By Wisdom JONNY-NUEKPE
To regain momentum and create a growth rate and investment climate conducive to achieving key development goals, government must take decisive action over the next four years to make some gains, the African Centre for Economic Transformation (ACET) has said.
A Senior Director-Research, Policy and Programmes at ACET, Dr. Edward K. Brown – who was addressing media about the Centre’s African Transformation Index (ATI) as part of the country’s National Economic Dialogue which was held last week – explained that government requires targetted structural reforms to achieve key development goals.
Dr. Brown said investment in productivity-enhancing sectors, and policies that promote inclusive and resilient economic growth, with focus on diversification, export competitiveness, productivity, technology, and human well-being, must be holistically pursued by government to accelerate economic transformation.
Labelling these focus areas as ‘DEPTH’, Dr. Brown said diversification – which is a key driver of economic transformation – remains weak and declining in Ghana.
For instance, the country’s economy has become less diversified over the past two decades despite shifting from subsistence agriculture to services. The industrial sector, likewise, has become smaller – largely driven by shrinking manufacturing, construction, mining and utility subsectors – but still accounts for about a quarter of the country’s total GDP.
Dr. Brown is concerned that since 1980 Ghana’s goods’ export value increased from US$1.2billion to US$20billion in 2020. However, the country’s export structure has been slow to diversify.
On export competitiveness, ACET opined that the country’s exports remain concentrated in moderate and low-complexity products, reflecting limited diversification and export sophistication.
“Weak value addition and minimal processing have hindered technology upgrading, slowing industrial progress,” Dr. Brown noted.
While Ghana’s economy has undergone significant structural change since 2000, these changes, according to ACET, have not enhanced productivity in the last two decades.
According to ACET, manufacturing, labour and productivity have dropped by almost 50 percent between 2012 and 2020. This, according to the Centre, is partly due to a shift in employment from agriculture to low-productivity oriented sub-sectors in the informal sector.
ACET noted that this high level of informality – about 90 percent – dominates both the services and agricultural sectors.
On technology upgrading, ACET explained that though Ghana has begun to catch up with peers in the digital world, the overall intensity of technology use in production and exports remains low.
“This reflects the weaknesses in industrial policy related to using technology content for triggering mechanised export,” Dr. Brown noted.
With focus on human well-being, the Centre suggested that the country’s job transformation process has also been unfavorable to women – particularly female representation in formal employment.
However, Dr. Brown noted that it is imperative that government creates pathways for informal sector workers – particularly women – to shift into formal employment through targetted training and skill development programmes.
