Ghana will not receive any Millennium Challenge Corporation (MCC) funding in 2026 because of a U.S. law about debt. This puts about $190 million meant for Ghana’s energy sector at risk. It’s a setback for Ghana, which has worked closely with the U.S. aid group since 2004.
Over the past 20 years, Ghana has made three major agreements with the MCC. The first brought $55 million between 2006 and 2008 to improve governance, strengthen tax collection through the Ghana Revenue Authority, and make loans more accessible. Many believe these efforts helped Ghana prepare for larger projects later.
The next major agreement provided $547 million from 2007 to 2012, focusing on agriculture and rural development. Many small farmers received support such as irrigation and improved seeds, and they formed groups to increase production. The program also upgraded the George Bush Highway in Accra and built schools, water facilities, and clinics. These projects were widely seen as transformative, linking infrastructure spending to poverty reduction.
Ghana’s second agreement, called the Power Compact, was signed in 2014. The MCC contributed $316 million, and Ghana added $37 million to improve the energy sector. The program upgraded electricity distribution, trained staff at the Electricity Company of Ghana (ECG), and encouraged private sector involvement. However, the main partnership with Power Distribution Services ended in 2019 due to contract disputes, which disrupted the plan. The project concluded in June 2022.
With this announcement, about $190 million intended for the energy sector is now at risk. Experts say Ghana will need to find alternative funding sources to continue improving its electricity system.
Although this is a setback, Ghana’s experience with the MCC shows that aid can be effective when managed well. Projects like the George Bush Highway and agricultural improvements remain as evidence of the benefits of these partnerships. Observers note that if Ghana wants MCC funding in the future, it will need to improve its financial management and governance.
Ghana’s experience with the MCC highlights the challenges of balancing foreign aid with responsible financial management. It serves as a lesson for other African countries receiving aid from the U.S.
