Ghana will not receive funding from the United States’ Millennium Challenge Corporation (MCC) in fiscal year 2026 due to a debt default restriction in U.S. law.
The move is a setback for a long-standing African partner of the aid agency, which has supported the country since 2004.
Two Decades of MCC Partnership
Over the past 20 years, Ghana has participated in three major MCC initiatives. The first, a $55 million Threshold Program from 2006 to 2008, aimed to strengthen governance, improve tax collection through the Ghana Revenue Authority, and expand access to credit.
Analysts say this early program laid the groundwork for larger projects that followed.
The first major compact, worth $547 million and running from 2007 to 2012, focused on agriculture and rural development. It helped thousands of smallholder farmers gain access to irrigation, better seeds, and organised farmer groups, boosting productivity.
Infrastructure improvements included the upgrade of Accra’s six-lane N1 Highway, widely known as the George Bush Highway, along with new schools, water facilities, and healthcare centres.
These projects were widely praised for linking infrastructure investment to poverty reduction.
Energy Sector Reforms Hit by Setbacks
Ghana’s second MCC compact, the $316 million Power Compact signed in 2014 with an additional $37 million in local funding, aimed to modernise the country’s energy sector.
The programme focused on electricity distribution improvements, staff training at the Electricity Company of Ghana (ECG), and private sector reforms.
However, the core agreement with Power Distribution Services collapsed in 2019 due to contractual disputes, limiting the compact’s long-term impact. The programme officially ended in June 2022.
The MCC’s recent announcement puts about $190 million in planned energy reform funding on hold. Experts say Ghana will need alternative sources to continue modernising its electricity distribution system.
Legacy and Future Challenges
Despite the setback, Ghana’s experience with MCC-funded projects demonstrates the potential impact of well-managed aid. Infrastructure achievements, such as the George Bush Highway, and improvements in agriculture remain tangible successes.
Observers note that Ghana’s eligibility for future MCC funding will depend on implementing fiscal and governance reforms.
The situation highlights the delicate balance between development assistance and domestic financial management, a lesson relevant for other African countries pursuing U.S.-backed development programmes.