Ghana Productive Safety Net Project 2 - Additional Financing

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The COVID-19 pandemic, followed by the ongoing war in Ukraine has led to a serious economic downturn in Ghana, affecting the poor and vulnerable. According to the last published COVID-19 Households and Jobs Tracker from the Ghana Statistical Service (GSS), two-thirds of households indicated that their income had not recovered to pre-COVID-19 levels as at end 2021. When asked about what shocks households experienced due to COVID-19 since March 2020, about three quarters (73.4 percent) indicated that they experienced an increase in the price of major food items consumed and 58.7 percent of households indicated that they were affected by school closures. The inflationary pressures triggered by the war in Ukraine have created an additional negative shock for the purchasing power of the poorest, particularly on account of increased food prices. According to GSS, the year-on-year inflation rate as measured by the CPI was 54.1 percent in December 2022. Food and non-alcoholic beverages experienced inflation of 59.7 percent during the same period. Ongoing macroeconomic instability, notably high inflation, is particularly hard on the poorest, particularly given that expenditure on food accounts for 43 percent of total expenditure by households in the bottom 40 percent. Further, the fact that social assistance program benefits are not indexed to inflation means that during these times, the poor and vulnerable, even those on the Livelihood Empowerment Against Poverty (LEAP) cash transfers program, are not adequately cushioned. LEAP benefit amounts have been raised only two times since the start of the program in 2008 and the real value of the LEAP transfer has fallen by 56 percent since its last upward revision in 2015. At the same time, governments fiscal space to finance social spending has reduced, due to the country’s current debt distress situation, with the country’s gross debt to GDP ratio having reached 87.8 percent in 2023 according to the International Monetary Fund (IMF) . The Ghana Productive Safety Net Project (GPSNP) 2 became effective on January 21, 2022. The project development objective (PDO) is to expand and enhance social safety nets that improve the incomes and productivity of the poor in Ghana. GPSNP 2 has the following components: (i) Productive Inclusion Program; (ii) Labor Intensive Public Works Program; (iii) LEAP Cash Transfers Program; (iv) Social Protection Systems Strengthening; (v) Project Management, Coordination, and Capacity Building; and (vi) Contingent Emergency Response Component. GPSNP 2 is progressing well towards the achievement of the PDO, outputs and implementation progress (IP) ratings and is compliant with key loan covenants. Progress on components are described below:Productive inclusion: Complementary Livelihood and Asset Support Scheme (CLASS). Preparatory activities and first phase beneficiary targeting have been completed. These include: (i) the sensitization and orientation of District Assemblies (DAs), Regional Coordination Committees (RCCs) and other key stakeholders; (ii) the constitution and ongoing training of District Committees in 41 new districts; (iii) targeting of communities and Income Generating Activities (IGAs) in new districts; and (iv) enrollment of 8,803 beneficiaries into the project MIS (out of a total target of 35,000 by end of 2025). The World Bank also supported government in undertaking a needs assessment to shape the design of the urban PI activities through complementary technical assistance. LIPW: Achievements include commencement of works in 170 subproject communities involving over 5,400 beneficiaries out of a target of 467 subprojects and 60,000 beneficiaries, respectively. Activities completed also include: (i) the orientation of key stakeholders across 100 municipal and district assemblies and 16 RCCs; (ii) training of district engineers; (iii) Management Information System (MIS) training across districts; (iv) appraisal of 631 subprojects; (v) design of 114 feeder roads and small earth dams; and (vi) pre-tender training to 83 firms on the skills needed to tender for LIPW contracts. LEAP: LEAP bi-monthly unconditional cash transfers are ongoing, currently reaching 346,019 households, comprising 1,533,747 individuals against a target of 350,000 households and 1,540,000 individuals. The planned reassessment of LEAP beneficiaries has also commenced, with community validation and verification ongoing across the pilot reassessment districts. Completion of the reassessment exercise is expected by end of 2023. Innovations under the LEAP program have included close collaboration with the National Health Insurance Authority that has led to the enrollment of almost 80 percent of LEAP beneficiaries to receive free healthcare through the scheme and fully operationalizing the MIS to appropriately track program implementation.SPSS: Data collection for the Ghana National Household Registry (GNHR) is ongoing, with the completion of full census data collection for 8 out of the 16 regions. Further, through continued collaboration with the Ghana Statistical Services (GSS), the GNHR is leveraging the 2021 Population and Housing Census to complete all remaining 8 regions, after which the Registry will focus on dissemination and updates. The Single Window Citizen Engagement Service (SWCES), which provides a digitalized unified grievance redress mechanism for the main social protection programs and gender-related issues, is operational. Another key achievement under SPSS has been the development of an integrated Social Protection Monitoring and Evaluation Management Information System (SP MEMIS) across four of the flagship social protection programs in Ghana. Project management, coordination, and institutional strengthening: The component is continuing to support administrative, procurement, financial management capacity building, and project oversight activities for the effective implementation of the other components.Contingent Emergency Response Component has not been activated as no eligible emergency has occurred.The Additional Financing proposes to scale-up the safety nets supported by GPSNP 2’s existing components as well as introducing support to the Ghana School Feeding Programme (GSFP) as a new subcomponent. Specifically, the requested financing has the following goals: (i) scale up existing social safety net components to additional beneficiaries (PI, LIPW and LEAP); (ii) increase the transfer value of LEAP cash transfers to improve their adequacy given the erosion of their value due to inflation over the years; (iii) strengthen social protection systems and improve their responsiveness to future shocks; and (iv) provide financing to the GSFP, to support government both in terms of financing for food transfers through payments to caterers for the preparation of daily school meals for children; and financing the technical assistance needed to improve systems and operations of the program. The changes brought about by the AF are therefore: (i) increasing financial allocations to existing components; (ii) restructuring component 3 to introduce a subcomponent for financing to the GSFP; and (iii) revising the Results Framework to account for new activities. No changes are proposed to the PDO nor to the project closing date of December 31, 2025.The proposed AF is aligned with World Bank corporate strategies and joint frameworks with the Government of Ghana. The AF is directly aligned with the World Bank’s Country Partnership Framework (CPF) for Ghana, 2022 – 26 (Report No. 157249-GH). Specifically, the project contributes to Focus Area 3: Promoting resilient and sustainable development. The proposed AF is also consistent with the World Bank’s 2012–22 Social Protection and Labor Strategy: Resilience, Equity, and Opportunity and Human Capital Project (Report No. 73235); Africa Human Capital Plan: Powering Africa’s Potential Through Its People; as well as the World Bank’s GCRF report (Report No. 174