Ghana has secured a €323 million financing package to improve water supply and sanitation in Tamale, Yendi and Damongo, combining grant support from European partners with concessional financing from the European Investment Bank (EIB).
Finance Minister Dr Cassiel Ato Forson announced the funding package for the Northern Ghana Water and Sanitation Project following a meeting with EIB Vice-President Ambroise Fayolle.
The package comprises €98 million in grants and €225 million in concessional financing. The European Commission will provide €68 million, while Invest International, a Dutch government initiative, will contribute €30 million. The grants account for about 30.3 per cent of the total funding, reducing the amount Ghana will have to repay.
Dr Forson described the EIB financing as highly concessional, although the loan will still create repayment obligations for the country. Its long-term impact on public finances will depend on the interest rate, repayment period and other conditions, as well as movements in the cedi-euro exchange rate.
The project comes as residents and businesses in parts of northern Ghana continue to face water supply challenges. Unreliable access to clean water can increase household expenses, disrupt business operations and make it difficult for schools and health facilities to maintain proper hygiene and sanitation.
Tamale, a major commercial centre in northern Ghana, requires reliable water infrastructure to support its growing population and economic activities. Improved supply could benefit households, businesses, hospitals and educational institutions while creating better conditions for investment in the region.
The financing structure is also significant for Ghana’s debt management. Following the country’s recent debt crisis and restructuring, securing grants and affordable loans for essential infrastructure can help limit the pressure on public finances compared with relying entirely on commercial borrowing.
However, concessional financing does not eliminate the risks associated with borrowing. Since the EIB facility is denominated in euros, a significant depreciation of the cedi could increase the cost of servicing the loan when measured in local currency.
The project’s success will therefore depend on how efficiently the funds are used, whether construction is completed on schedule and whether the infrastructure is properly maintained. Delays, cost overruns or poor management could leave the government with repayment obligations without delivering the expected benefits to residents.
Beyond the construction of pipelines and treatment facilities, the project will need to demonstrate tangible improvements in access to safe water, continuity of supply and sanitation services. Affordable tariffs will also be important to ensure that low-income households can benefit from the investment.
Climate resilience will be another consideration, particularly as northern Ghana faces changing rainfall patterns and prolonged dry periods. Infrastructure planning must account for future water availability and population growth to ensure that the systems remain reliable over time.
For the three beneficiary cities, improved water and sanitation services could strengthen public health, reduce the time households spend searching for water and lower operating costs for businesses. The investment could also support more balanced regional development by improving essential infrastructure in northern Ghana.
The €323 million package represents a significant funding opportunity, but its ultimate value will depend on delivery. Transparent procurement, effective project management and sustained maintenance will be essential to ensuring that the investment achieves its intended purpose.
For residents of Tamale, Yendi and Damongo, the real measure of success will be consistent access to safe water and improved sanitation, rather than the size of the financing package alone.
