The economy of
Ghana is market-based, It is the second-largest export of cocoa globally.
It also the largest exporter of gold in the sub-region. Ghana is well endowed
with natural resources and agriculture accounting for about 20% of GDP
and employs more than half of the workforce. While the service sector accounts
for 50% of GDP. The major exports of the country include gold, cocoa beans, and
timber products. Others include tuna, aluminum, manganese ore, diamonds, and
horticulture. Just after independence in 1957 Ghana has tried to modernize its
economy of which they made great progress, by developing industry and its
agriculture.
Agriculture is
based on coffee, banana, potato, corn, and rice production. The industry
operates in food, beverage, cigarette, chemical, metallurgical and timber
production. Ghana also cultivates many other export products, such as
rubber, palm oil, and kola nuts. Though Ghana does export in agriculture,
majority of it farmers do only subsistence farming.
Shortly after
independence just about the 1960s to 1980s Ghana was hit by corruption and
several military takeovers which brought the economy on its knees.
The World Bank,
the International Monetary Fund and relevant international donor communities
proposed radical structural adjustment to revive the troubled economy and to
restore their productivity. The then government led by Jerry John
Rawlings accepted the reform, the government introduced a series of free-market
reforms In 1983. In an effort to revive the faltering economy. As part of
the reform, rural electrification was deepened and new roads constructed.
Also, Farmers were paid more money for their crops thereby increasing
agricultural production.
In 2001 Ghana was
hit by another economic crisis, Ghana was declared a Highly Indebted Poor
Country (HIPC). According to the then President, John Agyekum Kufuor, the
decision was strategic because the economy he inherited was so bad that all
donor partners had abandoned Ghana and the move was significant in putting the
economy back on its tracks. In 2006 Ghana signed a five-year Compact,
Millennium Challenge Corporation (MCC), which aims to assist in the
transformation of Ghana's agricultural sector.
In 2007 Ghana discovered offshore oil within its marine boundaries and by the
mid-2010, production officially began and is expected to boost economic growth.
In 2016 and 2017, the production of another two oil fields TEN and
Sankofa started respectively. With TEN initially supplied about 20,000
barrels per day. Ghana has a gas processing plant at Atuabo producing gas
for power generation which is from the Jubilee field. Apart from the oil
reserves, there is significant natural gas deposits below the country’s seabed
which is yet to be tapped. The gas deposit is estimated to be more than 20
billion cubic meters of natural gas.
Whether the black
gold resource for Ghana turns out to be a curse or a blessing only time can
tell.
Ghana In 2009,
signed a three-year Poverty Reduction and Growth program with the
IMF to improve macroeconomic stability, private sector competitiveness, human
resource development and good governance and civic responsibility.
The government has
also introduced several programs to help in development and poverty
eradication.
Like Zongo
Development Fund (ZDF), by the Ministry of Inner City and Zongo
Development, the National Entrepreneurship Innovation Program (NEIP),
the Infrastructure for Poverty Eradication Program (IPEP).One popular
of them is the Nation Builders Corps (NABCO) a program designed to
employ the unemployed graduates.
Through
increased foreign direct investment, especially from China, lavish transfers of
Ghanaian overseas, growing tourism and lending from relevant
international development institutions such as the World
Bank, IMF, and African Development Bank are contributing
significantly to growth and modernization of its economy. Discovery of oil has
also brought about enormously costly investments in the oil and gas sector and
the necessary improvements in infrastructure.
But there is still
considerable potential for growth in the traditional agricultural sectors and
the poorly developed industrial sector. Going forward Ghana needs to massively
develop its economy by investing in its agriculture and industrial sector
through technology and innovation for the future.
After slower
growth in 2015 and 2016 due to low commodity prices, the cost of electricity
and the cost of credit, which hampered business activity and competitiveness,
2017 marked the return to substantial growth - 7.9% by the government and 5.9%
by the IMF. The year 2018 marked growth of 6.9%. Ghana was one of the
strongest countries in 2018 in terms of growth in all of sub-Saharan
Africa. For 2019, the World Bank anticipates a growth rate of 6.7%.
With 9.4%
inflation in 2018, Ghana continues to limit the price increase, this result
following a year 2016 marked by inflation of 15.4% (after 18% in
2015). The fall in inflation is the result of a strict monetary policy of
the Central Bank of Ghana with a key rate maintained at 26% in 2016.
Nevertheless, the improvement in the economic situation and the desire to
support growth has enabled the Central Bank to carry out a five-fold
consecutive rate cut to 20% since the end of 2017.
The local currency,
the cedi, increased against the dollar for most of 2018, going from 4.52 GHS
for 1 USD in January 2019 to 4.89 GHS. The national currency, on the other
hand, suffered the global appreciation of the euro, going from 4.5 GHS (in
2017) for 1 EUR in December 2019 to 5.6 GHS.
Surprisingly the cedis has been the best performing currency against the dollar this year 2020.The currency has strengthened 3.9% the most among more than 140 currencies as against a 13% drop last year.
But it looks like the worlds second producer of cocoa needs more to be done. Currently Ghana is one of the most indebted economies in sub-Saharan Africa: its debt represents 71% of its GDP and also increased public debt and shortfalls in domestic revenues pose challenges to further macroeconomic improvements.
But hope is not lost as government is poised to working hard to achieving it gender Ghana Beyond Aid.
