Ghana’s economy is expanding, with recent indicators pointing to steady growth largely driven by the services sector. However, this pattern of growth raises concerns about long-term sustainability if agriculture and manufacturing continue to lag, Dr. Michael Insaidoo, an economist and lecturer at the University of Professional Studies, Accra (UPSA), has warned.
He noted that services, including telecommunications, trade, finance, transport and digital platforms have become the dominant contributors to Ghana’s economic growth, accounting for more than half of Gross Domestic Product (GDP).
“On the surface, the numbers look positive, but the composition of growth matters,” Dr. Insaidoo said. “An economy that grows mainly through services, without strong productive sectors underneath, risks growing without transforming.”
Services as Ghana’s Growth Engine
Dr. Insaidoo explained that over the past decade, services have outpaced agriculture and industry due to rapid digitalisation, urbanisation and the expansion of consumer-driven activities such as mobile money, logistics, hospitality and professional services.
He said services-led growth offers short-term benefits for policymakers, including faster output expansion, improved tax mobilisation through digital platforms and visible economic activity in urban centres.
“Services are easier to scale because they require less capital than manufacturing,” he said. “But ease of growth should not be confused with depth of development.”
Weaknesses in Agriculture and Manufacturing
According to Dr. Insaidoo, agriculture despite employing a significant portion of the workforce continues to experience low productivity due to rain-fed farming, limited mechanisation, climate risks and weak agro-processing linkages.
Manufacturing, he added, faces even greater structural constraints, including high energy costs, dependence on imported inputs, limited access to long-term finance and intense competition from cheaper imports.
“The result is a dual economy,” he said. “Services are expanding rapidly, while the sectors that create scale jobs, exports and value addition remain weak.”
Limits of Services-Led Growth
Dr. Insaidoo cautioned that services-driven growth has natural limits.
He explained that many service activities are consumption-based rather than export-oriented, placing pressure on Ghana’s balance of payments as imports rise faster than exports.
In addition, he said services often generate fewer jobs for low- and mid-skilled workers compared to agriculture and manufacturing, contributing to persistent youth unemployment and underemployment.
“Services are also highly sensitive to economic shocks,” he noted. “When incomes fall or credit tightens, demand for services declines quickly.”
The Value-Addition Challenge
Dr. Insaidoo argued that Ghana’s core development problem lies in where value is created. The country continues to export raw cocoa, gold and agricultural produce while importing processed foods and manufactured goods.
“This structure limits income retention and industrial learning,” he said. “Without agro-processing and manufacturing, services end up feeding on imports rather than supporting local value chains.”
Towards a Balanced Growth Model
He stressed that services should complement not replace productive sectors. Digital finance, logistics and telecommunications, he said, could support farmers and manufacturers if aligned with targeted industrial policies.
Such a shift, he added, would require lower industrial energy costs, access to long-term financing, stable trade policies and sustained investment in skills and infrastructure.
A Policy Question Ghana Cannot Ignore
Dr. Insaidoo said services-led growth was not inherently negative and reflected progress in modernising parts of the economy. However, he warned against mistaking speed for strength.
“Without deliberate efforts to revive agriculture and manufacturing, Ghana risks growing without transforming,” he said. “The challenge is to turn services-driven growth into a platform for production, not a substitute for it.”
