Ghana’s Economic Growth: The numbers tell the story
Impressive figures for GDP growth and increases in FDI speak volumes about Ghana's economic progress, while the country has also been lauded as a role model for African development
By Alana Kalin, Geoffrey Cooke, Leeni Ojaniemi and Vanessa Massimini (WorldFolio.com)
Political stability and sound macroeconomic prudence have helped Ghana attract soaring levels of foreign direct investment (FDI) and become a focus point for business in West Africa.
In 2011, the country registered 13.6 per cent expansion in gross domestic product (GDP) – against a backdrop of gross world product (GWP) growth of just 3.7 per cent. During 2011, almost $7bn in FDI poured into the former British colony in a massive vote of confidence in its future from the global investment community, as massive deposits of minerals, gold, and recently discovered oil and gas reserves in the Jubilee field – Africa’s largest find in the past decade, brought on stream in a record 3.5 years – captured worldwide attention.
“Since the mid-1990s, Ghana has grown by around 5 per cent annually. This has mainly been driven by raw materials, including cocoa beans, gold, manganese, bauxite and oil,” says Eberhard Schanze, German Ambassador to Ghana. “The domestic economy is not as developed – there is a lot to do, but you can be sure that this growth will increase to 7-8 per cent for 15 to 20 years.”
Major economic achievements highlighted in the 2012 budget include the significant reduction of the fiscal deficit from 8.5 per cent of GDP in 2008 to 2 per cent in September 2011, which stood at GH¢1.13bn ($645m) for the first three quarters of 2011, compared to a target of GH¢2.47m (or 4.4 per cent of GDP.) In addition, inflation fell from 18.1 per cent in December 2008 to 8.6 per cent last December. Gross international reserves of $4.98bn in October 2011 exceeded three months-worth of imported goods and services, compared to reserves of $2bn at the end of 2008, which could barely cover two months of imports. Also, in 2011 the agriculture sector – which employs more than half the country’s workforce – grew by 2.8 per cent, and industry expanded 36.2 per cent. The services sector registered 4.2 per cent growth and remained the largest contributor to GDP, contributing to 48.1 per cent of the nation’s income.
The theme of this year’s budget “Infrastructural Development for Accelerated Growth and Job Creation” encapsulates the government’s aspirations for the medium term: to sustain economic growth, create more employment opportunities, raise incomes, and improve the standard of living for Ghanaians. The government is attempting to ensure that the oil and gas windfall will bring benefits to other parts of the economy, with ripple effects creating support industries and new sustainable sectors. The goal is to have a diversified economy, cultivated from local content to ensure long-term stability and growth. “The best way to resolve the issue of poverty is to create an environment that is conducive to business and the creation of jobs,” says Paul King Aryene, Ghana’s Ambassador to Germany.
Known for centuries as the Gold Coast, on March 6 2012 Ghana celebrated 55 years of becoming the first sub-Saharan colonial nation to achieve independence. Since re-establishing multiparty politics in 1992, Ghana has become one of only a handful of African countries to experience peaceful and constitutional transfers of power – a major factor behind its economic performance and international appeal.
Three years after choosing Ghana as first stop on his first official visit to Africa, President Barack Obama met with Ghana’s President John Atta Mills at the White House in March 2012 and commended the country’s strong tradition of democracy. He referred to it as an African “good-news story” and said: “Ghana has proven, I think, to be a model for Africa in terms of its democratic practices. And I very much appreciate the efforts that President Mills has taken not only to ensure fair and free elections, but also to root out corruption, increase transparency, make sure that government is working for the people of Ghana and not just for the few.”
In response, President Mills said: “Democracy goes with development. If you come to Africa, our people are yearning for only one thing – improvement in their daily lives. And there can be no development without peace.”
The upcoming elections in December 2012 between the incumbent National Democratic Congress (NDC) and opposition National Patriotic party are expected to be close, but fair. The UK’s Financial Times reports “the electoral commission is considered genuinely independent” and that in Ghana there is a “national desire to be treated by the rest of the world as an emerging black power rather than an aid-dependent African reformer, collecting World Bank stars.”
Regionally, Ghana’s profile is on the rise. Affluent Nigerians are sending their children to private schools and universities in Accra and buying second homes in the capital city. Multinationals with regional bases in Ghana include BASF, General Electric and Nestle.
Recently, the UN chose Ghana to spearhead its campaign to ensure universal energy access for all African countries by 2030. Ghana’s Vice President John Dramani Mahama has welcomed the decision, saying it is in tune with the government’s rural electrification program that aims to make electricity accessible to all Ghanaians and raise quality of life for all.