The African Development Bank (AfDB) has released a report outlining the obstacles hindering Ghana’s progress towards achieving structural solid transformation in its economy.
The report identifies three main factors contributing to Ghana’s limited level of structural transformation.
First, it notes that most employment opportunities in Ghana are concentrated in sectors such as personal services, agriculture, wholesale and retail, and manufacturing, which are often characterized by low productivity.
Secondly, the report highlights Ghana’s underutilization of factors that could contribute to structural transformation, such as deteriorating institutional quality, limited export diversification, inadequate infrastructure, moderately developed human capital, and unmet expectations from urbanization efforts.
“Thirdly,” the report emphasizes, “Ghana faces significant challenges linked to a large informal sector, increased vulnerability to climate change, limited access to affordable credit, and a high proportion of young people not in education, employment, or training (NEET).”
Despite experiencing sustained economic growth since the 1990s, mainly driven by oil production and stable policies that elevated it to lower-middle-income status in 2010, Ghana’s recent financial performance has been unstable following the COVID-19 pandemic.
Real GDP growth slowed to 3.8 per cent in 2022 from 5.1 per cent in 2021, with projections of 2.9 per cent for 2023, primarily due to macroeconomic volatility, tightening global financial conditions, and the fallout from multiple shocks.
The report emphasizes that Ghana urgently requires substantial financial resources to achieve its developmental goals.
It estimates a need of USD 4.87 billion annually until 2030 for the Sustainable Development Goals (SDGs) and USD 0.85 billion until 2063 for the African Union (AU) Agenda 2063.
However, Ghana has yet to secure a fraction of the required funding, highlighting a critical shortfall in financial mobilization.
The report recommends several strategic measures to expedite structural change and narrow the development gap with leading developing nations.
These include creating a more conducive business environment to attract domestic and foreign investment into key sectors essential for structural transformation.
It also advocates for a coherent urbanization strategy aimed at optimizing developmental impacts.
Moreover, the report urges Ghana to implement reforms to bolster macroeconomic stability and support structural transformation efforts. Key reform areas include enhancing monetary and fiscal policies to control inflation, stabilize exchange rates, and reduce non-productive public spending.
The report also stresses the importance of improving coordination in public sector development initiatives and accelerating debt restructuring to create room for concessional finance and enhance financial market accessibility.
In conclusion, the AfDB report serves as a comprehensive roadmap for Ghana’s economic challenges, emphasizing the critical need for strategic reforms and enhanced financial mobilization to foster sustainable and inclusive growth.
