Ghana: Recent Developments and U.S. Relations
Released: 2013-01-04T00:00:00

Overview

U.S.-Ghanaian relations are warm, as signaled by President Barack Obama's travel in 2009 to Ghana, where he laid out his views on democratization and governance in Africa in his single major Africa-focused policy address. Ghana is the only sub-Saharan African country to which Mr. Obama has thus far traveled while serving as president. Then-President George W. Bush also traveled there, in 2008, and Members of Congress regularly visit Ghana, which is widely seen as a key U.S. partner in West Africa and as an African success story. It has built a relatively robust democracy and a growing economy, although it faces persistent, widespread poverty and a range of profound development challenges.

Ghana, which last held national elections in early December 2012 (see below), is considered a model for many of the outcomes that congressional and executive branch policy-makers have long sought to achieve in the region under diverse programs that have drawn substantial congressional engagement. Ghana has received a large U.S. Millennium Challenge Corporation (MCC) Compact and may soon receive a second one. It also participates in three presidential development initiatives, the Global Climate Change (GCC) initiative, Feed the Future (FtF), and the Global Health Initiative (GHI), and hosts U.S. Agency for International Development (USAID) and U.S. Drug Enforcement Agency (DEA) regional offices and the USAID-administered West Africa Trade Hub.

The Hub activities seek to expand intra-regional and bilateral trade with West African countries, a focus of renewed congressional interest and a key pillar of the Obama Administration's June 2012 U.S. Strategy Toward Sub-Saharan Afric a . Ghana has also drawn U.S. attention because of its recent discovery of sizable oil reserves and its potential contributions to global and U.S. energy security. Energy production may boost national income and development prospects, but may also pose good governance and resource management challenges, as is common in oil-rich developing countries.

Ghana has evolved into a U.S. partner in the region, in part, because in recent decades—after two politically tumultuous decades following independence—it developed into a stable country in an often volatile sub-region. Commitment to constitutional governance has become increasingly ingrained, as illustrated by successful inter-party transfers of state power following close recent national elections. Similarly, when President John Atta Mills died in July 2012, state power was transferred to then-Vice President John Dramani Mahama, as constitutionally mandated, within hours.

Ghana's regional stability and international peace efforts have dovetailed with those of the United States, which has often sought to support regional solutions to regional political crises and to mitigate the effects of conflict in West Africa by providing large amounts of humanitarian assistance. Ghana's government has helped to mediate several armed civil conflicts in West Africa in recent decades and has hosted refugees fleeing such crises. In late 2012, the last of a residual long-term Liberian refugee population in Ghana was repatriated, but Ghana continues to host refugees from Côte d'Ivoire who fled during or following that country's 2011 civil-military crisis. Such populations are generally peaceful, but can contain politically restive elements, some opposed to their home governments, as was the case with a small number of the Liberian refugees. In recent months, Ghana has detained or deported multiple Ivoirian who, while in Ghana, have allegedly participated in efforts to destabilize the government of Côte d'Ivoire or are accused of crimes during the Ivoirian crisis. Ghana has pledged not to allow such activities and, in coordination with Ivoirian officials, is investigating attacks allegedly carried out from its territory. Still, critics contend that it has taken insufficient action to counter such acts.

Ghana is a steady contributor of troops to international peacekeeping operations, both in Africa and elsewhere, and is a recipient of U.S. training and assistance aimed at supporting such deployments. Ghana also faces threats from illicit narcotics trafficking, notably related to a rise in cocaine being transported from South America to Europe via West Africa. Shared interest in countering such trafficking is a growing area of U.S.-Ghanaian cooperation.

Ghana is viewed as having achieved substantial progress in its socio-economic development, despite many remaining challenges. In FY2013, it met or greatly exceeded the minimum score on 18 out of 20 Millennium Challenge Corporation (MCC) policy performance criteria that are prerequisites for MCC compact eligibility. These criteria pertain to three broad eligibility assessment categories: Economic Freedom, Investing in People, and Ruling Justly. Its FY2012 performance had also been strong, especially in the area of governance; it ranked among the top 5% "of all low-income countries on every single Ruling Justly indicator, including control of corruption, government effectiveness and democratic rights." Ghana completed a five-year $547 million MCC compact in February 2012, and is a likely recipient of a second MCC compact.

The anticipated compact, for which Ghana had been found eligible to apply in early 2011, is expected to support higher rates of economic growth by increasing access to credit, secure land tenure, and electrical power. These goals were identified as national development priorities under joint Partnership for Growth and MCC analyses. Power sector enhancements are seen by the MCC as offering "an opportunity to advance U.S. interests by addressing problems in the power sector that are a brake on economic growth in one of Africa's most important regional anchors." An economic constraints analysis for the proposed compact was completed in November 2011.

Ghana was selected as one of four initial U.S. Partnership for Growth countries globally for several reasons. These include its positive MCC scores and compact completion record; potential synergies between the expected second MCC compact and other U.S. assistance programs; and increases in other types of U.S.-Ghanaian engagement, including private sector business deals.

Government and Politics

Mills Administration and Succession

Ghana's most recently elected president, John Atta Mills, died on July 24, 2012, of natural causes. Mills, a former academic and national office holder, was elected in 2008 and took office in early 2009, succeeding former President John Kufuor of the New Patriotic Party (NPP). Key Mills policies were rooted in his National Democratic Congress (NDC) party's election platform, A Better Ghana : Investing in People, Jobs and the Economy (2008) and were detailed in various policy statements. They included:

good governance and anti-corruption efforts, including passage of a Right to Information Bill, security force capacity building, prioritization of female appointments in government, and greater representative, decentralized governance and accountability; economic growth and investment, notably through what the NDC platform called "activist and enabling state" policies and actions, such as efforts to spur business growth by increasing access to credit, enact business-friendly regulatory and tax reforms, and boost Ghanaian exports and diversified local industrial and agricultural production; investment in people, especially in health, education, and poverty reduction efforts; and investments in infrastructure, including public housing construction, water and sanitation improvements, and reforms, and investments in roads, rails, and the electricity sector.

President Mahama

President John Dramani Mahama was elected president in Ghana's December 2012 national elections and is scheduled to be inaugurated on January 7, 2012, despite an NPP legal suit challenging his election. Mahama, former Vice President under Mills, had initially assumed the presidency in July 2012, succeeding Mills hours after his death, in accordance with the constitution. Mahama is a Christian from northern Ghana, and a former non-governmental organization manager, Communications Minister, Member of Parliament (MP), and national NDC party leader who also served on several national functional agencies.

Politics and Elections

Polling during the December 7, 2012, presidential and legislative elections was peaceful, but limited technical challenges and late poll openings hindered voting in some places. Key problems included malfunctions associated with a new biometric voter identification system used by Ghana's Electoral Commission (EC) to register and identify Ghana's 14.03 million voters, 80.2% of whom (11.25 million) cast ballots. In response to these technical delays, voting was extended by a day at hundreds of polling places.

The presidential race featured a close contest between the NDC's Mahama and Nana Addo Dankwa Akufo-Addo of the NPP. Akufo-Addo served as Foreign Affairs Minister and Justice Minister under Kufuor, is a former MP, and was Mills's rival in the 2008 election. The 2012 election resulted in Mahama's election as president, with nearly 50.8% of votes. Akufo-Addo garnered over 47.7% of votes, while six minor candidates each won a 0.6% or lower vote share. Domestic and international observers reported that, apart from the limited technical problems—primarily those noted above—polling and the vote counting processes were carried out in a transparent, free, and largely proficient manner, and that the process overall was credible and legitimate. The United States recognized the re-election of President Mahama and congratulated him and the Ghanaian people for a "successful election."

Despite such findings, following the announcement of the presidential election results, NPP supporters staged boisterous street protests questioning the election results and the neutrality of the Electoral Commission, and the Akufo-Addo campaign and the NPP announced that they would challenge the legitimacy of the vote in court. They did so in a December 28 suit, filed in the Supreme Court, naming President Mahama and the Electoral Commission as respondents. Their suit alleged that there had been "diverse and flagrant violations of the statutory provisions and regulations governing the conduct" of the presidential election "which substantially and materially affected the results of the elections." The suit contended that the announced election results were "vitiated by gross and widespread irregularities and/or malpractices which fundamentally impugned the validity of the results" reported for 4,709 polling stations, resulting in the recording of 1.34 million "irregular votes." The plaintiffs further asserted that these allegedly irregular votes should be annulled. Once they were discounted, the plaintiffs claimed, the results would show that Mahama had garnered 4.66 million votes (48.26%), while Akufo-Addo had won 4.85 million (50.28%), making him the "duly and validly elected" winner of the election. The initial suit may reportedly be followed by further NPP suits in 2013.

In the legislative races, 275 parliamentary seats were contested―45 more than the 230 seats in the previous parliament. According to official Electoral Commission results, the NDC won 148 seats, while the NPP won 123 seats, with the balance going to the small People's National Convention (PNC, one seat) and independents (three seats). Despite winning fewer seats than the NDC, the NPP's share of the aggregate popular parliamentary vote was reportedly 120,000 votes larger than that of the NDC. Due to the geographic concentration of its supporters, however, this advantage was not reflected in the overall results.

Some polls during the pre-election period, which featured very limited political violence, indicated that the two parties were very evenly matched, but that many voters—as many as a third—were undecided. In early November, incumbent politicians, but most notably the majority NDC government, received a potentially politically damaging blow when it was reported that president Mahama had authorized a large, backdated pay raise quietly passed by parliament in late October for himself, ministers, and parliamentarians. The increases were harshly criticized by government transparency activists and raised a public furor. In early November, Mahama ordered that the salaries not go into effect and asked parliament to rescind them, but the incident may have politically damaged the NDC. Another negative signal for NDC prospects was a survey suggesting that as many as 63% of Ghanaians in 2012 are dissatisfied with economic trends, up from 45% in 2008, when the NDC took power from the NPP.

Election Stakes and Campaign

The primary stakes in the hard-fought election were control over rapidly rising oil revenues and influence over the direction and political and financial fruits of a vibrant economy, potentially for some time to come. The winner of the 2012 election was also seen as well placed to win the 2016 election. In late October, a live televised presidential debate was held between Mahama, Akufo-Addo, and the candidates of two minor parties that hold seats in the parliament. The debate, the first to feature a sitting Ghanaian president, was reportedly fiercely contested. It featured allegations by Akufo-Addo of NDC corruption, and a stiff defense by Mahama of the NDC record, especially regarding economic growth. Key issues included the economy, job creation, and the agricultural and energy sectors; education and healthcare; and taxation, among other issues addressed in the two parties' 2012 election manifestos, which were broadly similar. A vice presidential debate was also held in early November, as was a second presidential debate later in the month.

After taking power following Mills's death, Mahama worked to unify a somewhat divided NDC and to counter a major contracting corruption scandal that rocked the Mills government and threatened to hurt NDC electoral prospects (see textbox). In early September he also set out a policy plan that used Mills's Better Ghana priorities as a general point of departure but also laid out a range of specific actions that Mahama used to guide his administration in the period leading up to the elections. One of the objectives in his agenda was tighter regulation of state-private business transactions, possibly as a means of averting corruption-focused criticism of the NDC by the political opposition.

A key source of internal NDC divisions had been personalized, often barbed criticism of Mills by former president Rawlings, the founder of the NDC, whose wife, Nana Konadu Agyeman-Rawlings, had unsuccessfully challenged Mills for the 2012 NDC presidential spot prior to his death. Rawlings appeared to view Mills, who had served as his vice president, as his political protégé and to have resented the independent political support base that Mills built within the NDC. After Mills's death, Rawlings initially endorsed Mahama and pledged to support party unity, but then threw his support behind his wife after her October 2012 selection as the presidential candidate of the newly formed National Democratic Party. Agyeman-Rawlings's candidacy was rejected by the Electoral Commission on technical grounds, a decision that she legally contested. She later announced her support for the NPP, and her husband reportedly declined to campaign for the NDC. Some analysts have concluded that Agyeman-Rawlings failed presidential bids and the NDC's victory, notwithstanding Rawlings's absence from the NDC campaign hustings, indicate that Rawlings's past strong influence over the NDC and Ghanaian politics generally has waned considerably.

Economy

Ghana's economy has grown steadily in recent years; gross domestic product (GDP) totaled $32 billion in 2010, rose to $39 billion in 2011, and is projected to rise further. Goods export earnings have also grown; estimated at $8 billion in 2010, they grew to $13 billion in 2011, with additional gradual growth projected in the next three years. Spurred by new oil sector investment and production (discussed further below), the economy grew at an estimated annual rate of 14.4% in 2011, according to the Economist Intelligence Unit (EIU, a private economic analysis firm), which projected a decline to 7.3% in 2012 and 7.6% in 2013. The International Monetary Fund also estimated that the economy grew by 14.4% in 2011, but provided a slightly more optimistic estimate of 8.1% for 2012 and 7.8% in 2013. This prospective decline is attributable, in part, to slowing new investment in the oil sector, lower-than-expected initial oil output, and a temporary dip in prices for cocoa. In general, rising commodity prices and production, notably for key exports like cocoa and gold, along with growth in tourism, have helped propel economic growth in recent years.

Despite diversification into oil, mining and, to a lesser extent, financial services and offshore information processing, and even though about 52% of Ghanaians are urban, farming remains a cornerstone of the economy. Agriculture employs over half of workers, and contributes about 27% of annual GDP, although its share has dropped since the mid-2000s. The government, with donor backing, is investing heavily in agricultural productivity gains, including in the cocoa sector. Services have expanded rapidly, and contributed 47% of GDP in 2011. Industry, notably the gold mining sector, has also grown markedly; it provides about 25% of GDP. In recent years, gold has contributed a high share of export revenues, in part due to high global prices. Government policies are supportive of the extensive small-scale and informal sectors. The Ghana Stock Exchange, which has performed well in recent years, plans to establish a separate exchange for small firms, the Ghana Alternative Market. Ghana cooperates closely with international financial institutions and received substantial foreign debt relief in the mid- 2000s. In recent years, the World Bank's annual Doing Business report has consistently rated Ghana positively—better than all but four countries in sub-Saharan Africa.

Ghanaians enjoy better access to public goods and services than is typical in West Africa, and poverty rates are slowly declining. Average annual per capita income, at $1,570 in 2011, has grown markedly from $310 in 2003. Rates of access to cell phones are high, and most social indicators have also steadily improved in recent years. Rates of access to electricity are also relatively high, although there are regular periodic electricity shortages. Insufficient electricity supplies have long hindered economic growth, but several national and international regional power generation/distribution projects and efforts to liberalize the electricity sector are under way. Development of Ghana's natural gas reserves (see below) for use in fueling electricity generation—notably at Asogi, a major power plant—and other types of longer term industrial development has been beset by technical problems associated with piping the gas from offshore and construction of a new gas processing plant. Asogi has also been idled due to a break in Chevron-operated West African Gas Pipeline, designed to ferry gas from Nigeria to Ghana and other coastal countries.

Despite significant economic success, poverty is widespread, notably in rural areas, and income distribution is unequal. Slightly more than half of Ghanaians have access to piped water, tarred roads, sewage systems, and health clinics, leaving many without access to these public goods and services, according to a recent survey of economic and social conditions. As discussed previously, the survey also found that 63% of respondents rated national economic conditions as "bad" or "very bad"; in contrast, only 30% described conditions as "good" or "very good," and six percent were neutral on the matter. Such views have generally remained roughly similar over the past decade, apart from the most recent prior survey, undertaken in 2008. At that time, the proportion of respondents who saw conditions as "bad or very bad" and as "good or very good" was equal, at 45% for each group, indicating that a growing number of Ghanaians have become dissatisfied with economic trends. Rising import demand, spurred by the oil sector, has also driven a substantial devaluation in 2012 of the national currency, the cedi . This, in turn, has led to a nascent rise in smuggling of cocoa into Côte d'Ivoire, where sellers can obtain relatively more stable Euro-pegged CFA francs , reversing a trend in which large amounts of Ivoirian cocoa were reportedly smuggled into Ghana.

Energy Sector

The start of oil production in late 2010, from the first of several sizable, recently discovered offshore oil fields, and the reported likelihood that other finds being assessed will prove positive have boosted export and state revenue projections. The advent of large-scale oil and gas production is a game-changer for Ghana's economic future. Production from Ghana's large Jubilee field alone is projected to place it among the world's top 50 oil-producing countries. The potential for greater rates of production and additional reserve confirmations is high.

Ghana's total oil and gas reserves (i.e., deposits for which production is technically and economically viable) are difficult to estimate; most of its oil and gas deposits have been discovered relatively recently, and new discoveries and estimates continue. According to U.S. government estimates, Ghana has 660 million barrels of oil (MMBO) of proven reserves, the 45 th largest globally. The Jubilee field alone has been very conservatively estimated as containing 278 MMBO, but is widely believed to house much larger reserves, in the 500-600 MMBO range and potentially as much as 1,500 MMBO. Total national oil reserves are thought to range between 3 billion and 4.5 billion barrels, with more optimistic projections suggesting that reserves might be larger by a factor of two or more. Most of Ghana's oil fields also contain natural gas condensate, and there have been several significant gas finds. Ghana's proven natural gas reserves, according to U.S. government estimates, stand at 22.65 billion cubic meters, the 75th largest globally.

Production at Jubilee started in late 2010 under a $3 billion-plus "Phase 1" operation focusing on a core area where reserves are best documented. It is led by UK-based Tullow Oil, in partnership with five other firms; three are U.S-based (Anadarko, 23.5%; Kosmos, 23.5%; and Sabre, 2.8%). About 120,000 barrels of oil per day were projected to be produced once full production rates were reached, and Phase 2 production in 2014 was projected to increase production to 240,000 barrels per day, and possibly eventually 500,000 barrels per day. Initial production, however, was substantially below the level initially projected, due to technical problems, as noted above.

The start of oil production has spurred an increase in public spending and borrowing based on projected future oil earnings. External debt climbed from $3.32 billion in 2006, after Ghana received international financial institution-mediated debt forgiveness, to an estimated $9.7 billion in late 2011. The Economist Intelligence Unit estimates that debt will have grown to $11.6 in 2012 and $18.5 billion by 2018. Critics have warned that this could lead to financial over-commitments and excessive state reliance on oil revenues. However, Ghana may be able to continue to rely on its generally positive record of economic growth and diversification to borrow on international bond markets.

There are also concerns that Ghana lacks adequate environmental oversight and oil spill response capacities. In March 2011, a Petroleum Revenue Management Act was enacted after months of debate, but a proposed Petroleum Exploration and Production Act has yet to be passed. Civil society groups are closely monitoring the government's actions as a signatory of the Extractive Industries Transparency Initiative (EITI), an internationally-backed effort to promote governance accountability governance in resource-rich countries. In October 2009, Ghana became the second African EITI signatory, and one of five countries worldwide to be judged EITI Compliant at the time. Despite such developments, energy sector governance—notably transparency, accountability, and efficacy regarding public uses of oil revenue receipts and expenditures—is a key issue facing Ghanaians. The World Bank has been providing technical assistance aimed at addressing environmental protection and management challenges, as well as promoting transparency regarding extractive industry contracting, licensing, and revenue payments.

Rule of Law Issues

Corruption

Public sector bribery in Ghana is reportedly common and there have been several high profile corruption cases involving top officials, although by some measures, Ghana is significantly less corrupt than many of its regional peers. According to Transparency International's (TI) Global Corruption Barometer (GCB) 20 10/11 , 60% of Ghanaian respondents thought corruption had worsened in the past three years and 40% reported that they had paid a bribe in the last 12 months. About 55% of Ghanaians viewed their government's anti-corruption efforts as effective, while another 36% reported them as ineffective. According to the State Department and GCB , petty police corruption is widespread.

President Mills pledged to reduce corruption "to the barest minimum and make the penalty for corruption so high that it will become something to avoid at all cost." His primary tactics for doing so included efforts to improve the capabilities of anti-corruption government agencies, to "rigorously" enforce Ghana's Whistleblower's Act, and to "vigorously" prosecute official corruption. The government also planned "a massive education campaign against corruption" involving state anti-corruption institutions and civil society anti-corruption agencies and organizations. How effective these efforts have been is not clear. As previously noted, President Mahama has pledged to continue Mills's policies, including regarding transparency issues.

Trafficking: Narcotics

Ghana faces illicit drug trafficking challenges, notably as a result of a rise in recent years of cocaine from South America and heroin from southwest Asia. These drugs are typically shipped onward to Europe and, to a lesser extent, to South Africa and North America, often via couriers on commercial flights. In the early to mid-2000s, cocaine was reported to arrive on small aircraft and small freighters, with local transfers to smaller coastal vessels, such as fishing boats. These methods reportedly continue to be used, but in recent years there has been a reported increase in cocaine shipments via containerized ship freight, sometimes from non-traditional shipment points, such as Chile and Panama. A nascent methamphetamine production and export trade servicing local and foreign markets has also emerged in recent years.

Ghana has served as a departure point for human drug couriers, known as mules, who swallow their shipments or otherwise transport them while traveling on commercial passenger flights. There have been other indications of Ghanaian ties to international drug trafficking, as indicated by periodic arrests of Ghanaians in other countries, including in the United States, West Africa, and Europe. Several years ago, there were also several high-profile cocaine-corruption cases involving government officials. In some instances, suspected large-scale seizures disappeared prior to or after being confiscated, allegedly with official connivance. According to the State Department's 2012 International Narcotics Control Strategy Report (INCSR ),

Gangs trafficking South American cocaine have increased their foothold in Ghana, establishing distribution networks run by Nigerian and Ghanaian criminals. Ghana's interest in attracting investment provides good cover for foreign drug barons to enter the country under the guise of legitimate business. However, South American traffickers limit their personal involvement in Ghana by relying on local partners, thus insulating themselves from possible arrest by local authorities.

Ghana engages in counternarcotics cooperation with multiple members of the international community, including the United States, but its capabilities are seen as limited. The State Department reports in the 2012 INCSR that

Corruption, a lack of resources, and porous borders seriously impede interdiction efforts. While law enforcement authorities continue to arrest low-level narcotics traffickers, Ghana has had relatively less success pursuing the so-called drug barons. Narcotics-related cases and others involving serious crimes can sometimes take years to prosecute, due to lack of expertise for prosecutors and judges, overbooked attorneys and the failure of witnesses to appear in court. Interagency coordination among law enforcement agencies remains a challenge.

The U.S. Drug Enforcement Agency (DEA), which opened a regional office in Ghana in 2009, has initiated several extradition cases and carried out other law enforcement operations with Ghana. Beginning in FY2010, the DEA also developed a Sensitive Investigative Unit (SIU) in Ghana. SIUs are composed of specialized host country counternarcotics investigators and police who are vetted, or screened, by the DEA through drug tests, background investigations, and polygraphs. They receive additional DEA-funded training, as well as mentoring, including during cooperation on sensitive bilateral investigations. Drug-related law enforcement activities and liaisons in several West African countries are coordinated through the DEA country office in Accra. The Department of Defense (DoD) also provides counternarcotics-related training and equipment-related assistance to Ghana. Examples include airport scanners and related trace detection machines, and the U.S. military's Africa Command has funded the construction of several small physical facilities to house counter-narcotics machinery and seizures.

Trafficking: Persons

The State Department classifies Ghana as a "Tier 2" country with respect to trafficking in persons (TIP). This means that the government "does not fully comply with the minimum standards for the elimination of trafficking; however, it is making significant efforts to do so," according to the State Department's most recent annual Trafficking in Persons Report , released in June 2012. According to the report, "Ghana is a country of origin, transit, and destination for men, women, and children subjected to forced labor and sex trafficking." Ghanaian nationals, notably children, make up the bulk of trafficking victims within the country, although transnational TIP operations also regularly victimize foreign migrants. Ghanaians are also trafficked into other countries in the region and further abroad.

U.S. Relations

U.S.-Ghanaian relations are close. A small population of Americans, many of African-American descent, has settled permanently in Ghana, and many prominent Ghanaians have received education in the United States. In its foreign aid Congressional Budget Justification (CBJ) for FY2013, the Obama Administration stated that the United States supports the Ghanaian government's "efforts to improve on and sustain middle-income status, and to solidify its position as a regional leader in an area better known for civil strife and economic stagnation." It also pledged to help Ghana to achieve the poverty reduction and development-focused United Nations Millennium Development Goals by 2015. The United States also sponsors a variety of exchange visits for Ghanaian government officials, focused on increasing Ghanaian familiarization with U.S. legislative and other governance practices, and a variety of educational programs for students and civil society organizations.

A 130-member Peace Corps program, funded at $3.8 million in FY2012, with $3.9 million requested for FY2013, supports work in information technology, education and business development, health, and food security.

Bilateral Assistance68

The Administration has requested combined FY2013 State Department and U.S. Agency for International Development (USAID) assistance of $179.3 million. An estimated $172.7 million in aid is being provided in FY2012, while $165.9 was provided in FY2011. A large portion of the FY2013 aid request (89%) would support education (16% of the total); agricultural development (29%), mostly under Feed the Future programs; and health-related capacity development (44%), under the Global Health Initiative. This pattern of allocations closely mirrors that of FY2011 and FY2012. Some Development Assistance funding is provided under the Global Climate Change Initiative. As discussed previously, Ghana is a likely candidate for a second MCC compact.

Trade and Investment

Ghana is a leading African buyer of U.S. goods, and while bilateral trade is relatively small compared to U.S. trade with countries in other regions, it has grown exponentially―by 638%―over the last decade. Total bilateral trade in 2002 stood at $309 million; by 2011, it had grown to $1.97 billion. In 2009, U.S. exports to Ghana totaled $634 million, but they jumped to $983 million in 2010 and $1.2 billion in 2011. These increases appear attributable to inputs for the oil sector. U.S. imports from Ghana stood at $135 million in 2009, and rose to $273 million in 2010 and $779 million in 2011. There is a highly variable but large U.S. trade surplus with Ghana. In 2009, the total value of U.S. exports to Ghana was 4.7 times as large as that for U.S. imports from Ghana, and over the past decade the trade surplus ratio in favor of the United States has averaged nearly 2.5 to 1. Ghana is eligible for trade benefits under the U.S. African Growth and Opportunity Act (AGOA, P.L. 106-200 , Title I, as amended). Exports under AGOA, however, have declined sharply, from a high of 41% of exports to the United States in 2004 to under 1% in 2010, although there was a jump to just over 9% in 2011. Furthermore, AGOA exports were undiversified, made up mostly of processed fuel products and a range of textile and apparel products. Multiple factors may account for the general decline in exports under AGOA as a share of all exports to the United States, which have risen, but one study attributes these trends to Ghana's "lack of supply capacity, the result of low industrialization; its lack of financial resources; and its lack of a national strategy on AGOA."

Three bilateral trade and investment agreements are in force. They include an Overseas Private Investment Corporation (OPIC) Investment Incentive Agreement, a Trade and Investment Framework Agreement (TIFA), and an Open Skies aviation agreement. U.S. firms are key investors in Ghana. U.S. foreign direct investment (FDI) in Ghana (investments in which U.S. firms own 10% or more of an overseas firm or other business asset) have risen steadily in recent years. It totaled $2.3 billion in 2011, $2.1 billion in 2010, and $1.6 billion in 2009. Most of this investment is likely associated with oil sector and mining investments.

Corruption (see above) can negatively affect trade and investment, but foreign investors can generally operate far more easily in Ghana than in many other countries in the region. Accra, the capital, along with several smaller cities in the interior, offers relatively advanced and steadily improving cell phone and Internet access. In many areas of commercial activity, doing business is relatively straightforward and subject to effective legal protections, including from nationalization or expropriation, with limited exceptions. In rare cases where expropriation has occurred, legal redress and/or compensation have been forthcoming. Legal processes, however, are often slow and enforcement of legal judgments can present challenges. Alternative commercial dispute resolution is both allowed and practiced, and such services are provided by the Commercial Conciliation Center of the American Chamber of Commerce (Ghana).

Trade Assistance

U.S. trade capacity-building (TCB) assistance in Ghana, mostly in the form of activities authorized, mandated, or encouraged under AGOA, is diverse. Ghana hosts the USAID regional office and USAID's West Africa Trade Hub, which seeks to increase exports from countries in the region. Trade hub export promotion focuses on expanding exports of selected products that are competitively produced by small scale manufacturers and other types of firms in the region (e.g., apparel, cashew, fish and seafood, home decor & accessories, shea nut butter and products, and specialty foods). The hub educates buyers and sellers regarding how to export and access their target markets and obtain financing. It also connects importers and exporters through trade shows and other forums, and helps build producer industry alliances. Hub staff coordinate with other USAID units to address regional trade and competition-inhibiting challenges related to transportation and telecommunications, lack of access to finance and business services, and poor business environments. For instance, the hub issues regular reports on checkpoints, bribes and delays on West Africa trade corridors and other aspects of road governance. It also sponsors regional capacity-building projects that support initiatives such as the Economic Community of West African States (ECOWAS) free trade area. This initiative aims to facilitate the free movement of transport, goods, and persons within ECOWAS member states and remove tariff and non-tariff barriers to trade, but faces numerous implementation challenges.

Ghana receives bilateral TCB assistance administered by various U.S. development and trade agencies in all major TCB categories. The majority of aid supports:

construction of communications, transport, and power infrastructure for trade-related industrial zones and trade-related agricultural, agribusiness, and services capacity-building; trade facilitation (e.g., customs operations; market expansion-based trade promotion; business networking and trade-related information technology capacity-building, and skills training; and free trade agreement implementation assistance); and trade-related labor improvements (support for labor standards, worker rights and the elimination of child labor, and workforce development), financial sector development, and environment-related capacity-building).

U.S. TCB assistance to Ghana is primarily provided by the Department of Treasury, MCC, Overseas Private Investment Corporation (OPIC), U.S. Trade and Development Agency (USTDA), Department of Agriculture (USDA), and USAID. From FY2007 through FY2011, bilateral TCB assistance from all agencies totaled $312.5 million, but varied considerably by year (e.g., ranging between $248.2 million in FY2007 and $7.1 million in 2008). Large variations are usually attributable to one-time obligations of funds for large projects, such as multi-year outlays of MCC compacts (e.g., FY2007) or, as in the case of FY2011, a large OPIC project.

Outlook

Close U.S.-Ghanaian relations are growing stronger, as reflected by Ghana's selection as a Partnership for Growth country, and appear likely to remain positive. Ghana is a key target for increased and more diverse public-private development cooperation and investment under several U.S. initiatives, and has a growing and increasingly diverse economy. Ghana's role as a new oil producer is also likely to increase its strategic importance to the United States. Prospects for growing trade and investment relations may spur new congressional interest in Ghana. Development cooperation is likely to remain a key area of congressional engagement; despite its economic successes, Ghana faces deep-seated socio-economic development challenges. It also may face natural resource governance challenges—a growing area of policy interest among some Members—associated with its anticipated oil export earnings windfall.