Impact of USAID Freeze on Ghana

by Bismark Akoto

Over the past few weeks, there has been a sudden pause in US humanitarian assistance including that funded by the United States Agency for International Development (USAID) for an initial 90-day period. USAID was set up in the early 1960s to administer humanitarian aid programs on behalf of the US government. Since the directive, many countries including Ghana are reeling about the adverse effect this would have on some critical sectors of the economy.

USAID funding has been instrumental in Ghana’s health, education, agricultural, and governance sectors. Through its Feed the Future initiative for example, USAID supports smallholder farmers, particularly in northern Ghana, where poverty is prevalent, with improved seedlings and agricultural technologies. This has increased food production, built resilience among farmers, and alleviated hundreds of people from the impact of malnutrition. Whereas the Accountable Democratic Institutions and Systems Strengthening (ADISS) program has supported the fight against corruption and deepened transparency in local governance, the Ghana Partnership for Education project has supported the education ministry’s drive to improve, expand and sustain learning outcomes for over 2 million primary school children since 2014. In the health sector alone, over $45 million was recently provided by the US Government through USAID to improve adolescent, maternal, child health, and nutrition under the Integrated Health Partnership project (2024-2029).

With this funding support halted, Ghana faces immediate consequences, particularly related to public health. Essential medications such as malaria vaccines, antiretrovirals, and other critical health supplies are likely to run out of stock, affecting critical healthcare service delivery and patient care. Beyond health, the withdrawal of financial and technical expertise to rural farmers could potentially lead to hikes in food prices and the loss of employment could negatively affect economic growth.

Although other development partners such as the European Union are predicted to step in to bridge the funding gap, this moment should serve as a wake-up call. This is the time to mobilize and take urgent steps to become more self-reliant. One of the key actions to take is to increase domestic resource mobilization through expansion of the tax collection system and reduce revenue loopholes. Like Nigeria, the Ghanaian government should consider issuing dollar-denominated diaspora bonds to attract investments from Ghanaians abroad, particularly those with savings held overseas, as no country develops with absentee citizens. Additionally, public-private partnerships must be encouraged. Through a Build-Own-Operate-Transfer (BOOT) agreements, capital-intensive projects like road construction could be implemented, operated, and later transferred to government by the private sector after their investments have been recovered through road tolls. This will enable government to spend on other critical sectors of the economy such as the health sector, while reducing the public debt.

In conclusion, the freeze of US foreign aid has had a complex and multisectoral effect in Ghana. Despite the myriads of challenges, the situation presents an opportunity for resilience, innovation, and creative thinking starting with a clamp down on profligacy, corruption, and bad governance.