Ghana’s economic transformation has remained weak and unstable over the past two decades, according to a recent report by the Africa Center for Economic Transformation (ACET).
The report highlights Ghana’s consistently low ranking in the African Transformation Index (ATI), scoring just 19.1 out of 100, far below the African average of 30.3. Despite notable shifts in the country’s economic structure, including the growth of the services sector and advancements in banking, telecommunications, and financial technology, Ghana has struggled to achieve sustainable economic progress.
One of the key findings of the ACET report is that Ghana’s economic transformation has been largely stagnant, with its ATI score fluctuating within a narrow range, reaching a peak of only 20.6 in 2014. This indicates that while the economy has experienced some sectoral shifts, the fundamental drivers of transformation—such as diversification, industrialization, and value addition—have remained weak.
The report calls for urgent measures to diversify production and exports, arguing that Ghana’s reliance on a few key commodities is constraining its economic growth and competitiveness.
Shift from Agriculture to Services but Limited Gains
Historically, Ghana’s economy was classified as agrarian, with agriculture being the dominant sector for decades. However, in 2006, the services sector overtook agriculture as the largest contributor to Gross Domestic Product (GDP), accounting for approximately 45.5% of total economic output. This shift was driven by the rapid expansion of banking, telecommunications, and other service-oriented industries.
Despite this transition, the country’s overall economic transformation has remained sluggish. The report notes that while financial services and technology-driven sectors have grown, they have not created sufficient linkages with other sectors, limiting their impact on overall economic growth. Additionally, while agriculture’s contribution to GDP has declined, it remains a vital sector, providing employment for a large portion of the population and sustaining Ghana’s cocoa industry, one of the country’s main exports.
Ghana’s industrial sector, which has been the second-largest contributor to GDP since 2011, has not seen the expected level of expansion, despite the country’s rich natural resource base. The sector accounts for about 29% of GDP, with significant contributions from gold mining, oil production, and other industrial activities. However, ACET’s report emphasizes that Ghana has not effectively leveraged its resource wealth to drive industrialization and economic transformation.
One major challenge identified is the lack of value addition in the country’s industrial sector. Ghana continues to export raw materials such as gold, crude petroleum, and cocoa without significant local processing or manufacturing. This prevents the country from fully benefiting from its resources and reduces its ability to create high-value jobs and drive sustainable economic growth. The report argues that industrial expansion must be accompanied by greater investment in manufacturing, value chain development, and the creation of a more diversified export base.
Export Dependence and Limited Global Integration
Ghana’s export performance has shown some improvements over the years, with total exports rising from $2.37 billion in 2000 to approximately $20 billion in 2022. However, this growth has not been accompanied by sufficient diversification. The country remains highly dependent on a narrow set of exports, primarily gold, crude petroleum, and cocoa. The top five export products accounted for 89% of total exports in 2020, up from 70% in 2000, highlighting an increasing concentration of Ghana’s export base.
ACET points out that Ghana’s limited integration into global and regional value chains has further hindered its export competitiveness. Unlike countries that have successfully diversified their economies through industrialization and sophisticated production, Ghana’s heavy reliance on commodity exports exposes it to price volatility in global markets.
The COVID-19 pandemic further highlighted this vulnerability, contributing to a decline in exports in 2020 and demonstrating the need for a more resilient and diversified economic structure.
Enhancing Economic Transformation
To break free from economic stagnation and achieve meaningful transformation, ACET recommends a strategic focus on diversification, industrialization, and value addition. This requires implementing key policy measures that will drive sustainable economic growth and improve Ghana’s global competitiveness.
One crucial measure is promoting manufacturing and industrial growth. Encouraging local industries to add value to raw materials before export will not only enhance job creation but also contribute to economic stability. By processing raw materials domestically rather than exporting them in their crude state, Ghana can increase the value of its exports and create a more robust industrial sector.
Another important step is expanding export markets and diversifying product offerings. Ghana’s over-reliance on a few commodities such as gold, crude petroleum, and cocoa exposes the economy to price volatility and market fluctuations. Developing new export products and penetrating new markets will help reduce this dependency and create a more resilient and dynamic trade environment.
Enhancing infrastructure and technological innovation is also essential for boosting economic productivity and competitiveness. Investments in transportation, energy, digital technology, and research will improve efficiency across sectors, making Ghana’s industries more attractive to both domestic and foreign investors. A modern infrastructure network, coupled with advancements in technology, will accelerate industrial growth and support economic transformation.
Additionally, strengthening linkages between sectors is critical to ensuring a more integrated and balanced economy. Growth in services, agriculture, and industry should be interconnected through coordinated policies and strategic investments. This will allow different sectors to complement and support one another, creating a more cohesive economic landscape where progress in one area stimulates growth in others.
While Ghana has made some progress in sectoral shifts, its overall economic transformation remains limited. Without decisive action to promote diversification and industrialization, the country risks continued stagnation.
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