Ghana: Achieving economic growth with job creation
In 2011, Ghana’s economy was described as one of the fastest growing economies in the world and achieved a lower middle-income status after the rebasing of the national income figures. This calls for celebration, except that underneath the growth numbers lies the troubling phenomenon of unemployment.
Economic growth is necessary to create opportunities for those seeking employment. However Ghana’s situation is different as the country is experiencing a jobless growth.
Unlike 2011 when Ghana recorded one of the highest Gross Domestic Product (GDP) growth rates in the world (14.4%), the year 2012 was marked by significant economic and political challenges.
The question now, as reflected in the theme for the 2013 Budget, is how to shore up the confidence of the investor community, private sector, donor community and the public at large, in the nation’s economy.
Should the success story of 2011, that is single digit inflation, relatively stable currency against major trading currencies, and improved budgetary position, be only a mirage? Is the economy ready to withstand the reduction in grants and aid from donor countries as is customary with countries attaining lower middle income status, so that more jobs can be created locally?
Certainly, it is not a pleasant situation to have an economy with a lower middle income status while at the same time there are large numbers of young graduates from the universities, colleges, polytechnics and the secondary schools with employable skills who are unable to find decent work both in the formal and informal sectors.
The logical question to ask then, is: If Ghana’s economy is on such an inspiring growth path, should it not be creating jobs, raising people’s standards of living and improving the welfare of its people?
Of course it should, but the truth of the matter is that much of the growth is occurring in sectors that are not labour intensive such as the oil and mining sectors. Sectors that are labour intensive such as manufacturing and agricultural sectors are performing at a relatively lower rate.
It is significant to acknowledge that growth in selected areas of the economy did provoke confidence in 2012. Key sectors such as agriculture grew by 2.6 per cent from an actual out-turn of 0.8 per cent in 2011, whilst the services sector, the largest sector of the economy, grew by 8.8 per cent.
The growth was attributed to the noteworthy performances of sub-sectors like hotels and restaurants by 13.6 per cent, transport and storage by 11.4 per cent and financial intermediation by 11.4 per cent.
The industrial sector largely made up of mining and quarrying, manufacturing, construction and electricity, amongst others, recorded a modest growth rate of 7.0 per cent in 2012, against a target of 15.8 per cent and an actual out-turn of 41.1 per cent in 2011.
The challenge is to sustain and enhance this level of growth again in 2013 to ensure that more jobs are created especially for the unemployed youth.
The attainment of the one million metric tons of Cocoa production in 2011 was a laudable achievement and a big boost to farming in Ghana, but it could not be sustained last year.
Ghana is still lagging behind in fish farming and livestock production. Government is finding it difficult to get the necessary funding to increase investment in these areas and, therefore, needs the partnership of the private sector to attain self-sufficiency in food production, to meet domestic needs.
Currently, livestock farmers are facing problems in acquiring the necessary input, and require Government’s assistance in the form of subsidies to reduce the cost of feed, which is the main impediment to increasing productivity in that sector..
Industrialization plays a vital role in the economic development of an underdeveloped country like Ghana. It is an established historical fact that all the developed countries of the world broke the vicious cycle of underdevelopment by industrializing their economies, but the situation in Ghana is that the industrialization drive has remained low over the decades.
Economic growth is not enough unless it is accompanied by significant job growth and improvement in living standards. Hence, a jobless growth economy has serious implications for everyone because it does not only mislead the people but it also provides policymakers a false sense of comfort. Such a combination is a recipe for enhanced social tension, discontent and political unrest.
It is important for policymakers to note that the main reason behind the unrest in North Africa has not merely been because of lack of political freedoms, but rather the end-product of growing economies that have failed to produce jobs for the teeming unemployed, especially young graduates.
Although it is the last thing one would wish, it must be conceded also that similar upheavals cannot be ruled out in Ghana because when the people are not getting any jobs to do, they will become frustrated and resort to desperate measures. The remedy now, therefore, is all about what we can do to ensure that job creation goes hand in hand with economic growth.
Government must strive to move the country from a lower middle income status to a fully fledged middle income country. This goal can be achieved if the country should gear towards investment and export-led economic growth to create jobs locally rather than depend on consumption and import-led growth.
The 2013 Budget Statement seeks to set the stage to deliver on the four pillars which underpin the National Development Programme – that is, putting the people first; building a strong and resilient economy; expanding infrastructure; and ensuring a transparent and accountable governance framework. In addition to these, it is important given the country’s current position, to continue to sustain confidence in the future of the Ghanaian economy.
The present budget, albeit cautiously, attempts to tackle all those challenges but the million-dollar question now is, “Does the current Administration have the political will and fiscal discipline to deliver on all of these in 2013 so that investors both local and foreign can take advantage of the enabling environment to create the much needed jobs?”.
These, of course in addition to dealing decisively with the current energy crisis confronting the nation, are some of the paths along which Ghana could achieve the crucial dual-target of economic growth alongside growth in employment generation.
By George Larbi
Source: GNA