in the community. Again, there are currently no laws impeding women’s access to the land registry, but discrimination in customs and women lacking knowledge of the laws prevent them from participating fully.

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  The programme

The Overall Objective of this action is to improve urban prosperity for all.

The Specifics Objectives of this action are to:

• Improve governance and implementation of urban policies;
• Increase accessibility to quality urban services and accountability of local authorities;
• Reduce management costs and foster revenue mobilisation.

The Outputs to be delivered by this action contributing to the corresponding Specific Objectives are: 

• contributing to Outcome 1 (SO1): Participative and multi-sectoral coordination and monitoring of urban development and policies is improved and integrated into all administrative levels
• contributing to Outcome 1 (SO1): Applied research in urban and regional development is strengthened
• contributing to Outcome 2 (SO2): Capacities at central and decentralized levels are strengthened, to provide more sustainable and economically viable municipal services to the population
• contributing to Outcome 2 (SO2): Urban planning framework, related tools and capacities for implementation are available at the MMDAs’ level
• contributing to Outcome 3 (SO3): Strategies to identify and improve collection of domestic revenues are developed and implemented
• contributing to Outcome 3 (SO3): Digital technologies are mainstreamed in urban services, to facilitate delivery and management of urban services

• Implementation approach

Entrusted with the design and implementation of international technical cooperation projects, EF works on the ground to develop innovative solutions that meet partners’ needs and donors’ expectations. Built upon skill transfer and peer dialogue, EF’s actions have one goal: to advise and support partner countries in strengthening their public policies.

In this specific project focusing on sustainable and inclusive cities, EF would pursue the following actions in order to achieve the overall objective of improving urban prosperity for all:

• Encourage dialogue and cooperation at local and national levels (including women associations or youth groups) and make sure that national and local authorities, civil society and other relevant actors participate in policy dialogues, and help define priorities for urban development ;
• Structurally improve urban governance by strengthening the capacity of central and local governments to coordinate, design and implement urban policies, planning and regulation ;
• Improve accessibility and consistency in urban data collection and monitoring and implement research projects;
• Identify and disseminate successful and tested solutions, particularly regarding the inclusion of youth, women and also people with disabilities;
• Facilitate further concrete investments in cities (AAP 2024).

According to the Action Document elaborated by the EU delegation, a focus could be made on 5 or 6 cities in Northern regions. Ghana has seen a persistent and increasing spatial inequality. The spatial inequities reflect both ecological conditions, disparities in service delivery and infrastructures. Obviously, the rise in inequalities is a risk factor which could compromise earlier progress in poverty reduction, increase health risks and ecological damages and weaken social cohesion.