US suspends Ghana from $190 million MCC energy funding

The decision marks a setback for a country that has been a key African partner of the U.S. aid agency since 2004.

The initiative focused on strengthening governance, improving revenue collection through the Ghana Revenue Authority, and supporting financial sector reforms to widen access to credit.

Analysts note this phase laid the foundation for Ghana’s subsequent, larger-scale projects.

The first major compact, valued at $547 million, ran from 2007 to 2012 and targeted agriculture and rural development. Thousands of smallholder farmers gained access to irrigation schemes, improved seeds, and farmer-based organisations that boosted productivity.

Infrastructural upgrades included the rehabilitation of Accra’s six-lane N1 Highway, popularly known as the George Bush Highway, alongside new schools, water facilities, and healthcare centres.

These projects were widely regarded as transformative, linking infrastructure investment directly to poverty reduction.

Ghana’s second compact, the Power Compact, signed in 2014 with $316 million from the MCC and $37 million in Ghanaian counterpart funding, aimed to overhaul the energy sector. It supported electricity distribution upgrades, staff training at the Electricity Company of Ghana (ECG), and private sector reforms.

However, the core concession agreement with Power Distribution Services collapsed in 2019 amid contractual disputes, limiting the programme’s long-term impact. The compact concluded officially in June 2022.

Experts say Ghana will now need alternative sources to continue modernising its electricity distribution system.

Despite the setback, Ghana’s MCC experience demonstrates the potential of well-managed aid. Projects such as the George Bush Highway and agricultural modernisation remain tangible legacies, reflecting significant gains from previous partnerships.

Ghana’s trajectory with the MCC is a reminder of the delicate balance between development assistance and domestic financial management, a lesson increasingly relevant for other African nations pursuing U.S.-backed development programmes.