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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
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