Project

A different approach to skills development

Trans Dank Enterprise, Accra. Photo @Wolfgang Diederich

To address a shortage of skilled workers in Ghana, Danida launched a demand-based skills development project, which has proven to be so successful that other African countries want to follow its example.

October 3, 2018

SDG: #8, #4, #5, #9, #10
SECTORS: Development Consulting
COUNTRIES: Ghana
DONOR: Ghana
CLIENT: Danida and the Government of Ghana
CONTRACT VALUE: EUR 2.3 million

With a predicted 8.5% GDP growth in 2018, Ghana has the fastest growth trajectory in Africa. However, its growth is set to slow down in the long term, as the economy is hampered by various factors, including high debt rates and trade deficits. The latter is underscored by arguably the biggest challenge to GDP growth: an under-skilled workforce.

The lack of a skilled workforce suppresses the effects of every driver of GDP growth, but is probably most keenly felt in the private sector, where both local market and export businesses must compete with foreign competition while contending with lower quality and higher unit costs due to diminished productivity.

For this reason, Danida piloted the Skills Development Fund (SDF) in 2011 in close cooperation with Ghana’s Council for Technical Vocational Education and Training (COTVET). The SDF is a challenge fund with a difference. While most skills development activities are supply driven, the SDF takes the opposite approach, offering funding to businesses needing to train their employees to improve their skills and productivity. In this way, the fund is demand-driven, supplying funds to fulfil market-based requirements. SDF I ran from 2011 to 2016 and was funded by Danida (as part of its Business Sector Programme Support) and the World Bank. SDF II started in 2016 and is planned to continue until end 2020. Danida (as part of its Support to Private Sector Development Programme – Phase III) and the Government of Ghana are funding this phase.

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NIRAS in association with WUSC (Canada) and Cornerstone Capital Advisors (Ghana) have been contracted to handle SDF II’s implementation. As such, NIRAS has been instrumental in developing the fund management manual; application criteria; government structures around funding decisions; and monitoring and evaluation (M&E) criteria, a result-based M&E system, procurement procedure, and a quality assurance system for beneficiaries. A state-if-the-art online fund management and M&E system ‒ the SmartME platform ‒ was tailored to the SDF’s requirements and utilised across the grant management process, including calls for concepts and proposals, evaluation of proposals, disbursements, M&E, and reporting. Moving the process online has resulted in wider access, improved efficiency, and greater transparency in the fund’s management.

About the fund

SDF is a challenge fund with a co-payment component. The funds being managed for SDF II value about EUR 12.1 million. The fund currently concentrates on small, medium, and micro industries and enterprises; labour unions and trade organisations; and universities, technical schools, and training providers in the agribusiness, agro-processing, and sustainable energy sectors – although entities active in other sectors may also apply, in keeping with the fund’s principal of being demand-driven.

Interested enterprises and organisations can apply in one of four funding windows:

Window 1: Technical Vocational Education and Training (TVET) in formal enterprises
Window 2: Workers (and/or apprentices) in the informal sector
Window 3: New, innovative training by TVET institutions
Window 4: Formal training and coaching of management and supervisory employees.

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The windows each have different limits and co-payment requirements, but every applying party is required to co-pay for the training to varying degrees, depending on each individual deal. Currently the co-payment is between 20% and 40% of the training project’s total value. The fund also offers the help of intermediaries who can help applicants draw up the best possible proposals. These intermediaries are only paid on acceptance of their application to ensure that they do their best possible work. Applications are done through SmartME, and all identifying information is removed before the application is sent through for analysis by two evaluators, who are chosen at random. The evaluators weigh up the applications based on merit and each gives a yes/no vote. In the case of there being a draw, a third evaluator is assigned to break it.

Projects that pass the evaluation stage go through due diligence to screen applicants’ credibility and to verify the applications’ facts and details. After this phase, the successful applicants are trained in contract management, procurement, and M&E to ensure they are able to report and manage their projects according to SDF’s standards (which are the highest requirements between Danida and the Government of Ghana). Disbursements are done in three stages, with service providers being paid after a report by the beneficiary confirming the successful delivery of services. The final payment is made after completion of each project.

This transparent and equitable process have built a great level of trust, and the SDF has an excellent reputation in Ghana, with applications numbers increasing during calls for proposals. During the third call, which took place in 2018, almost 900 companies applied for funding from the SDF. Due to the fund’s successful implementation, other countries like Nigeria, Burkina Faso, Malawi, Uganda, and Sierra Leone have approached the SDF with the intention of creating a similar fund for themselves.

Contributing to the UN’s Sustainable Development Goals

SDF has come to stay. It is my trust that this national project continues to receive the support of all as it pursues its quest to become a fund of choice for skills and technology development in Ghana and a model for managing similar matching grant funds.

Ato Simpson, Skills Development Fund Manager

The SDF mainly focuses on working towards SDG 8, decent work and economic growth, and SDG 4, quality education. However, the fund also emphasises cross-cutting issues such as gender, human rights, and health and safety while evaluating applications. It also fosters and supports the development of a greener economy in Ghana while simultaneously monitoring and striving to limit negative environmental impacts from its selected projects.