Agricultural Aid to Ghana and Ethiopia under Different Governance Quality

Agricultural development has the potential to strengthen food security, reduce poverty, and accelerate economic growth, especially in the early stages of development. Considering the important roles that agriculture can play in economic development, foreign aid donors have supported agriculture across developing countries.

This study examined agricultural aid practices by bilateral donors in two African countries, Ghana and Ethiopia using official aid data. The two economies rely on agriculture, continue to receive agricultural aid, and have widely different governance qualities, with Ghana being considered better governed than Ethiopia.

The study found that donors to Ghana prioritized agriculture over other aid sectors, whereas donors to Ethiopia did not prioritize agriculture, partly because of urgent humanitarian needs that included direct food assistance. Overall, donors to Ghana appeared to give the country more flexibility with agricultural aid by allocating more budget support, using the state channel, and partnering more with developing country-based non-governmental organizations. Donors to Ethiopia, by contrast, appeared to exert stricter control over agricultural aid by providing minimal budget support, making limited use of the state channel, and engaging negligibly with nongovernmental organizations based in developing countries. The largest donor, the US, shaped the overall profile of agricultural aid to Ghana and Ethiopia. While supporting two identical agricultural sub-sectors in both African countries, the US involved different aid agencies, reflecting greater confidence in Ghana.

Effective institutions in recipient governments may encourage donors to loosen their control over foreign aid, granting greater flexibility to recipient countries.