ECG Proposes 224% Tariff Hike as Ghana Loses US Aid Over Debt; Cashew Sector Eyes Growth

Ghana’s economic landscape is marked by contrasting narratives this week: a bold move by the national power distributor to secure financial sustainability, a promising agro-processing sector pushing for greater value addition, and a sobering reminder of the lingering impacts of the nation’s debt situation on international support.

ECG Proposes 224% Tariff Increase, Citing Financial Viability and Forex Pressures

The Electricity Company of Ghana (ECG) has submitted a proposal to the Public Utilities Regulatory Commission (PURC) seeking a staggering average increase of 224% in the Distribution Service Charge (DSC) over the next five years (2025–2029).

The utility company aims to raise the charge from the current GHp19.0875/kWh to GHp61.8028/kWh, arguing that this adjustment is essential to restore its financial health and ensure sustainable operations. Key drivers cited include:

• Rising inflation and interest rates

• Foreign exchange volatility

• The need for full recovery of investment costs

  
  

ECG’s annual revenue requirement is projected to average GHS 9.1 billion over the tariff period. Beyond the headline increase, the company is proposing significant structural reforms, including:

• Simplifying residential tariff bands from multiple categories to just two

• Eliminating cross-subsidization to ensure cost-reflective pricing

• Introducing a net metering structure for renewable energy users

• Using the Bank of Ghana exchange rate for tariff calculations to manage forex risk

• Moving to monthly (instead of quarterly) automatic tariff adjustments

  
  

If approved, this would be one of the most significant electricity tariff hikes in Ghana’s history. ECG maintains that these changes are crucial to maintaining grid reliability and funding future investments.

Ghana’s Cashew Processors Target 85,000MT Annual Output by 2026

In a positive development for the agro-processing sector, the Association of Cashew Processors, Ghana (ACPG) has announced an ambitious plan to process 85,000 metric tons of cashew annually by 2026.

This target, if met, is expected to create thousands of jobs, boost farmer incomes, and strengthen Ghana’s position in the global cashew value chain. The announcement followed a working tour by ACPG leadership to processing facilities in Techiman, Sunyani, and other parts of the Middle Belt.

Despite this optimism, the sector faces significant challenges:

• Inconsistent supply of raw cashew nuts

• High processing costs and limited access to financing

• Competition from raw nut exports

• Low adoption of modern technology

  
  

ACPG is addressing these issues through a newly developed Cashew Framework aimed at improving raw material access, raising processing standards, and expanding market opportunities both locally and internationally.

Ghana Ruled Ineligible for US Millennium Challenge Compact Due to Debt Default

Ghana has been declared ineligible to receive foreign assistance for Fiscal Year 2026 under the United States’ Millennium Challenge Compact (MCC) due to its ongoing debt default status.

This decision, based on the debt default restriction in Section 7012 of the FY2025 SFOAA, means Ghana cannot access U.S. economic assistance until it reaches a debt restructuring agreement with its creditors. The country is among 18 nations,including Sri Lanka, Venezuela, and Zimbabwe, excluded from MCC eligibility due to legal prohibitions on economic assistance.

This development underscores the continued impact of Ghana’s debt challenges on its ability to attract foreign support and investment, even as the government works to stabilize the economy through domestic initiatives.

Ghana’s economy is at a crossroads: pursuing necessary but painful reforms in the energy sector, pushing for industrialisation through agro-processing, while still grappling with the external constraints of its debt burden. The ECG proposal, though aggressive, underscores the urgent need to address fiscal inefficiencies in state-owned enterprises. Conversely, the targeted growth in cashew processing demonstrates how focused sectoral strategies can drive job creation and export diversification.

For policymakers, the challenge remains to balance these domestic priorities with the need to fully resolve external debt issues to restore international confidence and access to support.

Stay tuned to the Cedi Board® for real-time updates on Ghana’s financial pulse. From prices and policy to investment tips that help you make sense of the numbers.