Ghana’s economy
Ghana’s economy is the mixture of both private and public enterprise. About three fifths of the GDP is derived from service sector, agriculture contributes almost one fith and industry about one fourth.
The government’s role was confined mainly to the provision of basic utilities such as water, electricity, railways, roads and postal services. Agriculture, commerce , banking and industry were almost entirely in private hands with foreign interest controlling the greater share in all of them before independence.
After independence, the government set out to extend it’s control over the economy by establishing a large number of state owned enterprises in agriculture and industry. in other to make up for the local shortage of capital and entrepreneurial skills, measures were adopted to attract foreign investors to operate independently but the policy did not achieve the desired results due to improper planning.
The economy has suffered significantly since early 2022. Inflation rose from 13.9% in January to 37.2% in September. Petrol and diesel prices have jumped by 88.6 percent to 128.6% respectively and most public transport fares increased by 100 percent since January
Water and electricity tariffs have risen by 27.2% and 21.6% respectively this year.
The country’s interest rate of 30 percent and lending rate of 35 percent are the largest in Africa. Ghana cedis is now the worst performing currency globally.
Factors driving Ghana’s
Ghana’s economy is driven by factors such as
• Se
• rvice. Services are the non physical intangible parts of our economy as opposes to goods which we can handle or touch.It consist of education, transport, banking and medical treatment services accounts for almost half of the GDP and substantial share of Ghanaian trade.
In 2005-2013, the service sector rose from 32.2% -48.8% overtaking agriculture as the largest segment of Ghana’s economy.
It is also an import source of job having accounted for 43.1% of employment in 2010.
In 2021, the service sector constituted 49% of GDP as a result of growth in education, health and ICT service industries.
• Industry. Industry accounts for about 27% of the GDP. It consist of five sub sectors manufacturing, construction, mining and quarrying, electricity water and sewage.
Manufacturing does not only help to modernize agriculture the back bone of our economy but help reduce people’s reliance on agricultural income by producing jobs in secondary and tertiary sectors.
Industrial development is required for the reduction of unemployment and poverty in the country.
Manufacturing accounts for 17% of the GDP while construction, mining and quarrying electricity water and sewage accounts for 10%.
• Agriculture.
Agriculture plays a key role in economic growth and is an important contributor to various sectors of the Ghanaian economy. It contributes to Ghana’s export earnings , serves a major source of inputs for the manufacturing sector and it’s a vehicle for creating employment.
Agriculture contributes to 54% of the GDP and accounts for over 40% of export earnings.
Problems facing Ghana’s economy
The major problem the Ghanaian economy is facing now is rising debt which stands above 80% of GDP and is projected to reach 104% by the end of 2022.
Ghana has been thrust into debt distress as 70% of it’s total revenue must go towards debt servicing. This leads little room for other statutory obligations by depreciating by 40%.
Factors contributing to the economic crisis in Ghana
• The country’s in ability to produce for export and it’s reliance on imports for daily consumption has led to perpetual deficit in the balance of trade. This means that Ghanaian cedi is forced to be weak as compared to the dollar leading to high import prices
• Poor public financial management. High levels of financial profligate government expenditure.
From 2017-2020 Ghana had 120 ministers and 100 presidential staffers. This lucrative appointments drained the public purse.
Spending on flagship programs such as NABCO that didn’t yeild the expected results.
Way forward
The government has put in place several measures to improve upon the economy which Includes
• 20% expenditure cut as part of the fiscal stabilization and debt sustainability measures
• 50% cut in fuel coupon allocations for all political appointees and heads of government institution.
There has been a decrease in exchange rate, the prices of petrol and diesel recently and the cedi is performing very well. Hence there’s hope for the economy.
