Closed Compact Report: Ghana Compact | June 2017

Agriculture Project

  • $240,984,000Original Compact Project Amount
  • $188,731,530Total Disbursed

Estimated Benefits

Time of calculation Estimated Economic Rate of Return over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years ($ millions)
Commercial Training, Irrigation, Land and Credit Activities At the time of signing 22.0% 298,882 $105.7
Irrigation Activity At the time of signing 15.0% 49,247 $8.5
Post-Harvest Activity At the time of signing 42.0% 126,035 $69.1
Feeder Roads Activity At the time of signing 18.0% 878,121 $26.8

The Commercial Training, Irrigation, Land, and Credit Activities were originally conceived as a tightly integrated project at the time of compact signing and are represented by one ERR. Only the benefit streams for the irrigation activity can be broken out separately.

MCC policy does not allow for a compact funding envelope to be increased, but MCC’s programming flexibility does allow the partner country and the agency to determine best use of compact funds even after a compact has been signed. The Ghana Compact took advantage of this flexibility as the timeline and budgetary pressures made it clear that certain activities, especially in the Agriculture Project, should not continue for reasons stated below, and that other compact projects needed additional funding. MCC policy is to update ERR information whenever new, important information on costs or progress against targets makes that an informative exercise or necessary for re-scoping. However, because the original ERR assumptions for this project no longer applied at the end of the compact, and because the necessary data to update them following closure is not available, ERRs for the Agriculture Project activities will not be updated. The final evaluation report will provide a post-compact ERR for the Feeder Roads Activity.

Project Description

At the time of investment, farming in Ghana was largely dominated by rain-fed production of crops for local consumption by smallholder farmers using rudimentary technology. Inconsistency in both the supply and quality of crops hampered Ghana’s ability to compete against other countries to supply regional and EU markets. Other barriers included poor connectivity to markets, limited access to credit, and insecure land tenure. The Agriculture Project was designed to enhance returns from staple food and horticulture crops produced by low-income smallholder farmers and improve delivery of business and technical services to support the expansion of higher value commercial agriculture in the Northern Agricultural Zone, Afram Basin Zone, and Southern Horticultural Zone through the following activities:

  • Commercial Training Activity

    The objective of the Commercial Training Activity was to accelerate the development of commercial skills and capacity among farmer-based organizations (FBOs) by providing training in management, business planning, technology applications, and marketing. To provide farmers with start-up capital and an incentive to participate in the training, each farmer was given a starter kit that contained fertilizer and seeds for one acre, protective equipment and a small amount of cash to facilitate land clearing. As a result of the training and starter kit, FBOs were expected to be more efficient in production, gain scale efficiencies in purchasing inputs, and competitively respond to commercial demands with necessary volume and quality.

  • Land Tenure Facilitation Activity

    The Land Title Facilitation Activity (LTF) was designed to increase investment and productivity by strengthening property rights.  With a focus on the Northern and Southern Zones, the activity sought to improve tenure security for existing land users and facilitate access to land for commercial crops through systematic provision of titles.  The activity was designed as a pilot to be executed in phases depending on the performance of the initial phase; however, limited funding and time, as well as local land disputes, led to the activity’s reduction in scope.  More information on the re-scoping can be found below.

  • Post-Harvest Activity

    The goal of the Post-Harvest Activity was to make the Ghanaian horticulture export industry a significant supplier of fruits and vegetables to the European Union (EU) and other export markets. The activity included the improvement of public sector capacity to meet International Plant Protection Convention (IPPC) standards, as well as a series of related investments that were designed to develop post-harvest handling capacity that maintains the quality of product from the farm to the market.

    The Small-Scale Post-Harvest Infrastructure sub-activity was designed to provide small grants to small-holder farmers for the purchase of agricultural storage facilities. Based on experience however, MiDA and MCC later determined that the small-holder farmers would not be able to manage this equipment in a sustainable way. Instead, private sector businesses interested in grain and pulses storage were procured to partner with FBOs to set up Agricultural Business Centers (ABCs) that were sustainable over the long-term.

    The Public Packhouse sub-activity funded construction of three public packhouses – two for pineapples and one for mangoes – to serve the needs of small-holder farmers who do not produce enough to justify having their own packhouses.

    The Post-Harvest Activity also directly targeted Ghana’s pineapple exporters through the Sea Freight Pineapple Exporters’ Association of Ghana (SPEG) loan program. The program sought to increase the association’s competitiveness in overseas markets by facilitating the purchase and installation of post-harvest facilities and equipment that help improve handling of their export pineapples to achieve better product quality in their targeted markets. The loan was later converted to a one-time grant that would serve as revolving credit to SPEG’s members.

    The construction of the Perishable Cargo Center (PCC) facility at Kotoka International Airport is the final link of an integrated cold chain for the horticultural sub-sector that begins at the packhouses where products are initially cooled. By facilitating the air shipment of high-quality produce to overseas markets, the Center was expected to help generate higher market prices and increased volumes for its normal fruit and vegetable exports.

  • Feeder Roads Activity

    The Feeder Roads Activity sought to rehabilitate or reconstruct up to 950 km of feeder roads to promote development in the agricultural sector. The intended outcomes were to reduce transportation costs and time, and thereby increase access to major domestic and international markets. It also aimed to facilitate transportation linkages from rural areas to social service networks including hospitals, clinics and schools. Due to escalating construction costs, upgraded design standards and competing needs of other investments, the scope of the activity was changed and MCC rehabilitated or reconstructed 357 km of rural roads and provided designs for 329 km more for future investment.

  • Credit Activity

    The Credit Activity was intended to improve credit services for on-farm and value chain investments and was anchored by the Agricultural Credit Program (ACP) Fund. It was supported by sub-activities aimed at expediting the flow of credit to identified value chain activities, including building the capacity of bank officials in agricultural credit. In late 2009, it became clear that the ACP faced serious challenges, and a comprehensive review undertaken by MiDA and MCC revealed significant implementation issues. Despite implementing a series of remedial measures aimed at improving performance, the activity was canceled in 2011 for the following reasons:

    • The ACP loans were not being repaid by the beneficiaries.
    • Management and oversight by the Bank of Ghana did not meet MCC standards.
    • The Private Financial Institutions had poor capacity and poor internal controls over their loan portfolios.

    As a result, MCC required the Government of Ghana to refund back to the U.S. Government all MCC funding disbursed, minus amounts repaid and reallocated under the compact, amounting to roughly $6.7 million. More information can be found in the section below on compact changes.

  • Irrigation Activity

    Originally, the Irrigation Activity was conceived as a way to invest in a limited number of retention ponds and weirs (a low dam built across a river to raise the level of water or regulate its flow) as requested by the local FBOs in their business plans, where access to water was critical to their business success. It was estimated that this activity would cover up to 5000 ha. With additional information and cost estimates, this objective was changed to rehabilitate existing irrigation infrastructure and construct a new irrigation scheme. The newly defined project was designed to bring a total of 2,290 ha of land under irrigation, and was expected to improve the success rate of farmers who need water for their routine farming activities. This updated project scope also aimed to ensure sustainable management of all irrigation infrastructure funded by the compact. To do so, it introduced anchor farmers, large commercial farms that would provide continued technical assistance and ready markets for the FBOs, in the catchment areas.

    At the end of the compact, MCC funded training for 66,930 farmers in 1,242 farmer-based organizations. The compact also funded construction of 10 Agricultural Business Centers for grain storage, processing and marketing and three public packhouses for mangos and pineapples, as well as the construction of a cargo center to store perishable agricultural goods for shipment at the Kotoka International Airport in Accra. Approximately 360 km of roads connecting farmers to markets in rural areas were rehabilitated or upgraded, and two irrigation systems covering over 500 hectares were rehabilitated or constructed. Construction of a third irrigation system covering approximately 450 hectares designed by the compact was completed following compact closure using Government of Ghana funding and oversight.

Evaluation Findings

Commercial Training Activity

This impact evaluation, completed in 2014, was designed to evaluate the extent to which the training and starter kit provided by the compact led to increases in total land cultivated and increased labor hours for farm activities, or the use of higher-quality inputs. It also asked whether the activity changed the value or source of loans obtained by farmers and whether it increased crop income and yields for the farmers.

Although most operational targets, such as outputs and outcomes, were met or exceeded, the independent impact evaluation found mixed results in terms of income increases that could be attributed solely to MCC funded interventions in the three regions where the Commercial Training Activity was implemented. The evaluation did not find evidence of impact on yields or crop incomes on average across the three regions. However, statistically significant effects were detected in the northern region, where farmers’ annual crop income increased 80 percent relative to the control group, and a statistically significant decline of 75 percent in the southern region.  (No significant impact could be measured in the Afram Basin Zone.)

The evaluation also indicated that:

  • Trained farmers were more likely to obtain loans from formal sources than farmers in the control group;
  • An estimated increase in the use of improved seeds and fertilizers was driven by the free seeds provided in the starter kit. However, the value of improved seed use was never greater than the value provided free by the project, suggesting that the farmers may be unwilling to buy improved seeds at their real cost on an ongoing basis;
  • No impact on land under cultivation; and
  • No impact detected on labor hours for farm activities.

There are several factors that may contribute to these findings. First, the evaluation only captured impacts after one year, even though the original program logic assumed two crop cycles would be necessary to observe and measure a change in outcomes.  This was due to delays in implementation, which caused the time interval between the delivery of training to the treatment group and the control group to be reduced from two years to one year. Second, training activities may not have been tailored appropriately to the regional differences in farmer capacity and crops.

Status of the evaluation
Component Status
Final Evaluation Questionnaires are public. Final evaluation completed in 2014.

Land Tenure Facilitation Activity

The World Bank began an impact evaluation for the Land Title Facilitation Activity in 2011, seeking to assess the effect of land title registration on perceived tenure security, on investments in land, on access to credit, on the choice of cash vs. subsistence crops, and on land markets in the Awufu-Effutu-Senya District in Ghana.

Status of the evaluation
Component Status
Baseline Completed in 2011.  Report and de-identified data are public.
Midline Completed. Questionnaires are public.
Endline Questionnaires are public.  Final results expected in 2017.

Feeder Roads Activity

A performance evaluation of the Feeder Roads Activity will assess changes in prices of goods in local markets that are transported on the roads improved by the Activity over time. It will also examine changes in fees to transport goods and passengers to markets served by the feeder roads.

Status of the evaluation
Component Status
Baseline Completed in 2010.  Report and questionnaires are public.
Endline Final results expected in 2018.

Credit Activity

MCC planned to use an impact evaluation to measure the effect of increased access to credit.  However, MCC cancelled the evaluation of this activity. 5

Status of the evaluation:

Canceled.

Irrigation Activity

A performance evaluation of this activity was conducted to determine the effectiveness of the irrigation schemes for farmers in rural Ghana constructed with compact funding.  The three main research questions this evaluation intended to answer were: i) did the new irrigation schemes raise production from 2 to 3 crop cycles per year? ii) did irrigation result in diversification of crops and potentially higher yields? and iii) did irrigation increase labor requirements?

Status of the evaluation
Component Status
Baseline Completed in 2013.  Report is public.
Endline The final assessment is expected in 2017.

Post-Harvest Activity

Agribusiness Center (ABC) Sub-Activity

The evaluation is designed to provide a financial and social analysis of the 10 Agricultural Business Centers and services provided to their affiliated smallholder farmers. It examines what a viable business model looks like for an ABC, whether the ABCs are working with the anchor investor and FBO farmers as intended, what factors limit their use, and what benefits farmers derive from the ABCs.

Status of the evaluation
Component Status
Baseline Completed in 2013.  Report is public.
Endline The final assessment is expected in 2017.

Perishable Cargo Center Sub-Activity

A performance evaluation was conducted on the construction and equipping of a perishable cargo center at Accra’s Kotoka International Airport to support increased exports of fresh fruit and vegetables from Ghana.  The objective of the evaluation was to analyze the performance of the Perishable Cargo Center since it began commercial operations and to determine its likely sustainability, impact, and effectiveness.

Status of the evaluation
Component Status
Endline The final assessment is expected in 2017.

SPEG Loan Sub-Activity

A performance evaluation was conducted of the sub-activity providing grant financing to SPEG.

Status of the evaluation
Component Status
Endline The final assessment is expected in 2017.

Key performance indicators and outputs at compact end date

Key performance indicators and outputs at compact end date
Activity/Outcome Key Performance Indicator Baseline End of Compact Target Quarter 1 through Quarter 20 Actuals (as of Jun 2012) Percent Compact Target Satisfied (as of Jun 2012)
Commercial Training Activity Farmers trained in Commercial Agriculture 0 50,000 66,930 134%
Hectares under production with MCC support 0 53,060 58,568.1 110%
Credit Activity Portfolio-at-risk of Agriculture Loan Fund (%) 0 20 87.54 -338%
Value of loans disbursed to clients from agricultural loan funds 0 26,000,000 16,740,762 64%
Feeder Roads Activity Kilometers of feeder road completed 0 357.44 357.44 100%
Irrigation Activity Additional hectares irrigated with MCC support 0 4,200 513.6 12%
Land Tenure Activity Land parcels registered in the Pilot Land Registration Areas 0 3,500 1,481 42%
Parcels surveyed in the Pilot Land Registration 0 4,800 5,729 119%
Post-Harvest Activity Cooling facilities installed 0 12 10 83%
Volume of products passing through post-harvest treatments (metric tons) 0 385,120 36,641.3 10%

Explanation of Results

While the irrigation systems funded by the Irrigation Activity in the Northern Zone were operational by the end of the compact and the irrigation system in the Southern Zone was completed with Government of Ghana funding in 2016, the activity was not complete at compact closure. This was due to delays in starting construction of the irrigation systems, challenges in coming to agreement on appropriate management structures, and poor contractor performance.

In the Land and Post-Harvest Activities, performance indicators show lower than expected achievement because targets were not updated to reflect the re-scoped activities. The Agricultural Credit Program under the Credit Activity was not implemented as planned and MCC therefore, claimed a refund from the Government of Ghana in May 2012 for the full amount disbursed.