Ghana needs close to US$ 5 billion annually till 2030 before it can be able to totally and effectively deal with the structural problems in the economy.
This was contained in the 2024 Country Focus Report on Ghana by the African Development Bank (AfDB).
According to the report cited by The High Street Journal, Ghana in the fourth republic has chalked some level of economic growth. However, little has been seen in the area of structural transformation.
Citing factors explaining the low level of structural transformation in Ghana’s economy, the report noted that the country’s job creation is experienced in the least productive sector. Moreover, little has been done to deliberately implement efforts aimed at structural transformation in addition to the predominance of the informal sector.
“Three factors explain the low level of structural transformation in Ghana’s economy. First, jobs in Ghana are concentrated and moving to the least productive sectors (personal services, agriculture, wholesale and retail, and manufacturing). Second, Ghana underexploits the factors favorable to structural transformation: the quality of institutions is deteriorating, the low diversification of exports limits the benefits of trade openness, the country lacks infrastructure, human capital is moderately developed, and urbanization has failed to bring about the expected structural transformation,” portions of the report read.
It continued that, “the country faces bottlenecks linked to the predominance of the informal sector, the high vulnerability to climate change, the limited access and high cost of credit, and the high share of young NEET.” Given the inherent structural challenges, coupled with the current economic difficulties, AfDB is recommending that Ghana embarks on a massive structural transformation so that it can catch up with its peers making significant strides.
This massive structural change, AfDB admits will come at a huge financial cost but optimistic that it is doable.
“Financial needs for structural transformation in Ghana are huge but within reach. To accelerate its structural change and catch up with the best-performing developing countries, Ghana needs to mobilize USD 4.87 billion per year, until 2030, for the Sustainable Development Goals (SDGs); and 0.85 billion, until 2063, for the African Union (UA) 2063 Agenda, of which the country has only managed to mobilize a third,” the report indicated.
The lack of structural transformation in Ghana’s economy is practically felt in the lack of decent and well-paying jobs which also lack opportunity for development. Many workers in the informal sector also lack job security, retirement plans, and are unable to save for the future. In addition, businesses are unable to expand to create decent jobs due to either a lack of credit or a high cost of borrowing emanating from an unfavorable business environment.
As a result, the economy is not able to absorb a significant number of the labor force. This is seen in the high unemployment rate leaving the youth with no opportunities leading to a sense of frustration and hopelessness. Should governments take this recommendation by AfDB seriously, such an annual investment will holistically deal with the fundamental and structural problems of the economy and transform the lives of the people.
