Economy of Ghana
|Economy of Ghana|
|Fiscal year||Calendar year 1 January to 31 December|
$90.882 billion (2013 estimate, PPP)
|GDP growth|| 8.5% (Q3 – 2013)
8.2% (2012 est.)
|GDP per capita||$3582 (2013 estimate, PPP)[n]
$1694 (2013 estimate, nominal)[n]
|GDP by sector||services: 50%; industry: 27.3%; agriculture: 22.7% (2012)|
|Inflation (CPI)||10.4% (2013 March)|
below poverty line
|3% (2013 est.)|
|Gini coefficient||39.4 (2005-06)|
|Labor force||12.83 million (2012 est.)|
|services: 28%; industry: 20%; agriculture: 52% (2011 est.)|
|Unemployment||3% (Q4 – December 2012)|
|Average gross salary||¢14,071.62 / $7,183.2 (per year)|
|Average net salary||¢1,172.66 / $598.60 (per month)|
|Ease of doing business rank||64th|
|Exports||$13.13 billion (2011 est.)|
|Export goods||Electronics, Automobiles, Petroleum Products, Liquefied Natural Gas, Electric energy, Industrial minerals, Horticulture, Cocoa|
|Main export partners||
Turkey 2.5% (2012 est.)
|Imports||$14.03 billion (2010 est.)|
|Import goods||Military technology
|Main import partners||India 4.0% (2012 est.)|
|FDI stock||$4.9 billion (2012)|
|Gross external debt||$5.84 billion (31 December 2009 est.)|
|Public debt||67.5% of GDP (2009 est.)|
|Revenues||$4.547 billion (2009 est.)|
|Expenses||$6.124 billion (2009 est.)|
|All values, unless otherwise stated, are in US dollars|
The economy of Ghana, has a diverse and rich resource base with a primary manufacturing and exportation of digital technology goods combined with automotive and ship construction and exportation, as well as exportation of diverse and rich resource hydrocarbons, industrial minerals among many others makes Ghana attain one of the highest GDP per capita in Africa. Ghana is one of the top–ten fastest growing economies in the world, and the fastest growing economy in Africa.
The Ghanaian domestic economy in 2012 revolved around services, which accounts for 50% of GDP and employs 28% of the work force. Growing output towards economic industrialization has made Ghana remain one of the more economically sound countries in all of Africa.
Ghana embarked on a currency re-denomination exercise, from Cedi (¢) to the new currency, the Ghana Cedi (GH¢) in July 2007. The transfer rate is 1 Ghana Cedi for every 10,000 Cedis. Ghana embarked upon an aggressive media campaign to educate the public about what re-denomination entails. The new Ghana Cedi now exchanges at a rate of ¥1 CNY= Gh¢ 0.31.[Exchange Rates.org] Value Added Tax is a consumption tax administered in Ghana. The tax regime which started in 1998 had a single rate but since September 2007 entered into a multiple rate regime. In 1998, the rate of tax was 10% and amended in 2000 to 12.5%. The top income tax and corporate tax rates are 25%. Other taxes included with value-added tax (VAT), are national health insurance levy, and a capital gains tax. The overall tax burden amounts to 12.1% of Ghana's total domestic income, and the budget of Ghana has fallen to the equivalent of 39.8% of GDP. Persistently high inflation has seen the Ghana Cedi become pegged to both Ghana's gold reserves and the China Renminbi.
- 1 Manufacturing
- 2 Telecommunications
- 3 Private Banking
- 4 Energy
- 5 Hydrocarbon and mining
- 6 Tourism
- 7 Agriculture
- 8 Macro-economic trend history
- 9 Economic history
- 10 Ghana: Vision 2020 and Industrialization
- 11 Economic transparency
- 12 Footnotes
- 13 References
Ghana's industrial base is relatively advanced. Import-substitution industries include electronics manufacturing; car manufacturing; textiles; steel; tires; photovoltaics (pv) and solar panels; crude oil and gas refining; finished goods; flour milling; food production; beverages; tobacco; simple consumer goods; and electric car, truck, and bus assembly, while toiletries are currently imported.
Ghana's telecommunications statistics indicated that as of 2013 there are 26,336,000 cell phone lines in operation. The mass media of Ghana is among the most liberal in Africa, with Ghana ranking as the 3rd most freest in Africa and 30th most free in the world on the world wide press freedom Index. Chapter 12 of the Constitution of Ghana guarantees freedom of the Ghanaian press and the independence of the mass media, and in Chapter 2 prohibits censorship. The Ghanaian press freedom was restored in 1992. Competition among mobil phone companies in Ghana is an important part of the telecommunications industry growth of Ghana, with companies obtaining more than 80 per 100 persons as mobil phone and fixed phone users. Ghana was one of the first countries in Africa to achieve the connection to the World Wide Web. In 2010, there were 165 licensed internet service providers in Ghana and they were running 29 of the fiber optic, and authorized networks VSAT operators were 176, of which 57 functioned, and 99 internet operators were authorized to the public, and private data and packet-switched network operators were 25.
The financial services in Ghana has seen a lot of reforms in the past years. Ghana through the Banking (Amendment) Act 2007 has include the awarding of General Banking license to qualified Banks and this allows Offshore Banks to operate in the country. Barclays Bank (Ghana) limited has become the first Bank in Ghana to be awarded the General Banking license in the Country. It has therefore become possible for non–resident individuals and foreign companies to open offshore Bank Accounts in Ghana.
As of December 2012, Ghana gets 97% of its energy from Hydropower and exports some of this to neighboring countries, however Ghana aims to increase its solar energy generation to get 100% of its energy from solar energy by the year 2016.
Ghana has aggressively began the construction of solar plants across its sun rich land in an aim for the country to become the first country to get 100% of its energy from solar energy generation by 2016. The biggest photovoltaic (PV) and largest solar energy plant in Africa, the Nzema project, based in Ghana, will be able to provide electricity to more than 100,000 homes. The 155 megawatt plant will increase Ghana's electricity generating capacity by 6%.
Construction work on the GH¢ 740 million (GB£ 248 million) and the 4th largest solar power plant in the world, is being developed by, Blue Energy, a UK-based renewable energy investment company, majority owned and funded by members of the, Stadium Group, a large European private asset and development company with GB£ 2.5 billion under management. Project director is Douglas Coleman, from Mere Power Nzema Ltd, Ghana.
Unlike many other solar projects in Africa that use concentrated solar power, solar plants will use photovoltaic (PV) technology to convert sunlight directly into electricity. Installation of more than 630,000 solar PV modules will begin by the end of 2013 with electricity being generated early in 2014. It is due to reach full capacity at the end of 2015.
Ghana has Class 4-6 wind resources and locations of the high wind areas – such as Nkwanta, the Accra Plains, and Kwahu and Gambaga mountains. The maximum energy that could be tapped from Ghana’s available wind resource for electricity is estimated to be about 500 – 600 GWh/year. To give perspective – In 2011, per same Energy Commission, the largest Akosombo hydroelectric dam in Ghana alone produced 6,495 GWhrs of electric power and, counting all Ghana's geothermal energy production in addition, total energy generated was 11,200 GWhrs in the same year. These assessments do not take into consideration further limiting factors such as land-use restrictions, the existing grid (or how far the wind resource may be from the grid) and accessibility. To conclude, wind energy has potential to contribute significantly to the country’s energy industry – 10% can certainly be attained in terms of installed capacity, and about 5% of total electric generation potential from wind alone.
The vast arable and degraded land mass of Ghana has the potential for the cultivation of crops and plants that could be converted into a wide range of solid and liquid bio-fuels, as the development of alternative transportation fuels could help Ghana to diversify and secure its future energy supplies. Main investments in the bio-energy subsector existed in the areas of production, are transportation, storage, distribution, sale, marketing and exportation.
The goal of Ghana regarding bio-energy, as articulated its energy sector policy, is to modernize and examine the benefits of bio-energy on a sustainable basis. Biomass is Ghana's dominant energy resource in terms of endowment and consumption, with the two primary bio-fuels consumed being ethanol and biodiesel. To that effect, the Ghana ministry of Energy in 2010 developed the energy sector strategy and development plan. Highlights of the key policy objectives strategy for the renewable energy subsector include sustaining the supply and efficient use of wood-fuels while ensuring that their utilization does not lead to deforestation. The plan would support private sector investments in the cultivation of bio-fuel feedstock, extraction of bio-oil and its refining into secondary products, thereby creating appropriate financial and tax incentives. The Ghana Renewal Energy Act provides the necessary fiscal incentives for renewable energy development by the private sector, and also details the control and management of bio-fuel and wood- fuel projects in Ghana. The Ghana National Petroleum Authority (NPA) was tasked by the Renewable Energy Act 2011 to price Ghana's bio-fuel blend in accordance with the prescribed petroleum pricing formula.
The combined effects of climate change and global economic turbulence, had triggered a sense of urgency among Ghanaian policymakers, industry and development practitioners to find sustainable and viable solutions in the area of bio-fuels.
Electricity generation is one of the key factors in order to achieve the development of the Ghanaian national economy, with aggressive and rapid industrialization; Ghana's national electric energy consumption was 265 kilowatt per capita in 2009.
Hydrocarbon and mining
Ghana has 5 billion barrels (790×106 m3) to 7 billion barrels (1.1×109 m3) of petroleum in reserves and a large oilfield which contains up to 3 billion barrels (480×106 m3) of sweet crude oil.was discovered in 2007. Oil exploration is ongoing and, the amount of oil continues to increase. Ghana produces crude oil, as of 15 December 2010, and until June 2011, Ghana exploited around 120,000 barrels per day and is expected to increase production up to 2.5 million barrels per day in 2014. Ghana produces gas and has vast natural gas reserves, which is used by many foreign multinational companies operating in Ghana.
Mining in Ghana has gained importance in the Ghanaian economy since the turn of the 21st century, with a growth of around 30% in 2007; main mining extractions are bauxite, gold (Ghana is one of the largest gold producers in the world), and the phosphates.
The Ghanaian Government has placed great emphasis upon further tourism support and development. Tourism contributed to 4.9% of GDP in 2009, attracting around 500,000 tourists. Tourist destinations include Ghana's many castles and forts, national parks, beaches, nature reserves, landscapes and World Heritage buildings and sites.
In 2011, Forbes Magazine, published that Ghana was ranked the eleventh most friendly country in the world. The assertion was based on a survey in 2010 of a cross-section of travelers. Of all the countries on the Africa continent that were included in the survey Ghana ranked highest.
Ghana National Agricultural Export is the government arm that operates, maintains, overlooks the planting of cocoa, cashew etc. and other crops for export. Since its inception, it has drastically assisted the government in boosting agricultural sales. Agribusiness accounts for small fraction of gross domestic product. Main harvested crops are corn, the plantain, rice, millet, sorghum, cassava and yam. Unlike Ghanaian agricultural livestock, forestry and fishing sectors, the crop sector is key to the Ghanaian Agriculture industry.
Macro-economic trend history
This is a chart of trend of gross domestic product of Ghana at market prices estimated with figures in millions of Ghanaian Cedis.
|Year||Gross Domestic Product||US Dollar exchange|
|Exportations to||Importations from|
Independence and Nkrumah (1957—1966)
At independence, Ghana had a substantial physical and social infrastructure and $481 million in foreign reserves. The Nkrumah government further developed the infrastructure towards industrialization and made important public investments in the industrial sector. The construction of the Akosombo Dam was completed on the Volta River in 1966. The Ghana state-owned company Volta Aluminum Company (Valco), Africa's largest aluminium smelter, was built to use power generated at the dam. Aluminium exports from Valco were a major source of foreign exchange for Ghana.
Many Nkrumah-era investments were monumental public works projects which were assets for the country, industrialisation and agricultural schemes. With cocoa prices falling and the country's foreign-exchange reserves fast disappearing, the government resorted to supplier credits to finance many projects. By the mid-1960s, Ghana's currency reserves were gone, and the country could not meet repayment schedules. To rationalize, the National Liberation Council (1966–1969) abandoned unprofitable projects, and some inefficient state-owned enterprises were sold to private investors.
Acheampong regime (1972—1978)
To restructure the economy of Ghana, Ignatius Kutu Acheampong (1972–78), undertook an austerity program that emphasized self-reliance, particularly in food production. These plans were not realised, however, primarily because of post-1973 petroleum price increases and a drought in 1975-77 that particularly affected northern Ghana. Acheampong, who had inherited foreign debts of almost $1 billion began to mismanage the economy, abrogated existing rescheduling arrangements for some debts and rejected other repayments. After creditors objected to this unilateral action, a 1974 agreement rescheduled the medium-term debt on liberal terms. Acheampong also imposed the Foreign direct investment Policy Decree of 1975—effective on January 1977—that required 51% Ghanaian equity participation in most foreign firms, but the government took 40% in specified industries. Many shares were sold directly to the public.
Akuffo regime (1978—1979)
Continued mismanagement of the economy, record inflation (more than 100% in 1977), and increasing political corruption, notably at the highest political levels (president of Ghana), led to growing dissatisfaction. The post-July 1978 military regime led by Fred Akuffo attempted to deal with Ghana's economic problems by making small changes in the overvalued cedi and by restraining government spending and monetary growth. In January 1979, the government promised to undertake economic reforms, including a reduction of the budget deficit. The reform became inoperative after the 4 June impeachment and coup that took place due to economic mismanagement and public dissatisfaction that brought Flight Lieutenant Jerry Rawlings to power for 3 months.
Limann government (1979)
In September 1979, the civilian government of Hilla Limann continued mismanagement of the economy and inherited declining per capita income; stagnant industrial and agricultural production due to inadequate imported supplies; shortages of imported and locally produced goods; a sizable budget deficit (almost 40% of expenditures in 1979); high inflation, "moderating" to 54% in 1979 with an increasingly overvalued cedi.
Limann's PNP government announced yet another (2-year) reconstruction program, emphasizing increased food production and productivity, exports, and transport improvements. Import austerity was imposed and external payments arrears cut. However, declining cocoa production combined with falling cocoa prices, while petroleum prices soared. No effective measures were taken to reduce rampant political corruption and black marketing. While it was waiting for realisations from its 2 year plan, the Limann government was impeached due to economic mismanagement and public dissatisfaction with a second coup staged by Flt. Lt. Jerry Rawlings.
Rawlings regime (1979—2000)
When Jerry Rawlings' P/NDC again seized power by a coup at the end of 1981, along with continued mismanagement of the economy, cocoa output had fallen to half the 1970-71 level and its world price to one-third the 1975 level. By 1982, petroleum would constitute half of Ghana's imports, while overall trade contracted greatly. Internal transport had slowed to a crawl, and inflation remained high. During Rawlings' first year, the economy was stagnant. Industry ran at about 10% of capacity due to the chronic shortage of foreign exchange to cover the importation of required raw materials and replacement parts to achieve economic industrialization.
In April 1983, Rawlings launched an economic recovery program aimed at reopening infrastructural bottlenecks and reviving moribund productive sectors—agriculture, mining, and timber. The largely distorted exchange rate and prices were realigned to encourage production and exports. Increased fiscal and monetary discipline was imposed to curb inflation and to focus on priorities. Through November 1987, the cedi was devalued and widespread direct price controls were substantially reduced.
During 1984-88 the economy experienced solid growth for the first time since 1978 with renewed exports and foreign direct investments. Reforms were initially hampered by the forced closure of aluminium smelters and severe electricity power cuts for industry to increase rapid industrialization output. Infrastructure repairs, improved weather, and producer incentives and support revived output in the 1990s.
Ghana: Vision 2020 and Industrialization
Ghana intends to achieve its goals of accelerated economic growth, improved quality of life for all Ghanaian citizens, by reduced poverty through, higher private investment, rapid and aggressive industrialization, as well as direct and aggressive poverty-alleviation efforts. These plans have been forcefully reiterated in the 1995 Ghana government report, Ghana: Vision 2020. Nationalization of state-owned enterprises continues, with about two-thirds of 300 parastatal enterprises owned by the Government of Ghana. Other reforms adopted under the government's structural adjustment program include the elimination of exchange rate controls and the lifting of virtually all restrictions on imports. The establishment of an interbank foreign exchange market has greatly expanded access to foreign exchange.
The medium-term macroeconomic program of Ghana forecast assumes political stability, successful economic stabilization, and the implementation of a policy agenda for private sector growth, and aggressive public spending on social services, infrastructure, and industrialization. The ninth Consultative Group Meeting for Ghana ended 5 November 1997 after deliberations in Paris and in March 1998. Twenty-four countries: Group of 24 were represented at this meeting called on by the Ghanaian Government with projected announcement that, Ghana's goal and target of reaching the high-income economy status and reaching the newly industrialized country status, would be easily realized by 2020 and 2039 should Ghana rapidly enact its Ghana: Vision 2020 and macroeconomic program.
The judicial system of Ghana deals with corruption, economic malpractice and lack of economic transparency in Ghana. Despite significant economic progress, obstacles do remain, and particular institutions need reform and property rights need improvement. The overall investment regime in Ghana lacks market transparency. Tackling these issues will be necessary if Ghana's rapid economic growth is to be maintained.
- ^ The New Ghana Cedi is now exchanging at a rate of ¥1 CNY= Gh¢ 0.31, as of 20 April 2013.
- ^ The New Ghana Cedi is now exchanging at a rate of $1 USD= Gh¢ 1.95, as of 20 April 2013.
- ^ 2013 GDP per capita of Ghana 15.3 million population.
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