[ 2016-11-11 ]

Ghana's economy scores another first
Ghana became the first sub Saharan African country
to halve extreme poverty, an indication that the
country’s economic policies are having the
desired impact, MARK DEAN of Your Business Watch
writes.

Ghana became the first sub Saharan country to
halve extreme poverty in relation to the UN
Millennium Development Goals, according to a
United Nations Development Program Report released
last week. The country also made significant
progress in reducing hunger, reducing the
prevalence of HIV/AIDS and making education
equally accessible to boys.

These latest milestones come on the heels of a
negative narrative of the Ghanaian economy that
seems to emphasise a view that the economy is in
tatters. But such negative narratives, mainly from
Opposition parties, are increasingly being
dismissed by Ghanaians as the economy continues to
show resilience and receive plaudits from both
local and international agencies.

The country’s economy is clearly not in tatters
as the UNDP report signals. Indeed, a few days
before the UNDP Report, Ghana was rated as the
country with the most favourable climate for
business within the West African sub region. Some
expected that for all the reports of economic
gloom, the country’s investment climate would
have been adjudged as highly unfriendly.

Generally, there have been challenging economic
times globally and these are primarily due to
reduction in commodity prices. But in the midst of
the global challenges, Ghana has provided a haven
for many investors seeking opportunities in
sub-Saharan Africa. For instance, it is very
instructive to note that despite its vast oil and
gas resources, huge population and market, the
Nigerian economy has not been able to match the
performance of the Ghanaian economy. The Nigerians
have struggled to introduce policies to address
economic challenges unlike their Ghanaian
counterparts and international community continues
to express confidence in the Ghanaian economy;
“Ghana’s economy is growing, Nigeria’s is
shrinking. We have a very different relationship
with Ghana. Ghana is more supportive of free trade
and shares a long history of peaceful existence
which Nigeria does not have,” US Ambassador to
Ghana recently stated in an interview with an
Accra based radio station when he dismissed
suggestions of a changed relationship with US
following the election of Donald Trump as the
President of the United States of America.

The resilience of the Ghanaian economy has been a
miracle to many people; beyond the global economic
slump resulting from low commodity prices, the
country has also faced a peculiar energy crisis
for more than three years bringing many industries
to their knees.

Yet, the country has managed modest growth rates,
stabilized the cedi and embarked on massive
infrastructural development projects in the past
four years while surprisingly maintaining good
fiscal discipline and managing inflation. The man
behind the strategies and policies, Mr Seth
Terkper, the country’s finance minister explains
that part of the country economic success can be
attributed to facing the challenges head on with a
pragmatic approach and avoiding panic and reckless
spending in an election year.

What the government did, he said, was to do a
contract data base of all outstanding contracts in
the country and then proceed to tackle pipeline
contracts. He noted that the country, hitherto,
did not have a good idea of the number of
contracts so controlling expenditure had always
been a challenge.

“Ghana never knew how many contracts were in the
system and that is one of the biggest headaches
Ghana has always had – overshooting the budget.
So when we did that data base, we realised that we
had nearly about 3,000 or so projects here and
there from education to health to others”, he
stated in a recent interview with Ghana’s
state-owned Daily Graphic.

Another response by the government was to seek IMF
intervention but develop home grown measures in
the country’s engagement with the IMF. Indeed,
the news of the IMF engagement had received mixed
response from Ghanaians. Some criticised the
government citing the restrictive conditions that
were likely to impose hardships. But others hailed
it as a master stroke considering the nature of
the engagement. In the end, many Ghanaians agree
that it was a good move from the government.

“Going to the IMF was inevitable,” the finance
minister explains. He notes that while there were
obvious conditions related to the IMF engagement,
there have been some very worthy benefits and
cites the enhanced stabilization of the cedi as
one of the benefits of the IMF intervention.

With a strategy that seeks to consolidate the
country energy base, the government is optimistic
about the future. It has turned to the World Bank
for a partial risk guarantee to develop its own
gas resource to help generate more power. That
will also help provide vital support to the
private sector and help boost industrial growth.

The future obviously looks promising and with the
solid foundations that have been put in place, the
Ghana is no doubt poised for more prosperous
economic times.

Source - Mark Dean

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