Reimagining Ghana's economic future: A precursor to post-2024 elections
Ghana, often hailed as a beacon of stability and democracy in Africa, continues to face significant economic challenges despite its wealth of natural resources.
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The world’s largest man-made lake, Lake Volta, and the Akosombo Hydroelectric Plant are testament to the country’s vast potential, yet Ghana’s economic performance remains underwhelming.
In 2010, Forbes ranked Ghana among the world’s worst-managed economies, a stark reminder of the gap between potential and reality.
Fast forward to 2024, and while some progress has been made, the upcoming elections present a critical opportunity for Ghana to reset its economic trajectory and address the enduring issues that have held the nation back.
The current economic landscape
Ghana's economy has been on a roller coaster ride over the past decade. In 2023, Ghana's GDP growth rate was estimated at 3.2%, a significant drop from the robust 6.3% in 2019 before the COVID-19 pandemic disrupted global economies.
Inflation, which stood at 7.9% in 2019, surged to 40.7% by December 2022, leading to a sharp increase in the cost of living for ordinary Ghanaians.
The cedi, Ghana’s currency, depreciated by nearly 50% against the US dollar in 2022, further exacerbating the economic challenges faced by the country.
Public debt has also been a major concern. As of 2023, Ghana’s public debt stood at approximately GHS 575.7 billion (around 98.9% of GDP), up from GHS 291.6 billion in 2019.
This unsustainable debt level has strained government finances, limiting the ability to invest in critical infrastructure and social services.
The decision to seek a $3 billion extended credit facility from the International Monetary Fund (IMF) in 2022, while necessary, has also raised concerns about Ghana’s fiscal autonomy and long-term economic stability.
Despite these challenges, there have been some positive developments. The government’s focus on digitalisation, particularly in the financial sector, has positioned Ghana as a leader in mobile money transactions and fintech innovation in Africa.
In 2022 alone, mobile money transactions reached a record GHS 1.07 trillion, reflecting the increasing adoption of digital financial services.
The Bank of Ghana’s efforts to regulate the fintech industry have also provided a more secure and efficient environment for these transactions, contributing to financial inclusion.
Government and business leaders’ appreciation of the current situation
The current government, led by President Nana Akufo-Addo, has acknowledged the economic difficulties facing the nation and has taken steps to address them.
The implementation of the "Ghana CARES Obaatanpa" programme, a GH₵100 billion post-COVID-19 recovery plan, aims to revitalise the economy by supporting businesses, creating jobs and enhancing productivity across key sectors.
Additionally, the government has made strides in the energy sector, including initiatives to address the persistent power shortages that have plagued the country for years.
The expansion of renewable energy projects, such as solar and wind farms, is part of a broader strategy to diversify Ghana's energy mix and reduce dependency on hydropower.
Business leaders too have responded to the challenges with resilience and innovation.
The private sector has increasingly embraced technology to drive growth, particularly in industries such as agriculture, manufacturing and services.
The rise of agritech startups, for instance, is helping to modernise farming practices, increase yields, and improve food security.
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Similarly, the manufacturing sector is gradually shifting towards higher value-added production, with companies exploring opportunities in agro-processing, textiles and consumer goods.
However, these efforts have not been without obstacles, as businesses continue to face high operational costs, inconsistent regulatory policies and a challenging macroeconomic environment.
Turning the situation Around Post-2024 Elections
As Ghana heads into the 2024 elections, the stakes are high. The next government will inherit an economy that, while showing signs of recovery, remains fragile and vulnerable to both internal and external shocks. To turn the situation around, a multifaceted approach will be required.
1. Economic diversification: The next administration must prioritise economic diversification. Ghana’s over-reliance on primary commodities, such as gold, cocoa, and oil, has made the economy highly susceptible to global market fluctuations.
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By expanding the manufacturing sector and promoting industrialisation, the country can create more resilient economic structures.
The government should incentivise investment in value-added industries, such as agro-processing, pharmaceuticals, and light manufacturing, which can generate jobs and increase export revenues.
2. Energy sector reforms: Reforming the energy sector will be crucial for sustained economic growth. The Akosombo Dam, which has historically powered a significant portion of Ghana’s industrial activity, must be complemented with alternative energy sources.
Investing in renewable energy, particularly solar and wind, will not only ensure a more reliable power supply but also align with global trends towards sustainable energy.
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The next government should also continue efforts to improve the financial viability of the energy sector by addressing the debt owed to independent power producers and enhancing the efficiency of electricity distribution.
3. Fiscal discipline and debt management: Ghana’s high debt levels are unsustainable and pose a significant risk to economic stability.
The next government must adopt a disciplined approach to public finances, prioritising fiscal consolidation and reducing the budget deficit.
This can be achieved through better revenue mobilisation, including broadening the tax base and improving tax compliance.
At the same time, the government should renegotiate existing debt agreements to secure more favourable terms and explore opportunities for debt restructuring.
4. Enhancing the business environment: Creating a conducive environment for business growth will be key to driving private sector-led development.
This includes simplifying regulatory procedures, reducing the cost of doing business, and improving access to finance for SMEs.
The next administration should also work closely with the private sector to identify and remove barriers to investment, particularly in sectors with high growth potential.
Strengthening public-private partnerships (PPPs) will be essential in mobilising the resources needed to support infrastructure development and other critical projects.
5. Strengthening governance and accountability: Good governance and accountability must be at the forefront of the next government’s agenda.
Tackling corruption, enhancing transparency in public procurement and ensuring that public funds are used effectively will be critical in rebuilding trust in government institutions.
The next administration should also focus on strengthening the capacity of state institutions to enforce regulations and deliver public services efficiently.
Conclusion: A new beginning for Ghana
Ghana stands at a crossroads as it approaches the 2024 elections. The country’s economic challenges are significant, but they are not insurmountable.
With the right leadership, policies and commitment to reform, Ghana can turn the tide and embark on a new path of growth and prosperity.
The next government has a unique opportunity to build on the foundation laid by the current administration and create a more diversified, resilient, and inclusive economy.
The road ahead will not be easy, but by embracing innovation, fostering collaboration between the public and private sectors, and committing to sound economic management, Ghana can overcome its challenges and realise its full potential.
The 2024 elections could mark the beginning of a new era for Ghana—a time when the nation finally harnesses its vast resources and human capital to build a better future for all its citizens.
The world is watching, and the time for decisive action is now.
Writer’s email: sammylaatey@yahoo.com