Reversing the Economic Decline, and Enhancing Growth and Prosperity: The Ghanaian Example

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1 Reversing the Economic Decline, and Enhancing Growth and Prosperity: The Ghanaian Example by Isaac Oppong-Manu Vice Principal, Co-operative College of Ghana Prepared as Background Information for Presentation at UW-Madison September 16, 2004 Ghana s economy at independence 47 years ago was among the best in Africa south of the Sahara, with per capita income above $1000. But today this has fallen to almost $360. The economy has since the early 1990s been characterized by high rates of inflation, high interest rates, continuous depreciation of the cedi (our national currency), dwindling foreign reserves, excessive public debt overhang and stagnant economic growth. Interventions embarked upon in the 1980s through extensive liberalization and adjustment produced some growth in services and mining but did little to produce and sustain growth in agriculture and manufacturing. As a result, both growth and incomes have remained stagnant. The stagnant growth of the economy in the 1990s has produced less than acceptable levels of poverty reduction. According to a living standard survey conducted by the Ghana Statistical Service in 1999, five out of ten regions in Ghana had more than 40% of their population living in poverty. The worst affected being the three northern savannah regions (the Upper East, Upper West and Northern Regions). Nine out of ten people in the Upper East; eight out 1

2 of ten in Upper West; seven out of ten in Northern; and five out of ten in Central and Eastern Regions were classified as poor in Food crop farmers in the country have the highest incidence of poverty. They constitute 59% of the poor in Ghana. This has been due to several factors, including the lack of access to markets, high cost of inputs and low levels of infrastructure. Strategies for Poverty Reduction It is to reverse this negative trend that the Government of Ghana adopted what is called the Ghana Poverty Reduction Strategy (GPRS). GPRS represents comprehensive policies, strategies, programs, and projects to support growth and reduce poverty over a three-year period ( ). It is premised on the conviction of the current government that the economy of Ghana needs to be managed effectively to enable wealth creation for the benefit of all Ghanaians. According to the GPRS document (which is in the public domain), five key thematic areas have been prioritized due to the magnitude of funding required to implement the entire program and project. These five thematic areas are: i. Infrastructure development ii. Modernization of agriculture based on rural development to ensure increased production and employment. iii. iv. Enhanced social services investment in education, health and sanitation. Good Governance upholding the rule of law, respect for human rights and the attainment of social justice and equity. 2

3 v. Private sector development through macro-economic stability and streamlining of public bureaucracy. Targets According to the GPRS document, the Ghanaian economy (the gross domestic product (GDP)) needs to grow by more than 7% annually in order for real poverty reduction to take place. To work towards that, in the short-term, the aim of government is to reduce the national incidence of poverty from 39% in 2000 to 32% in And to make this possible, the GPRS over the three-year period aims to improve real GDP growth to 5% and per capita growth from 1.4% in 2001 to 2.4% in On the micro level, it is anticipated that the incidence of poverty among food crop farmers shall decrease from 59% to 46% by Under 5 year mortality rate is planned to drop from 110/1000 to 95/1000. Gross JSS enrollment will grow from 61% to 65%. Gross Primary School enrollment will increase from 78% to 82% with that for girls increasing from 71% to 80% within the period. Projects and Programs of Implementation To achieve the targets set for the medium-term, priority projects and programs have been planned and are being implemented under the five thematic areas: i. Infrastructure The objective is to open up the country, introduce competition and create an enabling environment for the private sector. The following projects which are either ongoing or to commence shortly are planned: 3

4 The construction of three major highways: Accra-Yamoransa; Accra-Aflao; and Accra-Kumasi. This will open up the country and link it up with the trans- ECOWAS highway project. It will ensure that Ghana is able to take advantage of the opportunities from West African economic integration and will lead to creation of jobs. Select one major road to a productive area in every region that links the rural areas of the region to the urban area for rehabilitation to open up the country for investment, productivity expansion, and job creation. Accelerate the further development of our ports (Tema and Takoradi and inland ports) through private sector participation to make them competitive for global trade. Re-negotiate existing telecommunications agreements to introduce more competition and accelerate access to telephones, Internet and IT in general throughout the country. Take all necessary steps to increase the availability of energy to boost industrial growth and production. This includes the West African Gas Pipeline, the Bui Dam, the expansion of the thermal plant at Takoradi and increased use of solar energy. ii. Modernized Agriculture Based on Rural Development It is the government s objective to develop the country to become an agroindustrial economy by the year This will require the development of the rural economy. The actions being taken include the following: 4

5 Reform land acquisition to ensure easier access and more efficient land ownership and title processes. Serve as a catalyst to assist the private sector to increase the production of grains such as rice, maize and other tubers to achieve food security. Provide access to extension and research services, irrigation facilities and affordable credit to support the farmer. Encourage the production of cash crops like cocoa and cashew. Support the private sector to add value to cash crops like cocoa and cashew. iii. Enhanced Social Services The objective is to enhance the delivery of social services to ensure locational equity and quality, particularly with regard to education and health services. This is being done through actions including the following: Change the educational system to ensure that there is uninterrupted education for all Ghanaians from pre-school to age 17 to create the opportunity for human development. Ensure that we develop model senior secondary schools in every district in the country. Ensure that we develop model health centers for every district in the country. Phase out the cash and carry system of health care financing and replace it with a health insurance scheme. iv. Good Governance The objective is to ensure the rule of law, respect for human rights and the attainment of social justice and equity. This is to lead to the strengthening of the 5

6 three arms of government the executive, judiciary and the legislature. Actions being taken include the following: Support the work of Parliament to enable the institution to play its role for better governance. Restructure the civil service to ensure efficiency, effectiveness and related performance-based compensation. Strengthen the capacity of the Office of the Attorney General and the Judiciary in terms of numbers, technology, training and equipment in order to ensure the appropriate rule of law. Enhance social order by improving the police service. This is being done by equipping the police with vehicles, communication equipment and technology; enhanced training and increase in their numbers. Ensure transparency and accountability in resource generation, allocation and management. v. Private Sector Development The objective is to strengthen the private sector in an active way to ensure that it is capable of acting effectively as the engine of growth and a vehicle for poverty reduction. This is to lead to the creation of wealth at a faster rate in order to reduce poverty in a sustained manner. Actions being taken include: Working with the private sector, both foreign and domestic, as effective development partner. 6

7 Providing active assistance through the divestiture program, financial support and streamlining government bureaucracy. Monitoring and Evaluation of GPRS Having committed funds from diverse sources to implement the broad objectives identified above, Government has put in place a GPRS Monitoring and Evaluation (M&E) System to track expenditure disbursement and the actual implementation of the projects and programs. Results from goods and services provided by the projects and programs will be assessed through household surveys and participatory poverty analysis. To determine success towards poverty reduction targets set in the GPRS, poverty indicators will be monitored and evaluated using data from the Ghana Living Standard Survey Welfare Monitoring System. This will be supplemented by specific community surveys to be carried out by the GPRS (M&E) system. Invitation to Prospective Foreign Partners It is upon these noble intentions of government that all well-meaning peoples of the globe are cordially invited to partner with their Ghanaian counterparts to create wealth in an investment-friendly environment for the mutual benefit of our peoples. The Ministry for Private Sector Development is ever ready to welcome all investors to the country noted for its peace and congenial investment environment. You are all welcome to Ghana. Thank you very much. 7