USAID shutdown: Alternative sources of funding needed

The United States Agency for International Development (USAID) has been a vital partner in Ghana's development agenda for decades, leaving an indelible mark on various sectors, including health care, education, human rights, agriculture and democratic governance. 

The agency's contributions have been instrumental in ensuring free and fair elections, enhancing local governance and promoting accountability in public institutions.

USAID's funded projects have generated employment opportunities for thousands of Ghanaians, both directly and indirectly, through local NGOs, contractors and businesses. 

However, the threat of the agency’s global shutdown poses a significant risk to over 30 million citizens across the healthcare, education and agricultural sectors.

One notable initiative is the agency's five-year partnership with the Ghana Health Service, launched in 2024, which committed $18.8 million to enhance health service delivery.

Again, the potential loss of USAID funding is likely to affect Ghana’s national budget significantly. In the 2024 budget, over $8 million from USAID was anticipated to be utilised as part of bilateral and multilateral grants.

While this amount may seem relatively modest compared to other incoming funds, its loss compels the Ghanaian government to seek alternative financing to continue essential projects, many of which operate on a five-year cycle.

The suspension of USAID's funding would inevitably lead to a substantial shortfall in resources, forcing Ghana to rely on its own finances.

President John Dramani Mahama has responded to the development by instructing Finance Minister Dr Cassiel Ato Forson to address the funding gap created by the suspension of USAID's international funding programme.

The President expressed deep concern over the estimated $156 million funding shortfall, particularly the projected $78.2 million shortfall that would impact critical interventions such as malaria prevention, maternal and child health, and the fight against HIV/AIDS.

The loss of this funding would severely limit Ghana's ability to combat diseases, improve its education system and promote economic growth.

In the short term, the suspension of USAID will create economic pressures, especially in health, education and agriculture. However, this challenge also presents an opportunity for Ghana to develop alternative revenue streams, such as increasing domestic tax collection, improving local industries and attracting more private investment.

The government may consider exploring African-based funding mechanisms and regional partnerships, such as the African Continental Free Trade Area (AfCFTA), which would promote intra-African trade and reduce dependency on Western aid.

With access to the over 1.3 billion-person market, businesses could scale up production and exports, reducing dependence on US assistance.

While the funding gap and economic pressures are significant concerns, the government can leverage this opportunity to develop alternative revenue streams, explore African-based funding mechanisms and accelerate the Ghana Beyond Aid agenda.

The Daily Graphic takes the view that, as the country faces the potential loss of USAID funding, it is crucial to consider strategies for building resilience and fostering self-reliance.

While the challenges are significant, they also present an opportunity for Ghana to reassess its development strategies and explore new avenues for growth and sustainability.

The suspension of funding should encourage us to diversify our funding sources and explore public-private partnerships.

We must also strengthen domestic resource mobilisation to reduce dependence on external aid and invest in capacity-building to enhance local expertise and implementation capabilities.

We must also leverage technology and innovation to improve efficiency and effectiveness across sectors.

By focusing on these areas, Ghana can work towards creating a more resilient and self-reliant development model that can withstand external shocks and changes in the international aid landscape.

Ultimately, the suspension of USAID funding presents a strategic opportunity to accelerate the Ghana Beyond Aid agenda.

Whether Ghana emerges stronger or struggles depends on how the government and its agencies adapt to this new reality.