GHANA’S Vice-President Mahamudu Bawumia says his government has made significant progress in the management of the economy in the relatively short time it has been in office.
‘It has been only 22 months, but our progress is noteworthy. We have secured significant improvements in the trends of key macroeconomic indicators such as inflation, exchange rates, and real GDP growth rates. Ghana’s economy is projected to record one of the highest growth [rates] in the world in 2018,’ he said in a keynote address at the Ghana Investments & Opportunities Summit 2018 in London earlier this week.
Reeling off macroeconomic indicators, Bawumia said the central bank policy rate has fallen by about 850 basis points and alongside other government policies, lending and mortgage rates are declining.
‘We have reduced our debt to GDP ratio from 73 percent to 63 percent and attained relative stability for the local currency. We have significantly reduced the fiscal deficit from 9.3 percent to about 5.9 percent of GDP and still striving to align public expenditure with domestic revenue, as well as attain a primary balance surplus,’ he said.
The government’s policies have also revitalised the industrial sector, which has seen substantial growth. The overall business environment is judged as favourable and there is renewed investor confidence in the Ghanaian economy.
‘Just last month, [ratings agency] S&P upgraded our sovereign credit ratings from B minus to B on account of strong macroeconomic fundamentals and prudent public financial management.
‘Additionally, the recently released 2017-2018 global competiveness index measuring national competiveness and the level of productivity puts Ghana 3 points up at a time where continental giants such as South Africa and Rwanda dropped 14 and 6 places, respectively. There is no doubt that the new age of economic progress for Ghana is slowly emerging,’ he said.
To consolidate the progress made so far, the government is implementing measures to tackle some of the long-term structural issues. They include:
A passage, by the end of this year, of a fiscal responsibility law to cap the budget deficit at 5 percent for a fiscal year. Ensure complementary monetary management and establishment of institutional safeguards such as the Financial Stability Council (FinSC), Fiscal Council (FisC), and an International Economic Advisory Council.
‘The overarching objective is to safeguard the financial system, deepen financial intermediation, widen financial inclusion, and position Ghana as a West Africa Financial hub and economy with greater policy credibility,’ Bawumia stressed.
The government’s efforts are beginning to yield dividends with a number of big-ticket investments in the pipeline. Google has chosen Accra as its African Artificial Intelligence (AI) headquarters. Aker Energy is to invest $17bn in the country’s oil and gas sector, while German car giant VW plans to set up an assembly plant in Accra next year.
Real sector growth
Central to the plans for growing the real sector of the Ghanaian economy is value addition to Ghana’s agricultural commodities and mineral resources. Relying on the exports of raw cocoa beans and unprocessed minerals has not been very beneficial in stimulating growth and other wide-ranging job creation opportunities.
‘That strategy rather has made our economies more and more vulnerable and dependent on the fluctuations in global commodity trends. Our periodic growth spurt when commodity prices are on the uptick is not the way to build a resilient economy, especially when that growth is not accompanied by job creation. Ghana Beyond Aid requires us to build a resilient economy that provides opportunities for job creation.
‘Guided by the benefits of diversification, our industrialisation drive is not just limited to the extractives sector. Government has also followed through in the implementation of our flagship initiatives which are equally open to investor participation. Two of these are especially dear to the President,’ Bawumia said.
The government sees great prospects in the Planting for Food and Jobs programme as a basic first step in stimulating agro-processing. With growing population, urbanisation and emerging middle class, there is the need to develop the entire value chain from farm to dinner tables through the emergence of supermarkets.
The government therefore sees opportunities in the agricultural sector through transfer of technology and innovation in the value chain from production to value addition. There are opportunities in Ghana for investments and collaboration in commercial and mechanised farming with Ghanaian farmers for cash crops in the arable fields of the central to the northern belts of Ghana for exports.
The UK’s Minister for Investment at the Department for International Trade, Graham Stuart, in his remarks at the summit, underlined Prime Minister Theresa May’s goal to make Britain Africa’s largest investor by 2022. He said a joint-venture by Ghana’s Precious Minerals Marketing Company (PMMC) and UK’s largest gold refinery, Baird&Co to establish West Africa’s first gold assaying plant indicates that ‘Ghana is on a bold path of economic transformation and growth.’