Bilateral agricultural aid to Ghana and Uganda: donor practices under different institutional quality

Abstract

Agriculture has been the backbone of African economies, and agricultural development has the potential to drive overall economic growth. Considering the importance of agriculture in Africa, foreign aid donors have supported the sector to help push economic growth and reduce poverty. Studies indicate governance quality of a recipient country is an important factor for agricultural aid. Building upon this, the paper explores how bilateral donors provided agricultural aid to two African countries that have different institutional quality, Ghana and Uganda. The analysis of agricultural aid in those two countries was carried out with bilateral aid-profile data from 2011 to 2022. Despite the similar economic importance of agriculture in Ghana and Uganda, donors to Ghana invested the largest amount in agriculture among aid sectors, followed by health. On the other hand, donors to Uganda supported mainly health-relevant sectors with agriculture being ranked only fifth. Donors in both countries implemented agricultural aid mostly as project types. Yet, donors disbursed their aid funds through different aid channels. Donors to Ghana disbursed 48% of agricultural aid funds through the public sector institutions channel (or the state channel). By contrast, donors to Uganda disbursed only 24% of agricultural aid funds through the state channel, essentially bypassing Ugandan public agencies. They instead provided 76% of agricultural aid through the non-state channels such as non-governmental organizations, multilateral organizations, and private entities. Similar donor preferences of the aid disbursement channels were observed with total aid across all aid sectors. Overall, the donor aid profiles suggested donors provided Ghana with more flexible agricultural aid, while in Uganda they controlled agricultural aid more tightly. There could exist multiple underlying reasons for this, but the different level of institutional quality is highly likely one of the possible reasons. For foreign aid, governance quality is an important issue equally to both donors and recipients. Key words: Africa, agriculture, aid channel, bilateral aid, foreign aid, Ghana, governance, Uganda