PIAC raises concern over decline in oil fund allocation to Ghana’s industrial sector

The Public Interest and Accountability Committee (PIAC) has raised concerns over the Ghanaian government’s lack of allocation and disbursement of oil funds to the industrial sector for 2024. In its 2024 semi-annual report, PIAC describes this trend as “worrying,” highlighting that no budgetary provision was made from the Annual Budget Funding Amount (ABFA) for the Industrialisation Priority Area. This oversight signals a marked deviation from the intended use of oil funds to drive industrial growth.

A review of past PIAC reports shows a declining trend in allocations to the Industrialisation Priority Area. The ABFA disbursement dropped from 1.15% in 2020 to 0.11% in 2023, leaving the sector with only GH¢5.82 million last year. This figure represents a small fraction of the overall ABFA spending for 2023, underscoring PIAC’s concern over the lack of focus on industrial development. PIAC’s recent findings indicate a pressing need for stronger financial commitment from the Ministry of Finance, emphasizing that the dwindling disbursements risk undermining national efforts towards industrial growth.

The declining allocation trajectory has led PIAC to question the relevance of industrialisation as a priority. Despite its initial selection in 2020, industrialisation has seen limited support, with PIAC noting that “ABFA disbursement to this Priority Area has been on the decline since its selection.” The 2022 allocation, for instance, amounted to only GH¢9.29 million—equivalent to 0.20% of the total ABFA of GH¢4.41 billion—falling short of the GH¢216.3 million earmarked for that year. This low figure, amounting to only 4.29% of the budgeted amount, PIAC argues, does not align with the government’s prioritization goals.

The existing practice of selecting ABFA Priority Areas every three years was implemented due to the lack of a long-term national development plan approved by Parliament. For the 2023-2025 cycle, new priority areas were introduced. However, the persistent underfunding of the Industrialisation Priority Area has prompted PIAC to advocate for a more consistent approach to ensure prioritization truly reflects in the budgetary allocations.

PIAC has called on the Ministry of Finance to uphold its commitment to industrial development by ensuring regular and adequate ABFA disbursements, which they argue is essential for strengthening the industrial sector and sustaining economic growth.