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5. Official Development Assistance

Kanbur (2014) notes that IDA policies may act as a benchmark for other donors, such that IDA graduation is accompanied by a sharp decline in bilateral aid commitments. The development in Ghana’s net ODA flows relative to GNI depicted in Figure 1 appears to lend support to this idea. However, it is important to keep in mind that Ghana’s economy grew by 6.6 percent per year on average from 2000 to 2013 and although the growth rate decreased markedly from 2014 onwards, it was still positive and firmly above the population growth rate. With such growth rates a decline in official development assistance relative to GNI and GDP should be expected. Therefore, accounts of changes in aid flows must be decoupled from changes in GNI and GDP when analyzing donor policies. Thus, in the following we describe aid flows to Ghana in constant prices rather than as shares of GDP (or GNI).

Figure 6: ODA: commitments and disbursements, by donor type USD million, 2015 prices (DAC deflator)

Figure 6 Source: OECD QWIDS (http://stats.oecd.org/qwids/).

ODA commitments by donor type reported in constant USD using the DAC deflator in Figure 6 show a slightly declining trend in total DAC commitments especially between 2008 and 2013.[14] However, the past few years indicate a return of bilateral grants and, to a

lesser extent, multilateral loans. Thus, from a donor perspective, total ODA commitments to Ghana have been rather constant in real terms, with a large increase in 2008 and a dip in 2013 and 2014. The composition of the flows has been more volatile as bilateral grants decreased already in 2009 and in the following years, only to return to a high level in 2016. The decrease in bilateral grant commitments was counteracted by multilateral loans. Hence, in terms of ODA commitments to Ghana, the composition seems to be more volatile than the size with potential implications for sector allocations beyond the fiscal management constraints imposed by a move from grants to loan commitments.

Comparing commitments and disbursements in Figure 6, the time profiles are somewhat different from 2007 to 2013 and, in particular, commitments and disbursements of bilateral grants are significantly negatively correlated over time. Interestingly, disbursements peaked in 2015 because of the World Bank’s USD 500 million loan to the Sankofa Gass Project. More importantly, disbursements of bilateral grants in 2015 and 2016 are on a par with the level in 2007 and 2008 while bilateral loans are slightly larger in 2015 and 2016 compared to the early years. Looking at total bilateral disbursements, it is not possible to say if the past 2-3 years are a return to normal, similar to the period before 2009, or a new situation.

Table 4: ODA: Channels and types. Constant 2015 USD million (commitments)
  All Bilateral Multilateral
2007 2016 2007 2016 2007 2016
Channels
Public Sector 1,450 1,056 970 905 480 128
NGOs & Civil Society 98 125 97 115 1 10
Public-Private Partnerships 1 5 1 5 0 0
Multilateral Organizations 38 79 28 48 10 31
Teaching, Research, Think-tanks 0 21 0 21 0 0
Private Institutions 0 78 0 78 0 0
Other 11 50 10 49 1 1
Not reported 92 248 64 1 28 247
Types
Budget support 201 343 36 111 165 232
Core contributions 53 51 53 51 0 0
Project type interventions 426 1,232 125 1,024 302 185
Other (including debt relief) 1,010 36 956 36 53 0
Total 1,690 1,662 1,170 1,222 520 417

Source: OECD QWIDS (http://stats.oecd.org/qwids/). Constant 2015 USD million (commitments).

Table 4 shows details about the ODA commitments given in Figure 6 for the two years 2007 and 2016.[15] The upper part of the Table presents details about the channels (type of recipient) while the lower part has details on the support type. The Table illustrates little difference in the total commitments in constant USD terms, but a significant change in the direct support to the public sector which decreased by 1/3 from 2007 to 2016. However, the decrease is the result of a drop in multilateral commitments, whereas the bilateral commitments to the public sector are more or less at the same level with a tripling of the bilateral budget support. Caution is important in interpreting the results as seen from the multilateral commitments in 2016 for which it is reported that USD 232 million is given as budget support while the public sector only receives USD 126 million in direct support.

Using the OECD’s creditor reporting system (CRS), the bilateral commitments can also be described by purpose. This may be of particular interest in relation to Ghana’s commitment to the SDGs described in Section 3. Fulfilling the SDGs requires sustained support to the social sectors (health, education, water and sanitation). The allocation of public funds for the social sectors may be too small, and it has been slightly declining as a fraction of GDP since 2011 (World Bank (2017) Table 1.2). However, the bilateral donor support, in terms of commitments, has been reasonably constant as seen from Figure 7. Specifically, bilateral commitments to social infrastructure and services have been above USD 300 million (2015 prices) from 2013 onwards following a local peak at USD 400 million in 2012. Obviously, in view of the negative correlation between bilateral commitments and disbursements, the commitments to social infrastructure and services may not have been disbursed to the extent expected.

Figure 7: Bilateral ODA commitments by purpose USD million, 2015 prices (DAC deflator)

Source: OECD.Stat (CRS).

The overall conclusion regarding the official development assistance to Ghana is that the composition has varied much more than total flows. Furthermore, in terms of bilateral aid, a tendency to ‘herd behavior’ following the announced IDA graduation was observed, which is in accordance with the conclusions reached in UNCTAD (2016).


[14] In Figure 6 and the following Tables we use the DAC deflator because the focus is more on donor policies than on the purchasing power of the flow in Ghana.

[15] In should be noted that approximately 60 percent of ODA commitments to Ghana were not well classified pre-2010. Some of these commitments may have been targeted for “project type interventions” but not classified as such. Care should therefore be taken with regard to the interpretation of the data in Table 4.

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This page forms part of the publication "Evaluation Study – Graduation and Development Finance in the SDG Era – A Case Study of Ghana, May 2018" as chapter 5 of 9.
Version no. 1.0, 2018-06-27
Publication may be found at the address http://www.netpublikationer.dk/um/evaluation_case_study_ghana_may_2018/index.html