Climate Adaptation for Ghana's Business Sector

What leading fiscal policy practices from comparable developing countries might support Ghana’s goals in building a business environment focused on climate adaptation and mitigation?

This executive summary lays out highlights from the report Strengthening a Ghanaian business environment aligned with climate adaptation, written by Max Bell School Master of Public Policy students Coreen Enos, Gianna Formica, Isabel Diavolitsis, and Vivian Allison as part of the 2023 Policy Lab.

Access the summary and presentation below, and read their full report here.



The following policy brief discusses recommendations in response to this challenge question from the Ghana Climate Innovation Center (GCIC): What leading fiscal policy practices from comparable developing countries might support Ghana’s goals in building a business environment focused on climate adaptation?

Overview

As a country located in West Africa, Ghana is already experiencing severe climate impacts. The increasing volatility of weather patterns will cause the Ghanaian economy to suffer, even if the foundations for prosperity are in place. For instance, Ghana is a largely agrarian economy reliant on stable weather patterns to predict planting and harvesting seasons, but due to climate change, agricultural income is no longer predictable or reliable. Additionally, Ghana suffers from erratic rainfall patterns, drought, power outages as a result of unreliable hydropower, and flooding among other things. Especially since Ghana is an agriculture-based economy, these climate crisis-induced changes are devastating for the livelihood and security of all Ghanaians. Therefore, climate adaptation and building the resilience of this highly impacted country are urgent priorities.

To create creative and feasible recommendations based on the Ghanaian context, the student team completed stakeholder consultations, literature reviews, and conversations with professors. Stakeholder consultations consisted of agri-business owners, renewable energy companies, non-profit employees, government officials, and more. Most of these were based in Ghana to understand the grounded context of climate change impacts and adaptation possibilities, but consultations also included stakeholders from various countries who have a vested interest in the success of climate adaptation. Furthermore, an extensive review of literature on the following topics was necessary to gain background information and provide scope to guide our recommendations: climate impacts on Ghana, climate adaptation opportunities and challenges, the role of the private sector, Ghana’s overall economy, Ghanaian politics, environmental legislation, climate adaptation in comparable countries, and how Global Affairs Canada (GAC) funding works. Last, several conversations with economics, evaluation, and agriculture professors further informed this brief’s recommendations and helped to identify the main barriers as well as their possible solutions.

Key Insights

As a result of stakeholder consultations and literature reviews in conjunction with academic experts and policymaker mentors, the following key insights became clear: the significance of agriculture in upholding Ghana’s economy, how Ghanaian climate adaptation strategies are not always followed by implementation, that financial access and risk are large barriers to strengthening the climate adaptation-based economy in Ghana, and how education must play a significant role in increasing national awareness and capacity for climate adaptation. Due to the key insight that agriculture takes up a large proportion of the Ghanaian economy and is one of the most climate-impacted sectors, it became clear that the most pressing transformation for the resilience of Ghana must relate to smallholder farmers (SHFs). SHFs, or farmers operating on a small scale, as one of the most vulnerable groups to climate change, prop up the financial stability of Ghana through their agricultural productivity and individual incomes. In addition, SHFs’ climate-smart practices generate longer-term resilience for Ghana’s land, people, and any future advancements or pivots in the economy. Consequently, to promote opportunities for and the success of climate adaptation, fiscal policies must improve SHFs' access to capital, increase crop production, and promote education to build a more resilient and sustainable economy in Ghana.

Policy Recommendations

Four categories of change related to fiscal policy and supporting the livelihoods of SHFs as an important group contributing to climate adaptation became evident and essential for any set of recommendations. These were: innovations for access to finance, land protection, education, and monitoring and evaluation systems.

First, SHFs’ access to capital and incentives for investment in agriculture are major barriers and thus impede their ability to go about their agricultural practices in a climate-smart way. SHFs’ reliance on lower-quality inputs for farming leads to unproductive crop seasons, which are worsened by climate change, thus discouraging investment in agriculture from younger populations. As such, SHFs must gain greater access to financial capital and insurance instruments to invest in climate-smart farming practices. The first recommended method through which to do this is to invest in Village Savings and Loans Associations (VSLAs). As SHFs are mostly in rural communities where access to formal finance is limited, VSLAs become an essential way in which individual farmers can gain financial literacy and financial stability, and therefore, the tools to invest in quality farming input. A second suggestion is to introduce a Weather Index Insurance (WII) scheme for SHFs dealing with erratic climate patterns. This provides an alternative to traditional insurance schemes that are failing agriculture in the face of climate change, as they often do not distinguish between climate change and farming failures. Since WII can make this distinction, it provides financial stability to farmers who have experienced extreme weather events. Further, proper insurance schemes encourage agriculture investment as they incentivize investment in a declining but crucial industry. The recommended combination of VSLAs and WII encourages greater stability in the Ghanaian agri-business sector and thus builds Ghana’s business environment with climate adaptation as a priority.

Second, land protection includes strategies focused on rebuilding the resilience of Ghanaian land and strategies for responding better to new climate patterns. The first of these is a suggestion to invest in items like tree planting and climate-smart agriculture (e.g., organic inputs). The second strategy calls for investment in technological inputs such as early warning and crop monitoring systems, which will better prepare SHFs for a changing climate, and thus allow them to have more sustainable and stable incomes. As the incomes of SHFs become more stable, greater economic activity can happen in Ghanaian markets through agricultural investments, and therefore, Ghana’s overall economy will become more stable. In this way, land protection becomes significant for climate adaptation and Ghanaian prosperity.

Third, educational changes to build awareness and promote the proliferation of climate adaptation information throughout existing Ghanaian systems are essential. Two recommendations arise: investing in Farmer Field Schools (FFS) and creating a climate adaptation-focused mandate within the National Service Scheme (NSS). First, we recommend that the Ghanaian government collaborate with other stakeholders to create and subsidize resources for climate change-focused FFS. FFS can promote income generation by providing SHFs with education on climate-smart farming practices and financial literacy. In addition, this is a relatively cheap participatory and field-based approach that encourages SHFs to adapt new methods and technologies. Secondly, adjusting the NSS to add a climate adaptation-focused section of labour deployment will help promote education and awareness of climate adaptation strategies in the agribusiness sector. The NSS is a year-long mandatory program for all citizens of Ghana who are 18 years of age. Through this Scheme, Ghanaian young adults are assigned to a posting across the country to work. NSS postings can be urban, rural, agricultural, or in another sector of the economy. The NSS recommendation is two-fold: first, the Government of Ghana introduces adaptation-themed training for participants to learn and then utilize this knowledge wherever they end up; and second, the Government of Ghana increases the number of agribusinesses participating in NSS placements. Through FFS and NSS, this recommendation develops the awareness of climate adaptation strategies in farming, thus promoting a more resilient business sector.

Throughout all of the other three main recommendation areas, there remains a major barrier: monitoring and evaluation (M&E) capacity, practice, and use of results to continue a healthy cycle of policymaking. As such, the final essential component of transforming Ghana’s economy into a climate-adaptive and resilient engine is M&E. Without the responsiveness and information-based change that robust and comprehensive evaluation provides, Ghana will continue to face the same barriers to stimulating its business sector. In addition, we suggest that any M&E is grounded in the realities of Ghanaian life. To do so, it is strongly recommended that each recommendation category (access to finance, land protection, and education) has M&E systems tailored to the goal of building a business environment focused on climate adaptation. However, this can only happen effectively if evaluation teams perform M&E with cultural relevance and participatory methods suited to Ghanaian culture and life.

Finally, this brief will also recommend M&E changes for both GCIC’s organizational practices and Ghana on a national scale. First, it is suggested that GCIC invests in internal evaluation for the purposes of improving its own climate adaptation incubation programs and initiatives. Strengthening the reporting and evaluation capacity of GCIC and their incubated businesses will improve the success of climate adaptation practices in Ghana and also collect evidence to substantiate GCIC’s future demands of the Ghanaian government. To support GCIC’s capacity to perform internal evaluations, it is recommended that the organization either apply for a grant or repurpose resources from current funding streams to receive evaluation support and hire an evaluator employee. In the longer term, for continuous evaluation capacity building (ECB), we recommend that GCIC partners with local African evaluation organizations—not only GCIC’s incubation practices, but also the climate adaptation practices of their incubated businesses could be improved with greater ECB. With this internal evaluation and ECB in place, GCIC will be able to support evidence-based policymaking credibly and persuasively. As a result, GCIC will have greater capability to drive forward a Ghanaian business environment focused on climate adaptation.

A second recommendation is to support the creation of a strong, culturally relevant, and Ghana-led M&E system for the nation of Ghana. A Ghanaian evaluation repository and framework will promote decolonized solutions to development projects, local capacity and understanding, and national ownership of data, thereby ensuring policy relevance. Aspects of culturally appropriate evaluation that should be considered for use in such a repository or framework include participatory methodologies and proverbs. With a robust M&E system for the Government of Ghana in place, climate adaptation will be more successfully pushed as a priority for the country.

In conclusion, for the success of climate adaptation in Ghana, we recommend that fiscal policies focus on improving how SHFs access and contribute to the economy. Recommendations for how to do this are to improve their access to capital, protect land arability through tree planting, encourage greater crop production through better quality inputs, and promote education through farmer-focused courses as well as through youth awareness and practical knowledge in climate adaptation. Finally, throughout all these recommendations is a strong thread of robust monitoring and evaluation to assist in building a more resilient and sustainable economy in Ghana with substantiated evidence and a willingness to change.


Download the full version of this report here.


Authors: Gianna FormicaVivian Allison, Isabel Diavolitsis, and Coreen Enos

See the rest of the 2023 Policy Lab reports

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