AKUFO-ADDO WELCOME NEW CHALLENGE
poorly maintained roads.
The sector also lacks post-harvest technological know-how and insufficient central government support. In 1992, the share of agriculture to the GDP was 23.6 percent, growing to about 41 percent in 1995. But the Ghana Statistical Service reports that this declined from 29.8 percent in 2010 to 22 percent at the end of last year.
A report by the World Bank Group showed that about 21 percent of the Ghanaian population has moved out of agriculture to other more productive economic sectors over the 18- year period between 1992 and 2010. Akufo-Addo also faces rising inequality against the backdrop of declining poverty and may need to rethink of Ghana’ s growth strategy to achieve some of his campaign promises to create jobs, restore rapid growth, build a factory in every district. The promise to give each constituency the equivalent of $ 1 million per year to pursue development projects will be eagerly anticipated as well.
The country holds promise, as evidenced by its attaining lower-middle income status in 2011, and Ghanaians are eager for change. He appears to recognise this desire in his rather short victory statement: " I will not let you down. I will do all in my power to live up to your hopes and expectations." Some of the challenges he faces are below courtesy of a paper by Ernest Aryeetey. Professor of Economics and Vice Chancellor, University of Ghana and William Baah-Boateng Senior Lecturer, Economics, University of Ghana published in The Conversation.
Slower employment growth
A key indicator of the health of an economy is the availability of jobs and their quality. This is measured by rates of unemployment and joblessness as well as poverty incidence and income inequality. Employment growth in Ghana has generally been slower than economic growth, raising concerns about the quality of the country’ s growth. Ghana’ s employment growth lags behind economic growth, with an estimated employment elasticity of output of 0.47. This suggests that every 1 % of annual economic growth yields 0.47 % growth of total employment.
Beside the slow rate of job creation is the dominance of vulnerable employment and the working poverty rate. In 2010, seven out of ten jobs were estimated to be vulnerable. Only one out of five jobs could be considered as productive jobs that meet the standard of decent work.
Robust economic growth, shortage of skills Economic growth and job creation depend on the size and quality of the labour force. The availability of human resources in the right quantity and quality form the foundation of growth and development. Ghana’ s population of 26.3 million has been growing at an annual average of 2.5 % over the last three decades.
The size of Ghana’ s labour force in 2013 stood at 12.31 million( 94.8 % in employment and 5.2 % unemployed). This is up from 6.04 million in 1992, which translates into 3.4 % annual growth on average. Thus the economically active – 47 % of total population – are responsible for feeding the entire population. Ghana has a shortage of high skilled professionals. It is also short of semi-specialised skills, such as technical and vocational skills. Anecdotal evidence suggests that when Ghana started producing oil commercially in late 2010, there were specific skills that were difficult to obtain domestically. These include engineers, drillers, production and operation workers. The industry had to rely on people from Côte d’ Ivoire and Nigeria.
Crafting a new growth strategy
A KEY INDICATOR OF THE HEALTH OF AN ECONOMY IS THE AVAILABILITY OF JOBS AND THEIR QUALITY
Thus, fixing the problem of the declining manufacturing sub-sector and raising productivity in agriculture should be the priority of policy towards more inclusive growth. This calls for investment in areas that would promote manufacturing and agricultural activities where the potential for job creation is high.
The business operating environment must also be addressed. Macroeconomic instability culminating in high interest rates, and high taxes coupled with chronic energy problems make manufacturers less competitive. This makes them more fragile within a trade environment where firms face global competition.
Investment in the energy sector to ensure a consistent power supply within a stable macroeconomic environment would be a major step towards reducing constraints facing the manufacturing sector. The business environment could also be improved if the country’ s institutional arrangements and regulatory framework are properly streamlined in line with best practices. On the supply side, low quality of labour requires urgent policy attention. Education and skills development have seen some improvement over the last three decades. But the pace appears to be slow. The link between education and productivity is quite clear. A comprehensive review of the education system is needed to assess the medium and long term relevance of education and skills development. Ghana could also leverage the strong growth performance of low labour absorption sectors of mining and oil extraction to boost growth in other sectors. It could do this by channelling returns from these sectors into infrastructure to support growth in agriculture and manufacturing.
30 Business Times Africa | 2016