Focus on Ghana: Key Development Areas

16 Sep 2021

Focus on Ghana: Key Development Areas

The Government of Ghana has listed five key development areas in “The Coordinated Programme of Economic and Social Development Policies”. These development areas centres around socio-economic development, good governance, sustainable development and strengthening the country’s role in international affairs.

The Government of Ghana has listed five key development areas in “The Coordinated Programme of Economic and Social Development Policies” (2017-2024). Similar to those of most sub-Saharan African countries, these development areas centres around socio-economic development, good governance, sustainable development and strengthening the country’s role in international affairs.

 

a) Economic development

Ghana’s real GDP growth was 6.5 per cent in 2019, which fell to 1.7 per cent in 2020 (1.1 per cent according to the World Bank) (IMF). This decline is primarily attributed to the transport and logistics disruption due to the Covid-19 lockdown and its effects on the oil price that have stifled the Ghanaian economy (African Development Bank). These sectors’ declines led the country into its first recession in 38 years, during the 3rd quarter of 2020 (World Bank). Thanks partly to vaccines and the re-opening of the local economy and those of its main trading partners, Ghana’s GDP growth is projected to increase to 4.1 per cent in 2021 (AfDB). However, this growth is jobless; and thus, the double-digit youth unemployment rate of 12.1 per cent remains high (Aryeetey, Baffour, and Turkson). 

The latter can be associated with the country’s weak manufacturing sector (World Bank). If developed, this sector can create enough low skilled jobs needed to deal with the rising youth unemployment (Aryeetey, Baffour, and Turkson). Another threat to Ghana’s economic transformation remains its high level of public debt (World Bank). Government debt to GDP was 78 per cent in 2020 and projected to increase to 81.5 per cent (90 per cent of domestic debt in Ghana have short-to-medium-term maturities -AfDB) (IMF) in 2021.

 

b) Social development

Social development is related to education and health. Ghana’s World Bank human capital index was 0.45 (on a scale of 0 to 1) in 2020 (above the African average of 0.4). Based on the World Bank own interpretation guidelines, this means the future earnings potential of Ghanaians children born today will be 55 per cent below what they could have achieved with complete education and full health. Further, future GDP per worker could be 2.2 times higher if Ghana reached the benchmark of complete education and full health. Moreover, poverty will increase to 30.9 per cent in 2021. On the other hand, inflation has remained within the Bank of Ghana’s target range of 6 -10 per cent during 2020. The BOG projects that inflation will stay in the 6 to 19 per cent range during 2021 (AfDB). 

 

c) Environment, infrastructure and human settlements

Evidence from the literature suggests that climate change policies are unclear in Ghana and not well integrated into urban planning and development. For example, poor management of local floods due to heavy rains (Cobbinah & Peprah).

 

d) Governance, corruption and public accountability

Corruption stifles Ghanaian’s good governance and public accountability efforts. The country’s government integrity score in 2020 was 32.3/100 listed in the economic freedoms index (with 0 meaning no government integrity and 100 meaning total government integrity). Moreover, the Ghanaian corruption perceptions index score in 2020 was 43/100 (with 0 meaning highly corrupt), and it ranked 75 of 180 countries in the World. 

 

e) Strengthening Ghana’s role in international affairs

Ghana is ranked #118 of 190 countries on the World Bank’s Ease of Doing Business (DB) Index 2020 (#13 in sub-Saharan Africa). According to the World Bank, low ranking (or high numerical value) means poor legislation for businesses and weak protection of property rights. Ghana’s overall DB score was 60.0 (on a scale from 0 to 100, 0 = lowest performance and 100 = best performance) and was classified as medium on a four-stage classification system (“very easy” to do business, “easy”, “medium”, and “below average”).

 

In summary, to improve the well-being of the people, Ghana should focus on developing its manufacturing sector, invest in quality education and healthcare services. It should also continue the fight against corruption, improve the country’s business environment, and integrate climate change policies into its urban planning.  

This article was written for ABiQ by Huque Nkoutchou.  For more information on Ghana, please contact us here.

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