Ghana has not yet developed a growth-oriented, stable, sustainable and socially-balanced market economy. Over the past two decades, the economy grew by an average of 5% per year, yet poverty and unemployment remain high. While the average growth rate of 5% may be substantial by regional standards over the period, it fell below the average expected growth of 8%. The country also continues to record balance of trade deficit as imports have been growing faster than exports; and inflation still remains high.
Ghana’s economic sectors are poorly developed. For example, agriculture which contributes between 36-40% of GDP and employ about 60% of the labour force continues to face a number of challenges: inadequate capital, lack of access to loans and lack of market for local famers, as the state holds onto the import of cheap food from outside the country which makes it impossible for local farmers to compete with the dumping prices of imported goods.
In addition, the state continues to rely on natural resources, like gold, wood and now oil for its exports. Cocoa beans are also one of the most valuable export goods. Unfortunately, Ghana lacks a well-developed and competitive manufacturing industry. For example, while Ghana produces one of the best cocoa in the world, the country currently process only about 19% of her annual cocoa output and there are few possibilities in the country to continue processing the raw material to chocolate or other products. The cocoa beans are exported and the final products will be imported and finally offered in the stores at horrendous prices.
Furthermore, economic infrastructure is also poorly developed. With regards to the physical infrastructural improvements, the governments over the last two decades could not provide reliable water management, transportation, power production and distribution, science and technology (for households, agriculture, and industry), and communications systems. In terms of social services, general and professional education, housing, water and sanitation and health-care delivery systems have poorly developed as well.
Ghana’s discovery of oil in 2007 also poses a challenge to economic development. Experiences from other countries indicate that if the resource is not managed well, oil could hamper the long-term economic and social development. Therefore, a country should not rely fully on the finding of oil and believe in non-ebbing resources which go along with a never-ending wealth for the country. It is fatal to lean back and neglect opportunities to develop other economic sectors. Once the oil production will not be profitable enough due to the fact that the oil wells run dry, the economic loss has to be compensated by other strongly-developed economic sectors (agriculture, manufacturing and services).
The Friedrich-Ebert-Stiftung has created the Ghanaian Panel on Economic Development with its partner ISSER (Institute for Statistical, Social and Economic Research) at the University of Ghana. The 25-member panel will meet two to three times a year from 2011 to 2013 to develop a vision and a roadmap of how to achieve an economy which is socially and regionally just.