Tamale, Northern Region – President John Dramani Mahama has announced that government will no longer rely on external financing for a major water supply project in Tamale and Damongo, directing the Finance Minister to raise €277 million in cedis locally to execute the project independently.
Speaking during his ongoing tour of the Northern Region, President Mahama disclosed that a previously secured €277 million external funding agreement for water systems in the two cities had collapsed, largely due to Ghana’s current debt sustainability challenges which have restricted access to new external borrowing.
“I’ve directed the Finance Minister to find our own €277 million, in cedis, and do the water system ourselves,” President Mahama told a gathering of chiefs and residents, sparking applause from the crowd. “We cannot continue to wait for foreign partners whose conditions or timelines leave our people suffering.”
The project, originally designed to expand water treatment capacity and distribution networks in Tamale—Ghana’s third-largest city—and extend reliable supply to Damongo, has faced years of delays. Officials say the existing system, built decades ago, has become overstretched, with rapid urbanization leaving many communities underserved, especially during dry seasons.
The collapse of the external deal underscores a broader fiscal reality: Ghana is currently navigating a stringent International Monetary Fund (IMF) programme, with strict limits on non-concessional borrowing. Many multilateral and bilateral facilities have been paused or withdrawn as a result.
By opting for domestic financing, the government aims to bypass protracted negotiations and conditionalities, though the move raises questions about the impact on the cedi and local borrowing costs. The Finance Ministry is yet to provide details on how the €277 million equivalent—over GH¢3.5 billion at current exchange rates—will be mobilized without crowding out private sector credit.
The President, however, assured that engineering and design works would proceed in parallel with financial arrangements, with a target to break ground before the end of the year. “This is not a promise for tomorrow. We are acting now,” he added.
Local government authorities in the Northern Region have welcomed the announcement, describing it as a lifeline for thousands of residents who currently rely on unsafe water sources. The Tamale Water Supply System expansion, once completed, is expected to serve over 500,000 additional people.
The opposition has yet to comment on the feasibility of the self-financing plan. However, economic analysts caution that while the intent is commendable, government must clearly outline the funding sources—whether through reallocated budgetary funds, syndicated local loans, or pension fund investments—to avoid jeopardising macroeconomic stability.
President Mahama continues his Northern Region tour this week, with further stops in Yendi and Savelugu.
