Ghana Exhibits Growth During Hard Times

Benefitting from two decades of comparatively stable democracy and solid economic policy, Ghana was the second fastest-growing economy in 2011. Throughout the global economic crisis that began in 2007, the gross domestic product (GDP) of Ghana grew each year, with a peak increase of 14.4%.

Although half of Ghana’s workforce remains employed by agriculture, the local economy is mainly driven by the service industry and manufacturing. Together, these sectors generate nearly 75% of the GDP. Nonetheless, the agricultural sector is of critical importance as it is presently the source of the majority of Ghana’s exports.
Cocoa products alone represent over 50% of all Ghanaian exports. All cocoa exports are controlled by the Ghana Cocoa board, who guarantee a minimum price to farmers, and ensures taxation compliance within the industry. Fruit and fish are also produced for export, though in much smaller quantity. This lack of produce diversity in the agricultural sector can be a cause of concern. Cocoa prices have been stable or increasing over the last twenty years; however an eventual drop in prices or a disease outbreak could prove disastrous. For example, invasive fungal diseases in Brazil caused a 75% reduction in national cocoa production in the 1990s and a loss of 200,000 jobs.

The mining industry is responsible for significant revenue as well; with manganese, gold, and diamonds representing about a tenth of exports. As the 2nd largest gold exporter in Africa (after South Africa), Ghana has benefitted from high gold prices in recent years. Despite these industries, Ghana’s trade balance usually experiences a slight yearly deficit, approximately 1% of GDP. This trend may be about to change, in light of recent events.

In 2011, a surge in growth was caused by the exploitation of a massive 3-billion barrel oilfield that had been discovered in 2007. Potential oil production was estimated to exceed 100,000 barrels per day. As of October 2012, production has peaked at only 86,000 barrels, although plans to expand production are underway. If the original production goals are met, Ghana would become one of the most important oil exporters in Africa, adding significantly to the diversity of the nation’s economic resources.

Although the recent growth in the petroleum sector is promising, foreign companies may choose to hire expatriates rather than the local workforce. With youth unemployment already at 25%, the Ghanaian government passed a law in 2011 requiring locally-hired labour to be a part of every level of petroleum operations. This initiative is aimed at developing local skills, enabling technology transfer, and giving locals a greater degree of control over development of petroleum resources. In this manner, human resources are developed that can benefit the economy of Ghana as a whole for years to come.

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