External Resources Mobilization and Management Policy in Ghana
1. As an OECD/DAC partner country and a signatory to the Paris Declaration on Aid Effectiveness, Ghana, has committed itself and its institutions to continue increasing efforts towards harmonisation, alignment and managing of aid for development results to ensure aid effectiveness.
2. The outcome of the 2006 Survey on Monitoring of Paris Declaration on Aid Effectiveness showed that Ghana received approximately US $980 293 961 as Official Development Assistance (ODA) in 2005 from its 14 major development partners . A portion of ODA is available to the Government though the General Budget Support coming mainly through the Multi Donor Budgetary Support (MDBS) mechanism. In 2005 only US $273 842 438 was within the control of the Government to allocate to its prioritized activities. The rest of the development assistance amounting to US $707 451 523 was scattered in other projects and programmes. The total number of projects is and programmes is approximately 324, of which, some 193 are supported by multilateral donors and about 144 by bilateral donors. Many of the projects are not implemented in the harmonized basis for development assistance to become effective and achieve optimized national developmental objectives.
3. There is in generally a strong support, within the country, from both the Government and the Development Partners for the adopting a harmonized approach aligned to the country-owned national development programme (GPRS) in line with the principles of Paris Declaration (ownership, alignment, harmonization, managing for development results, mutual accountability).
4. However, the Paris Declaration monitoring Survey completed in August 2006 has brought a number of challenges/pressing issues/gaps to light that require immediate action. Some of the immediate gaps identified included the lack of a shared understanding between the Donors and Government on the definitions and concepts related to aid effectiveness. The Survey also revealed inconsistencies in reporting on activities financed by donor grants and loans, leading to the substantial differences in the data available to the Government and the development partners. It highlighted the need for stronger Government leadership and guidance for improving aid effectiveness.
5. Analysis undertaken by ERM at the sectoral level (agriculture, road sector) showed the fragmentation of donor efforts (both loans and grants) due to the lack of the relevant policy provisions guiding allocation of foreign aid. Furthermore, the Survey also revealed that a substantial part of external resources is not registered in the budget and technical assistance is provided in uncoordinated manner. This directly contributes to hindering Government’s capacity for effective harmonization and alignment of external resources to national priorities and calls for adequate policy response on development of the External Resource Mobilization and Management Policy.
6. The 2006, Budget Statement emphasized the need to develop a comprehensive external resource mobilization policy which should have two ultimate goals: “(a) to increase the effectiveness of external resources to Ghana, and (b) to provide a basis on which the additional aid required by Ghana to meet its short- to mid-term investment needs can be mobilized”.
8. In light of this ERM is developing a comprehensive External Resource Mobilization and Management policy. The Policy will provide guidelines for external resources mobilization and management (to both Government and the development partners) and clarify roles and responsibilities of MOFEP departments and other MDAs in articulating needs for external resources and management of external assistance.
9. The policy will contain the following elements:
? Criteria for effective use of external resources and Governments preferred modalities for external resources inflow;
? Standards and procedures for reporting and data collection on resource inflow;
? Guidelines for results based sector operational development strategies and costing of resource needs for their implementation;
? Strategy for donor resource mobilization.
10. The intent is to strengthen MOFEP capacity to:
? Harmonize and align development assistance to the approved national development strategies (including sectoral strategies);
? Reduce transaction costs and put in place monitoring and evaluation systems to manage for development results thereby increasing effectiveness of aid;
? Develop a system and mechanism for better responding to donor harmonization efforts.
11. The effective policy implementation will also require improved information flows and data management for improvement of results, therefore it will be supported by External Resource Mobilization and Management Tool designed for data collection and analysis in accordance with ERM mandate to contribute to the mission of the Ministry.
12. The process for development of the Policy is detailed below:
1) Concept Note on Ghana’s External Resource Mobilization and Management Policy developed
2) Review of Concept Note by Minister of Finance for clearance and further development
3) Brainstorming with key stakeholders on relevance and volume of external resource mobilization for national development strategy (GPRS II) – MOFEP (Budget Division, Policy Analysis, ADMU, ERM-M&B), NDPC, MFA (NEPAD), APRM, GAPVOD, Statistical Service, CAGD
4) Draft of External Resource Mobilization and Management Policy Developed
5) Submission of the Draft of the External Resource Mobilization and Management Policy, to MOFEP Management for comments and clearance
6) Review of Policy by stakeholders (MDAs)
7) Review by Development Partners
8) Amendments made by Coordinating Division
9) Submission to the MOFEP Management for approval
10) Presentation of External Resource Mobilization and Management Policy to Cabinet as Information Paper
11) Presentation at Consultative Group Meeting in June 2007
