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Introduction
Since 2004, Ghana has been one of the key African partners of the Millennium Challenge Corporation (MCC), a U.S. government agency established to promote sustainable economic growth and reduce poverty. Over the years, Ghana has benefitted from a threshold programme and two major compacts, each targeting different areas of the economy. On September 8, 2025, Ghana was declared ineligible for Millennium Challenge Corporation (MCC) assistance in fiscal year 2026.
Why the ineligibility status?
According to the corporation, the ineligibility status stems from a debt default restriction, as outlined in Section 7012 of the FY 2025 State, Foreign Operations, and Related Programs Appropriations Act. As a result, DUBAWA has decided to delve into the key projects that Ghana has benefited from, as well as the impact of our ineligibility status.
Threshold Programme
The first engagement between Ghana and the MCC was the Threshold Programme, implemented between 2006 and 2008 with a funding envelope of $55 million. The focus of this programme was on strengthening governance and economic management. It sought to improve procurement systems, enhance revenue collection through the Ghana Revenue Authority, and widen access to credit by supporting financial sector reforms. This phase was significant because it built Ghana’s institutional credibility and set the stage for larger investments in subsequent years.
First Compact – The $547 Million, Anti-Poverty Programme
The First Compact, which ran from 2007 to 2012, was approved on July 10, 2006, and represented Ghana’s most transformative phase of the MCC journey. Valued at $547 million, it targeted agriculture and rural development. Thousands of smallholder farmers benefited from irrigation schemes, improved seeds, and farmer-based organisations that boosted productivity.
Beyond agriculture, the compact also delivered critical infrastructure, notably rehabilitating Accra’s six-lane N1 Highway (popularly known as the George Bush Highway). Rural communities gained access to new schools, water facilities, and health infrastructure, linking development directly to poverty reduction.
Second Compact- The Power Compact
This shift, signed on August 5, 2014, and implemented between 2016 and 2021, focused on Ghana’s ailing energy sector. With $316 million from the MCC and $37 million in counterpart funding from the Government of Ghana, the programme sought to improve the reliability and efficiency of power distribution. It supported infrastructure upgrades such as substations and metering systems, provided training for the Electricity Company of Ghana (ECG) staff, and introduced reforms aimed at attracting private sector participation.
However, the centrepiece of this compact, the concession agreement between ECG and Power Distribution Services (PDS), collapsed in 2019 following contractual disputes and questions of ownership. While some technical improvements were achieved, the concession’s failure significantly limited the compact’s long-term impact. The compact officially ended on June 6, 2022.
The Africa Centre has done a complete assessment of the power compact for Energy Policy which was published in January 2020.
Impact
Key among the setbacks Ghana is likely to face is the pause in its negotiations to revive about $190 million in suspended MCC funding for energy reforms. As a result, Ghana will have to look elsewhere to support reforms in Ghana’s electricity distribution sector.
Conclusion
Ghana’s journey with the Millennium Challenge Corporation is therefore a mixed one. On one hand, projects such as the George Bush Highway and agricultural modernisation stand as lasting testaments to what well-managed aid can achieve. Looking forward, Ghana’s ability to regain MCC support will depend on its commitment to fiscal restructuring and deep governance reforms.
