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Ghana: Economic Challenges

AfricaFocus Bulletin
Jan 13 2009 (090113)
(Reposted from sources cited below)

Editor's Note

Incoming Ghanaian President John Atta Mills faces high expectations on coming into office this month. Visitors to the candidate's official website (http://www.attamills2008.com/site) made their priorities clear: 63% said he should focus on economic issues, 18% on national unity, 13% on education, and 6% on health care. But he also faces demands from international financial institutions; the World Bank country director warned in a January report that despite recent growth, both the fiscal and balance of payments deficits of the country were "unsustainable."

Two years ago the Ghana Human Development Report found that the country had made substantial progress against poverty over the previous eight years. It also found advances in areas such as primary education and health, while documenting continuing inequalities by gender, region, and the urban/rural divide. The report's statistical conclusions were reinforced by an Afrobarometer survey in March 2008, in which majorities reported some economic improvement, but also concern about inequality and the negative effects of some government policies.

This AfricaFocus Bulletin contains brief excerpts from the 2007 Ghana Human Development Report: Towards a More Inclusive Society, and from the June 2008 Afrobarometer report on its opinion survey about economic conditions in Ghana. The full 222-page Human Development Report is available at
http://www.undp-gha.org/publication.php and http://hdr.undp.org; the Afrobarometer report at http://www.afrobarometer.org

Another AfricaFocus Bulletin sent out today contains selections of commentaries on the successful presidential election and transfer of power in Ghana, as well as links to additional resources.

For previous AfricaFocus Bulletins on Ghana, and additional links, visit http://www.africafocus.org/country/ghana.php

For a recent authoritative book on Ghana's economic prospects , primarily by Ghanaian scholars, see Ernest Aryeetey and Ravi Kanbur, eds., The Economy of Ghana: Analytical Perspectives on Stability, Growth, and Poverty (James Currey):
http://www.africafocus.org/books/isbn.php?1847010032

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Ghana Human Development Report 2007

Towards a More Inclusive Society

United Nations Development Programme (UNDP)

[brief excerpts from full 222-page report]

Full report is available at

http://www.undp-gha.org/publication.php
and http://hdr.undp.org

Data on Human Development indices in Ghana from UNDP's annual Human Development Reports is available at http://tinyurl.com/95ykmf

Livelihoods And The Economy

Poverty Levels in Ghana

... The proportion of Ghanaians described as poor in 2005/06 was 28.5%, falling from 39.5% in 1998/99. Those described as extremely poor declined from 26.8% to 18.2%. Thus the first Millennium Development Goal of halving the poverty rate would be met by 2009 if the current growth rates are maintained.

The decline in poverty and extreme poverty between 1998/99 and 2005/2006 was more evenly distributed than in the earlier period of 1991/92 to 1998/99. All the localities and regions with the exception of Greater Accra and Upper West Region experienced declines in poverty. ... The Central and Eastern Regions experienced the largest decline in poverty of about 28.5%; these declines may be attributed to the concentration of programmes implemented under the President's Special Initiatives on cassava, pineapples, and oil palm in the Central Region and export crops of pineapples and cocoa in the Eastern region.

The general decline in poverty can be attributed to the high growth rates achieved during the period of implementation of the GPRS I and II. The growth has come from high growth in cocoa production benefiting from government intervention. Thus the benefits of the growth are seen in the more significant reductions in poverty in the cocoa producing localities and Regions.

...

Poverty trends in Ghana also differ among the various economic sectors (Figure 2.3). Poverty is particularly evident in two sectors in Ghana: agriculture and the informal sector, with the agricultural sector being the worse affected. Next to agriculture, 29 percent of those in micro and small enterprises live below the poverty line (National Policy Group, 2005). It was also observed that there is a general decline in the incidence of poverty for all groups. The absolute figures indicate that food crop farmers are the poorest compared to people in other activities. They recorded the highest poverty incidence-68 percent in 1991/92 but it fell to 46 percent in 2005/06.

Access to Education

In Ghana, both public and other key stakeholders such as religious and private institutions, provide basic school education, some secondary and tertiary education. The general story of developments in education is that access has improved considerably since 2004

[However] Progress at all levels of education in Ghana has been less than satisfactory or quite mixed (NDPC, 2007).

Access to Basic Education

Access to basic education is operationalised by the Ghana Statistical Service (GSS, 1998/99) as having a facility within one kilometre radius from one's place of residence.

There are regional differences in access to primary school. Regions in the southern sector of the country have greater access to primary education than the northern sector. The Upper East Region has the poorest access to primary education (61.9%) followed by the Upper West Region (67.1%). The factors that account for the low access to primary education in the three northern regions include sparse population distribution, poverty and the general deprivation in most areas. Access differs from urban to rural locations. Urban areas have better access to primary education than rural areas (93.2% compared to 81.0% respectively).

The picture is grimmer with respect to access to secondary education. The national average for access to secondary school is 43.3 percent, but it is even worse for the northern regions which average 15.5 per cent.

Apart from the north-south disparities, there exist differences between rural and urban areas. Access to secondary education is higher in urban areas (62.6%) than in rural areas (28.8%). Moreover, the quality of education in the rural areas is poorer. Similar explanatory factors of poor infrastructure and poverty, coupled with the tendency for more qualified secondary teachers to refuse posting to rural areas. Thus, in terms of education and related personal self-fulfilment and advancement, northern Ghana in particular and also the remote rural areas are increasingly excluded.

Patterns in Literacy

Table 2.6 presents the distribution of literacy levels for persons aged 15 years and above by region and sex, based on information from the 2000 Census. Over half (57.4%) of the total population of Ghana are literate; while 16.4 percent are literate in English only, 2.5 percent are literate in a local language only and 38.1 percent are literate in both English and a Ghanaian language. This implies that Ghanaians are generally more versed in learning through the English language than through their own indigenous language(s).There is a higher proportion of illiterate females (50.2%) than males (33.6%). Differences in access to economic opportunities, reinforced by some cultural practices are largely responsible for the much higher illiteracy rate of females and rural populations.

At the regional level, Table 2.7 indicates that for both sexes Greater Accra has the lowest illiteracy rate (18.4%), followed by Ashanti (35%) and Eastern (36.4%). The highest illiteracy levels are found in the three northern regions of Ghana (76.2% for Northern, 76.5% for Upper East and 73.4% for Upper West). Statistics also indicate that illiteracy is much higher in rural (55.6%) than urban (26.9%) areas and in both areas females have higher illiteracy levels (34.2% urban and 64.5% rural) than males (19.2% urban and 46.4% rural).


Afrobarometer Briefing Paper No. 50

June 2008

Economic Conditions in Ghana in 2008

[Excerpts. For full paper see http://www.afrobarometer.org]

[This Briefing Paper was prepared by CDD-Ghana
(http://www.cddghana.org/). The Afrobarometer, a cross-national survey research project, is conducted collaboratively by social scientists from 20 African countries. Coordination is provided by the Center for Democratic Development (CDD-Ghana), the Institute for Democracy in South Africa (IDASA), and the Institute for Research in Empirical Political Economy (IREEP, Benin). Several donors support the Afrobarometer's research, capacity building and outreach activities, including the Swedish International Development Cooperation Agency, the Department for International Development (UK), the Royal Danish Ministry of Foreign Affairs, and the U.S. Agency for International Development.]

Introduction

Ghana's economy has remained quite robust since 2005, notwithstanding the energy crises of 2006 and hikes in the prices of petroleum products. Real GDP growth increased from about 5.8 percent in 2005 to 6.2 percent in 2006 and available information (based on September 2007 data) projects real GDP growth at 6.3 percent. But what do ordinary Ghanaians think about the economy and their living conditions? What do they have to say about government's economic reform policies? And what is their assessment of the performance of government in the overall management of the Ghanaian economy? A fourth round Afrobarometer survey conducted in March 2008 provides public opinion data to respond to some of these questions.

The Afrobarometer

The Afrobarometer is a comparative series of public attitude surveys on democracy, governance, markets and living conditions. The survey is based on a randomly selected national probability sample of 1,200 respondents representing a cross-section of adult Ghanaians aged 18 years or older, which yields a margin of error of +/-2.5 at a 95 percent confidence level. All interviews are conducted face-to-face by trained fieldworkers in the language of the respondent's choice. Fieldwork for Round 4 of the Afrobarometer in Ghana was undertaken between March 4 and 27, 2008. Note that for purposes of cross-national comparison, the questions on the survey will be administered to random national samples in 19 other African countries before the end of 2008; comparative results will be presented in upcoming briefing and working papers from Afrobarometer Round 4.

Summary of Results

  • Ghanaians report general improvements in economic conditions and say that government economic performance has improved in many respects.
  • In 2008, for the first time since Afrobarometer surveys have been conducted in Ghana, (in 1999, 2002, and 2005) more than 4 in 10 Ghanaians express satisfaction with the condition of the national economy and their personal living conditions.
  • The experience of poverty (measured as shortages of basic human needs) has declined, especially with reference to improvements in reported popular access to medical care.
  • However this good economic news is offset by growing income inequality between rural and urban areas and across Ghana's administrative regions.
  • Ghanaians also report declining popular patience with economic reforms, probably due to a rising cost of living and negative perceptions of government performance at controlling inflation. In 2008, fewer people say they are willing to accept the hardships associated with economic reforms than in 2002 and 2005.

Evaluation of Current Economic Conditions

The Afrobarometer asks the opinions of respondents on the economic conditions of the country, their personal living conditions, as well as retrospective and prospective evaluation of those conditions.

For the first time in the history of the survey, close to half of Ghanaian adults assessed the general economic and their personal living conditions positively. More than 4 in 10 Ghanaians (45 percent) say that macro economic conditions are fairly good or very good. Another 42 percent express similar sentiments about their personal living conditions. The macro economy assessment represents a 19 percentage point increase over the 2005 score. That for personal living conditions is a 17 percentage point increase. These changes over time are both substantively and statistically significant.

However, there are substantial regional and other spatial variations in popular assessments of economic conditions. For example, a majority of respondents in the Upper West region express satisfaction with both macroeconomic conditions (58 percent) and personal living conditions (55 percent). A majority of respondents in Ashanti (57 percent), Upper East (54 percent) and Eastern regions (52 percent) also believe that macroeconomic conditions are fairly good or very good. But less than a quarter of respondents in the Volta region express satisfaction with macroeconomic conditions (18 percent) and their personal living conditions (23 percent).

....

Evaluations of Economic Conditions over Time

Again, for the first time since Afrobarometer surveys began in 1999, a majority of Ghanaians say economic conditions in Ghana are better or much better (56 percent) than they were in the previous year. An equal proportion (57 percent) also believes that their personal living conditions are better or much better now than a year before. These figures represent significant increases over 2005 when only a little over quarter (27 percent) each of Ghanaians expressed similar sentiments. In other words, retrospective economic evaluations have changed by +29 and +30 percentage points respectively.

As in previous surveys, Ghanaians continue to be very optimistic about the future. Large majorities believe macroeconomic conditions in Ghana (69 percent) and their personal living conditions (73 percent) will be better or much better in the years ahead. These evaluations declined significantly between 2002 and 2005 but have increased significantly in 2008, by 25 percentage points. The observed surge in optimism could have been influenced partly, if not largely, by the recent discovery of oil in commercial quantities in Ghana. Indeed the President was visibly elated on national television when management of the oil prospecting company broke the news. Moreover, the government's communication machinery has continued to tout the prospects of this discovery for Ghana's growth and development.

On the other hand, a sense of relative economic deprivation appears to prevail among Ghanaians. Compared to others, close to one third of Ghanaians (30 percent) think that their living conditions are worse or much worse. ...

Poverty

Experience of poverty has broadly declined since 2002. Take medical care for example. Whereas in 2002 more that half (54 percent) of Ghanaians reported having gone without this essential service at least once in the last 12 months, less than 4 in 10 Ghanaians (37 percent) report similarly in 2008. It appears that the introduction of the National Health Insurance Scheme has helped to expand access to medical care for Ghanaians. Similarly, the proportions of Ghanaians who reported having gone without food (40 percent), clean water (42 percent) and cash income (69 percent) in 2002 have declined to 31 percent, 36 percent and 53 percent respectively in 2008. However, it is important to note that a majority of Ghanaians continue to report shortages of cash income (53 percent).

These findings seem to confirm reported declining levels of poverty in Ghana from official sources. The most recent Ghana Living Standards Survey (GLSS, 2006) reported a decline in extreme poverty level from 37 percent in 1991 to 19 percent in 2006. It also lends credence to the report that the proportion of Ghanaians considered as poor (i.e. poverty head count) declined from about 52 percent in 1991 to 29 percent in 2006.

Experience of poverty is more pronounced in rural areas than in urban areas, especially when it comes to medical care and cash income. For the 2008 survey, 38 percent of rural dwellers compared with 25 percent of urban dwellers report having gone without medical care in the last 12 months. Similarly, whereas 56 percent of urban dwellers report a lack of cash income at least once in the last 12 months, some 69 percent of rural respondents report similarly. This is not surprising as it corresponds with recent GLSS data suggesting that poverty in Ghana has remained a disproportionately rural phenomenon up till now.

Government's Performance at Economic Management

We now turn to government's performance at economic management. In all four rounds of the survey, most Ghanaians rate the government's performance at economic management "fairly well" or "very well." Nearly 7 in 10 (69 percent) currently hold this view. Moreover, and for the first time, a majority of Ghanaians (54 percent) say government is doing well at job creation. The hike in appraisal of government's performance at job creation might have been influenced by the introduction of the National Youth Employment Programme in 2006 to provide jobs and job training for young people. It is worth mentioning that, in prioritising the development agenda of Ghana, unemployment is ranked highest; some 25 percent of Ghanaians say it is the most important problem facing the country today.

On the other hand, the government is consistently perceived by most Ghanaians to be performing badly or very badly in narrowing income gaps in the country. Currently, more than 6 in 10 (61 percent) of Ghanaians think government is doing badly in narrowing income gaps.

...

Assessment of government's efforts at improving the living standards of the poor was asked for the first time in the 2008 survey. Exactly half (50 percent) of Ghanaians think government is doing fairly well or very well in addressing the needs of the poor. It is worth noting that in February 2008 government introduced a Livelihood Empowerment against Poverty (LEAP) programme under which cash of between 8 and 15 Ghana Cedis will be transferred to poor households to help alleviate extreme poverty. Disbursement under this programme commenced in March 2008, the period of the fieldwork of this study.

Opinions on Economic Reforms

Despite the generally positive economic outlook among Ghanaians, many people now say that the costs of reforming the economy are too high and that government should abandon the current economic reform policies. More than a third (34 percent) of Ghanaians, representing a doubling (an 18 -point increase) over 2002, holds this view. In fact, less than 6 in 10 Ghanaians (59 percent) are willing to accept economic hardships now in order to ensure a better future. This figure compares unfavourably with 65 percent in 2005 and 72 percent in 2002. While a majority accept the need for continued sacrifice, it appears that many Ghanaians are running out of patience with the implementation of policies whose benefits are taking too long to materialise.

Moreover, a majority (54 percent) continue to hold the view that government's economic policies have hurt most people. However, it is worth noting that this represents a significant decline from the 67 percent recorded in 2005 and it is also the lowest score on this item since 1999. ...

Negative popular sentiments about economic reform in Ghana are probably a reflection of the unpopularity of policies introduced in recent years, notably petroleum deregulation (since 2005). This policy may be an economically rational means to redress inefficiencies in the sector, but it has become increasingly disliked among sections of the Ghanaian society. Deregulation and associated price increases were at the centre of nationwide protests against economic hardships in December 2007 by the political pressure group known as the Committee for Joint Action (CJA). Recently, the Ghana Trades Union Congress (GTUC) also expressed concern about taxes on petroleum products and called for their removal. Similarly, the Government's decision to contract a foreign company -Aqua Vitens Rand Ltd to operate the Ghana Water Company has been blamed (rightly or wrongly) for the recent severe water shortages in many parts of the country, especially in urban areas. These protests have been accompanied by calls for the cancellation of the contract and reversion of the management of the Ghana Water Company to local people.

...


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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