Revamp interest rates on loans to Africa

Minister of Finance, Ken Ofori-Atta

Finance Minister Ken Ofori-Atta has called on development partners who lend to African countries to reconsider the interest rates charged on loans for infrastructure development in poor countries.

Mr. Ofori-Atta argued that the difficult conditions of recent times, particularly the COVID-19 pandemic and Russia’s invasion of Ukraine, have made it difficult for developing countries in Africa to pursue planned policies aimed at reducing poverty.

He pointed out that, for example, foreign currency debt securities have also worsened the plight of countries in Africa due to soaring global interest rates; a situation that needs to be approached holistically to create balance.

“Really, if you look at the debt stock across the continent, it’s not looking as expected. Just last year [2021] Ghana’s debt to GDP ratio was around 65%, and now this year [2022] it jumped to 81% of GDP; and really, the foreign component is the challenge,” Ofori-Atta told a European Union (EU) delegation that signed two separate agreements with the government for a total of 247.7 million euros.

Citing the invasion of Ukraine as a case in point that could affect the growth of agriculture in Ghana, Mr. Ofori-Atta urged the EU delegation to re-examine the distribution of fertilizers across the world, given that Ghana is highly dependent on Ukrainian and Russian product.

“The issue of fertilizers is a major challenge that needs to be really looked at because it will have serious impacts on agriculture in this part of the world,” he said.

EU and Ghana sign €203m deal

As part of the visit, the EU, led by European Commissioner for International Partnerships, Ms. Jutta Urpilainen. signed a financial agreement of €203 million with the Minister of Finance of Ghana within the framework of the multiannual indicative program for Ghana for 2021-2027.

The new program is part of the EU’s new Global Europe Funding Instrument to support green growth jobs, smart and sustainable cities, and good governance and security.

According to the EU Delegation, the priorities were determined jointly with the Team Europe partners, in close consultation with the Ghanaian authorities, civil society and other relevant stakeholders.

“Ghana is a strategic partner for the EU in West Africa, as an economic powerhouse and anchor of stability in the region. The EU sees concrete opportunities to deepen our partnership by working together on Ghana’s green and digital transition, the security situation and at the multilateral level by promoting our common values,” Ms. Urpilainen said.

She hopes that the EU Global Gateway strategy will serve as a framework for the Ghana-EU partnership to boost smart, clean and secure connections for quality investments in Africa.

She explained that the multi-annual indicative program will take the form of joint programming for Ghana between 2021 and 2027.

Ghana will receive 44.7 million euros

As part of measures to boost agricultural production in Ghana, the EU has also signed a separate €44.7 million agreement with the Government of Ghana to build irrigation dams in northern Ghana, with the support of France within the framework of the agricultural water management project (AWMP).

The fund should finance the rehabilitation and construction of 15 dams, 11 boreholes and nine pumping stations on the Volta Noire.

The project will be overseen by the Ministry of Food and Agriculture, the French Development Agency (AFD) and the Ghana Irrigation Development Authority.

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