EUTF ‘GrEEn’ project in Ghana

overall rating:

1

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Chiara Savanco
3/5/2022
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The ‘Boosting Green Employment and Enterprise Opportunities in Ghana’ (GrEEn) project is a four-year action plan funded by the EU Trust Fund for Africa, in collaboration with the UN Capital Development Fund and the non-profit ‘SNV’, aiming to sustain Africa’s path to a green and circular economy. I give it a sustainability rating of 1 because, underneath its advertised, ‘noble’ mission, the project has planning and implementation dysfunctionalities. Pros: It promotes financial service provision, increased cash flow in rural areas and ‘green’ entrepreneurship with a particular focus on women and re-settled migrants. This is an inclusive approach to development, holding good prospects for a green economy. Cons: The ‘GrEEn’ project shows a severe mismatch between its aims and its cherry-picked ‘success stories’, which is an indicator of implementation difficulties. The selection criteria to screen which SMEs are eligible for funding lacks rigorous, ESG-based criteria. By making investment selective to the ‘WASH’ sector enterprises (i.e those which are already ‘green’), the project displays limited propensity towards a truly structural transformation of the economy. Also, the UNCDF’s agency is constrained by its operational dependence on sovereign nations’ funding, which casts doubts on the resilience of the UNCDF’s aid capital provision, and therefore on the ‘sustainability’ of the project. 

What it's made of:

0.8

The GrEEn project is financed by a contribution of 20 million EUR provided by the EUTF, with SNV and UNCDF contributing an additional 600,000 EUR. Aiming to boost green employment and enterprise in the Ashanti and Western regions of Ghana, its main policy areas are: a) to provide technical assistance and skills to promote green, circular economies involving especially youth and women b) to support the incubation of selected SMEs operating in the Water, Agriculture, Sanitation and Hygiene sectors (WASH) c) to extend financial services and equity to rural populations and integrate Ghana into the global economy. 

While the goal of promoting women in circular economies is definitely sustainability-enhancing, the GrEEn website does not disclose any information about how these ‘technical assistance’ and ‘skills’ are being implemented to reach it. This casts doubt on the success of the project. Where ‘success’ stories are shared, they are cherry-picked and showcase big underachievements with respect to ‘green economy’ goals. Indeed, boasting the introduction of a mechanized borehole in the town of Kobiriti, which has “made the life of Adiza Sulemani, mother of 4, extremely easier”, shows a limited, quick-fix effort towards ‘green employment’. Signs of greenwashing by the EUTF are thus evident. 

The second goal is addressed through an SNV- sponsored project called the ‘GrEEn innovation challenge’, which allocates up to 25,000 USD in grants to 12 top-performing ‘ecological’ SMEs. The website does not disclose the names of these SMES, although this might be for legal reasons. The big issue lies in the nature of this project; by selecting only WASH SMEs, it may crowd out other viable ‘green’ enterprises and skew the market in favor of the WASH sector, thus developing the Ghanaian market in an unbalanced way. This selective investing is also telling of a mindset where ‘green entrepreneurship’ is seen as applicable only to ‘green-sector’ companies. In this way, the GrEEn project supports green investing which is passive, rather than path-breaking. To be ‘sustainable’ and really serve the green transition goal, green investing should seek to both sustain green companies, and transform traditionally-hostile companies into green ones.   

The third goal has been addressed through a joint venture of  the UNCDF and the Youth Banking Department of Ecobank, with the aim of introducing agency banking to rural, underserved regions of Ghana. The UNCDF’s role was to coordinate the partnership between Ecobank and OZE digital business app, which helps newcomers to banking to manage their money. During the project launch week in March, 783 Accounts were opened, and more than half of them for women. The project idea appears commendable in terms of sustainability: extending financial services to rural areas facilitates the flow of funds to productive activities in those areas, thus discouraging unregulated labor that is often socially and environmentally degrading. Providing the service through technology both boosts its efficiency and outreach, and avoids unnecessary paperwork. Also, the focus on women is key-  it has been proved that increased women participation in the economy raises ‘green’ awareness and efficiency.  However, the issue here lies with the provider of financial services; EcoBank has a record of fraudulent activity-recently, an official was convicted for illicit diversion of over $7million from a bank customer. The low standards in transparency and corporate accountability are hardly supportive of sustainable development in rural regions, where this kind of behavior might even go unnoticed and unsanctioned more easily. The fact that UNDCF still nurtures a partnership with EcoBank for the GrEEn project raises alarm on the intentionality of the actor; capital growth is clearly prioritized above equitable and inclusive financial service provision.

How it's made:

1

As mentioned, the EUTF GrEEn project is split into different policy areas and initiatives, the main ones being skills and technical provision to promote green development, secondly, the SNV-sponsored ‘Green Innovation Challenge’ and thirdly, the UNCDF-Ecobank partnership to extend agency banking in rural areas. Observations can be made about the ‘livability’ of the first two initiatives. 

As part of the first initiative, UNCDF has installed a mechanized borehole (replacing the manual pump) in the rural community of Kobiriti, which yields fresher, more abundant amounts of water. While mechanisation certainly facilitates acquisition and distribution of water, it also introduces technical and administrative management issues which, if not resolved through other capacity-building policies, has adverse effects on the environment. It is known, for instance, that many boreholes fall into disuse resulting from the absence of spare parts or trained mechanics, or as water management committees fall out, leading to long-term waste accumulation in soils. Given that the EUTF project has a planned life-span of 4 years, it is worth asking how, and whether, this ‘green development’ will be sustained once the funds are withdrawn. 

For the Green Innovation Challenge, SNV has launched a competition to prize 8 selected green SMEs through 25,000 EUR grants, awarded as co-investments. The financial requirements are that selected SMEs will co-invest on a 20:80 basis. A scheme of equity Co-Investment is good as it both improves investor relationship and it mitigates risk, which increases the palatability of the ‘Green Innovation challenge’ for Ghanaian SMEs. This certainly contributes to the goal of supporting ‘incubation’ of SMEs into the green economy. However, the eligibility criteria for the SMEs to apply to this challenge are reductive, at best: according to the SNV website, the company must have a ‘positive impact on the climate, environment and community’. Needless to say, this vague definition, premised on subjective judgment on what is a ‘positive impact’, doesn’t really tighten the net around ‘green’ SMEs. Having said this, it is commendable that ‘priority will be given to business led by women or returning migrants’; increasing the amount of women and migrants covering entrepreneurial roles constitutes good prospects for the future of sensitive, open-minded and inclusive business approaches that are required in a green economy. 

 

Who makes it:

1

The GrEEn project in Ghana is largely funded by the EUTF, a trust fund for Africa worth 4.5 billion EUR, 89% of which comes from the EU budget and 11% from EU member states and privates. The funding of EUTF is regionally split, and parceled between development cooperation (56% of budget), migration governance (26%) and peace and security (10%) efforts, although its official role is to ‘address the root causes of irregular migration in africa’. An attention to ‘environmental stress’ is cited on the EUTF website as a corollary of migration, although it does not seem to take the priority spot. This raises questions on whether the EUTF is the best source of funding for the GrEEn project; if the answer is that it is the only viable capital pool, the implications are even more concerning because it means that the mission towards a ‘greener economy’ in Ghana is managed by a trustee whose culture and intentionality aren’t aligned with the end goals of green growth. An upside to the EUTF, however, is that it is transparent about administration and inclusive in its governance. The website accurately details who the contributing countries are. Both governing bodies of the Trust Fund (i.e the Strategic Board and the Operational Committees) are composed of representatives from both EU member states and regional (in this case, African) partner countries, as well as regional organisations. This indicates a well-rounded, representative governance which sustainability calls for. 

Another contributor to the GrEEn project is the UN capital development fund (est. 1966 by the UN General Assembly) whose expressed aim is to provide public and private finance assistance across 46 LDCs, through grants and loans. It therefore seems fitting that the GrEEn project is financed by the UNCDF; it has the required competence and authority. As it is a UN fund, it operates within the UN SDG mindset (a framework that is today integrated in all UN-related activities), which implies it will have sustainability on its mind. However, an issue of the UNCDF is that its agency is tied to the financial dispositions of sovereign countries. So far, many richer nations have been reluctant to provide funding, which has weakened the UNCDF’s provision of capital even where it has pledged to do so. This casts doubt on the long-term resilience of the UNCDF’s aid capital for projects such as ‘GrEEn’.