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Ghana Secondary Cities Support Program Public Disclosure Authorized GHANA SECONDARY CITIES SUPPORT PROGRAM Public Disclosure Authorized TECHNICAL ASSESSMENT Draft 1.2 for discussion 13 June 2018 Public Disclosure Authorized Public Disclosure Authorized Acronyms and abbreviations AAP Annual Action Plan AC Audit Committee ACG Anti-Corruption Guidelines AFD Agence Française de Développement CAGD Controller & Accountant General Department CBF Capacity Building Framework CBFd Capacity Building Fund CHRAJ Commission for Human Rights and Administrative Justice CPF Country Partnership Framework CSG Capacity Support Grant CSU Client Service Unit DA District Assembly DACF District Assemblies’ Common Fund DDF District Development Fund DLI Disbursement-Linked Indicator DP Development Partner DPAT District Performance Assessment Tool DPCU District Planning & Coordination Unit EOCO Economic and Organized Crime Office ESSA Environmental and Social Systems Assessment F&C Fraud & corruption FDU Fiscal Decentralization Unit FOAT Functional and Organizational Assessment Tool GAS Ghana Audit Service GDP Gross Domestic Product GHC Ghanaian Cedis GoG Government of Ghana GRS Grievance Redress Service GSCSP Ghana Secondary Cities Support Program GSS Ghana Statistical Service GUMPP Ghana Urban Management Pilot Program HRM Human Resource Management HRMIS Human Resources Management Information System IGF Internally Generated Funds IGFF Inter-Governmental Fiscal Framework IGFT Inter-Governmental Fiscal Transfer IMCCD Inter-Ministerial Coordinating Committee on Decentralization IVA Independent Verification Agency LED Local Economic Development LG Local Government LGCSP Local Government Capacity Support Project LGS Local Government Service LUSPA Land Use and Spatial Planning Act LUSPAu Land Use and Spatial Planning Authority MA Municipal Assembly MC Minimum Condition MDA Ministries, Departments and Agencies MDG Millennium Development Goal MLGRD Ministry of Local Government & Rural Development MMA Municipal and Metropolitan Assemblies MMDA Metropolitan, Municipal and District Assemblies MoF Ministry of Finance MoU Memorandum of Understanding MP Member of Parliament MTDP Medium Term Development Plan NALAG National Association of Local Authorities in Ghana NDAP National Decentralization Action Plan NDPC National Development Planning Commission NDPF National Decentralization Policy Framework NUPF National Urban Policy Framework OHLGS Office of the Head of the Local Government Service OSP Office of the Special Prosecutor OSR Own-Source Revenue PAP Project Affected People PB Performance Benchmark PDO Program Development Objective PFM Public Financial Management PM Performance Measure PPBME Policy Planning, Budget, Monitoring and Evaluation PPP Public Private Partnership QAR Quality Assurance Review RCC Regional Coordinating Council RFG Responsiveness Factor Grant RIAP Revenue Improvement Action Plan SC Steering Committee SWAp Sector Wide Approach SWM Solid Waste Management TWG Technical Working Group UDAP Urban Development Action Plan UDG Urban Development Grant ULG Urban Local Government Table of Contents I. PROGRAM DESCRIPTION .................................................................................................. 5 A. Background .................................................................................................................. 5 B. Government program ......................................................................................................15 C. The Proposed Program ......................................................................................................24 D. Choice of Instrument .......................................................................................................47 E. Program DLIs .................................................................................................................49 II. ASSESSMENT OF PROGRAM STRATEGIC RELEVANCE AND TECHNICAL SOUNDNESS 52 A. Strategic relevance ............................................................................................................52 B. Technical soundness ........................................................................................................53 C. Institutional and implementation arrangements ...............................................................61 D. Grievance redress mechanisms, fraud and corruption ......................................................66 III. ASSESSMENT OF PROGRAM EXPENDITURE FRAME-WORK.......................................68 IV. RESULTS FRAMEWORK AND M&E ..............................................................................70 V. PROGRAM ECONOMIC EVALUATION .............................................................................75 VI. PROGRAM ACTION PLAN .............................................................................................76 VII. TECHNICAL RISK RATING ............................................................................................82 Annex 1: DLI matrix and protocols .................................................................................................... 84 Annex 2: Performance Benchmarks (PBs) – indicators, scoring and assessment process............92 Annex 3: Program Operations Manual: annotated structure .................................................. 111 I. PROGRAM DESCRIPTION A. Background Country context 1. Over the last two decades, Ghana’s GDP has consistently grown (and at a higher rate than many other African countries), albeit with significant inter-annual variations. Annual GDP growth over the period 1997-2005 hovered between 3.7% and 5.9% and between 4.8% and a high of 14.0% over the period 2008-2013. As a result of economic growth, Ghana transitioned to lower middle income status in 2010. However, since 2014 GDP growth has slowed down dramatically, dropping from a peak of 14% in 2011 to a current low of 3.6%. Ghana’s recent pattern of relatively slow growth can be largely attributed to: (a) inappropriate fiscal policy choices (and increasing public debt); (b) fluctuations in the global prices for the country’s principal commodity exports; and (c) more recently, energy shortages and their negative consequences for industry and services. Figure 1: Annual GDP growth (1997-2016) Ghana: annual GDP growth 16.0 14.0 12.0 10.0 % 8.0 6.0 4.0 2.0 - 2006 2016 1997 1998 1999 2000 2001 2002 2003 2004 2005 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year Source: World Bank data 2. In the medium term, however, Ghana’s GDP growth rate is expected to reach around 6 to 7 percent in 2017 and 2018, assuming that fiscal consolidation proceeds and as oil and gas production rises and as the energy supply resumes. Nonetheless, the economy remains vulnerable to external shocks and to fiscal performance. 5 3. Over the last two decades, and consistent with overall growth, the structure of Ghana’s economy has changed a good deal. As in many other developing countries, the importance of agriculture has declined, from 40% of GDP in 1997 to 20% of GDP in 2016. The importance of industry has remained fairly constant over the period, with a relative decline in the mining and manufacturing sectors being offset by rising oil and gas production since 2010. Services (as elsewhere in the developing world) have become increasingly important – the service sector accounted for a little over 30% of GDP in 1997, but today accounts for over 50% of GDP. Figure 2: GDP structure (1997-2016) Ghana: structure of GDP 100.0 90.0 80.0 70.0 60.0 % of GDP 50.0 Industry 40.0 Services 30.0 Agriculture 20.0 10.0 - 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1997 Year Source: World Bank data 4. Growth, combined with pro-poor policies, has contributed to significant poverty reduction over the last two decades, enabling the country to achieve MDG1, the eradication of hunger and extreme poverty. Between 1991 and 2012, Ghana’s poverty rate fell from 52.6 to 21.4 percent, less than half the African average; moreover, extreme poverty declined from 37 to 11.2 percent over the same period. These are major achievements, even though the pace of poverty reduction has slowed from 11 percent between 1998 and 2005 to 7.1 percent in the period 2005- 12 – and has slowed even more in the last five years. 5. Non-monetary poverty has also declined in Ghana. In the health sector, infant mortality declined from 57 deaths per 1,000 live births in 1998 to 41 in 2014, while under-5 mortality declined by more than half. Ghanaians are now more educated: between 1991 and 2012, the share of the labor force without primary school education almost halved, from 41 to 24 percent. 6. Poverty reduction has been unevenly distributed across Ghana and inequality has grown. Economic growth and increased employment opportunities have been most marked in urban areas, especially in the Greater Accra and Kumasi regions. Other, less urbanized, regions 6 have not been so fortunate. Poverty rates have fallen below 20 percent areas that include the Ashanti, Eastern, Greater Accra, and Western regions, southern Brong Ahafo Region, and coastal Volta Region. However, the poverty rate is far above 40 percent in most districts in the north. As a result poverty has increasingly become concentrated in rural areas and in the Northern part of the country: one out of three poor people live in the northern rural areas while in 1991 it was only one out of five. Within regions, poverty is unequally distributed – rural areas are consistently poorer than urban areas. Sector and Institutional Context Urbanization
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