Strong private sector growth key in creation of jobs

private sector growth

Last year, I heard the Minister of Finance making bold statement saying that government is “creating one million jobs” in the next four years. But I have always advocated that the private sector, if equipped, has more potential to create more jobs than the public sector. A typical example is the private sector promoting the government flagship programme 1D1F. After we emerge out of this pandemic, government focus area for public policy has to be the creation of an enabling environment to create job openings in the country.

Currently, the quantum of private investors creating job creations has ebbed to around 58 percent. The story of public-private partnerships (PPPs) in Ghana has been a mixed-feeling one. While we have had some notable successes, the landscape is also littered with troubled projects, ranging from ones where unfair risk allocation by government entities has upended the fortunes of the private partner, to ones where the private investor has managed to extract more than a fair share of benefits from the project.

Challenges of private sector to job creation in Ghana

Currently, the quantum of private investors in the creation of jobs has ebbed to around 58 per cent, for reasons that are well known — COVID-19 pandemic, the crisis in the banking finance sector, the financial challenges faced by private companies, and the inadequately developed Ghanaian market for financial support.

A recent survey, 2019-22, has assessed that 62 percent of the Ghanaian youth are unemployed. Hence, perfectly agree with President Akufo-Addo that in his second term, the focus will be on creation jobs for the youth. Reviving private investment flows into job creation across is the country will be key to attaining this threshold of socio-economic development in Ghana.

Among the most problematic, but obligatory enterprises, is the need to revamp the Ghanaian culture and outlook towards the abutting of government agencies and private partners for creating business enabling environment in the creation of jobs. The private sector serves as a long-term source of jobs and incomes for most people worldwide.

Thus, a major foundation upon which the development of the private sector is supported is its ability to generate decent jobs and higher incomes. The logic is that, increased and better employment opportunities via the private sector serve as a motivation for people to invest in their education in preparation for job opportunities.

In other words, the social unrest and likely increase in crime due to unemployment can be minimized through the job avenues created by the private sector, making it critical to the development of a country.

The challenge of ramping up private investments in business opportunities in various sectors towards creation of jobs will need action on two fronts: Refreshing institutions and policies for channeling financing; and providing a stable, durable, and empowering ecosystem for private players to partner with government entities in the task of job-creation. Learning from the past mixed experience of PPPs, we need to reimagine and redesign the PPP ecosystem along many fronts.

Contribution of private sector to job creation in Ghana

Currently Ghana’s PPP Act passed by Parliament in 2020, seeks “to provide for the development, implementation and regulation of public private partnership arrangements between contracting authorities and private parties for the provision of infrastructure and services, to establish institutional arrangements for the regulation of public private partnerships, and to provide for related matters.”

Ghana in the last two decade has applied PPP concepts in various sectors which include transport (railways, roads, ports), sports infrastructure, IT infrastructure, hospital, office buildings, social infrastructure for the education sector and other social infrastructure, including markets. This PPP Act passed by Parliament is laden with eminently sensible plug-and-play recommendations which can radically improve the PPP environment, if implemented with consistency and firm purpose.

Persons Engaged by Type of Ownership of Establishment in Ghana’s Industry

Type of Ownership Percent
State Owned 5.7%
Private Owned 87.7%
Joint Ownership 6.6%

Source: Ghana Statistical Service

Generally, as many as 87.7percent of persons engaged in Ghana are found in the private sector as depicted in Table above. In contrast, state owned enterprises engage only about 5.7percent. Indeed, between 2000 and the year 2010, employment in the formal private sector increased by 48percent whereas public sector jobs decreased by 29percent in Ghana (Aryeetey and Baah-Boateng, 2015).

Such a decline in public sector jobs fall in line with the assertion that in many developing and transition economies, job creation by government and public enterprises would decline because of fiscal constraints and inefficiency of state enterprises. In terms of firm size, the table below shows that close to 100percent of all jobs created by micro enterprises are in the private sector.

In addition, more than 75percent of persons engaged by small, medium and large enterprises in Ghana are privately owned. Thus, the private sector is a major source of employment in Ghana as in many developing countries. For instance, about 90percent of jobs in developing countries are said to be found in the private sector (European Commission Communication).

Size / Ownership State Owned Private Owned Total % of Privately Owned
Micro 23033 1,083,938 1,106,971 97.9
Small 191,467 802,928 994,395 80.7
Medium 85,215 338,372 423,587 79.9
Large 197,363 660,890 858,253 77.0
Total 497,078 2,886,128 3,383,206 85.3

Source: Ghana Statistical Service


It is evidently clear that to fulfill government promise of one million jobs; we need to strengthen the private sector with a financial stimulus package to build a strong business sector towards creation of jobs for the Ghanaian youths. The key to a successful PPP is to provide stable financial support which could be invested in business opportunities across the country.  It is believed that a competitive private sector is key in giving poor people opportunities to employment, thereby providing them with a source of income, subsequently taking them out of poverty.

Indeed, most poor people in developing countries are said to be engaged in the private sector, be it formal or informal (World Bank, 2014). Furthermore, the pace and quality of economic growth brought about by a private sector led growth directly plays a major role in the reduction of poverty. In other words, the growth of the private sector leads to more growth to the entire economy, which is deemed as the biggest element in poverty reduction in Ghana.

>>>is a Researcher and Public Policy Analyst with considerable knowledge and expertise in Public Private Partnership, Leadership inspiration and Public Policy formulation. He is currently a Senior Management Consultant, Gimpa Consultancy and Innovation Directorate (GCID), the Consulting Division of the Ghana Institute of Management and Public Administration (GIMPA). Contact the Author on 0205012686 / [email protected]

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