Economy

Ghana: 2024 Economic Overview

Having received international support to implement fiscal and financial reforms, Ghana is determined to once again reclaim its position as “the rising star of Africa.”

Image credit: Shutterstock / Anton_Ivanov

In January, 2024, the World Bank approved a USD300 million special aid package to “help Ghana’s economic recovery and support the country’s resilient and inclusive growth,” according to a press release.

The funds will be spent on improving the country’s economic policy and fostering a robust macroeconomic status.

The aid will be followed by further low-to-zero-interest loans as part of the World Bank’s Resilient Recovery initiative aimed at increasing sustainable economic activity.

All this will be possible only through comprehensive fiscal and financial reforms.

Despite Ghana’s recent hardships, the fact that international institutions such as the World Bank see the country as being on the brink of economic transformation is a positive sign in itself.

The country has just left behind another period of rampant inflation over the 2021-2022 period, reminding everyone of the olden days of hyperinflation that necessitated a currency redenomination in 2007.

This is not the first time that Ghana has relied on loans from international financiers to successfully overcome a period of economic difficulty.

Ghana’s persistent fiscal deficit of the 2010s was finally remedied thanks to a USD900 million agreement for an emergency credit line with the International Monetary Fund (IMF) in 2015.

All of this portrays the Ghanaian economy as a struggling economy.

But this is not the case.

Ghana’s economy has been among the better performing economies in the region for a while, being called the “rising star of West Africa” as far back as the 2000s.

Indeed, Ghana was the the world’s fastest-growing economy in 2019, and the country has managed to create a relatively diversified economy, with minerals, agriculture, and manufacturing contributing almost equally to the GDP.

Agriculture
Image credit: Shutterstock / TG23

A major producer of tropical fruits and vegetables, Ghana generates roughly USD1.5 billion per year from the export of cocoa beans alone—that is equal to a third the revenue the Ghanaian economy receives from the export of petroleum (USD3.5 billion).

Moreover, Ghana is a leading exporter of yam (2nd largest in the world), cassava (4th largest in the world), and palm oil (8th largest in the world).

It has long been noted that a lack of transportation infrastructure is a major bottleneck for the growth of the agriculture sector. The country’s many subsistence farmers and smallholder communities often find it difficult to ship their products to national and regional markets.

Given the fertility of Ghana’s soil and the agricultural sector’s significant potential, this shortcoming can be addressed by investment in mass transportation and the modernization of farming methods.

Minerals and oil
Image credit: Shutterstock / Senderistas

Minerals form yet another pillar of the Ghanaian economy, especially since the momentous year of 2019 when Ghana became Africa’s leading gold producer. The nation’s gold exports jumped to over USD7 billion per year by the end of 2023, from just under USD2.5 billion a decade ago.

The export of crude petroleum, meanwhile, fetches approximately USD3.5 annually. And we should remember that it was largely thanks to crude exports that the country’s trade deficit has disappeared, turning into a moderate trade surplus.

The country ended 2023 with an overall trade surplus of USD2.63 billion—equivalent to 3.5% of the GDP.

The export of diamonds and rare earth metals has also been on the rise.

In 2023, Ghana introduced a set of new regulations to ensure green practices in mining while reaping profits from the industry.

The new policies will encourage foreign investors to participate in the sector, but a higher level of involvement by public and private Ghanaian actors will be the precondition.

Manufacturing

Manufacturing is what differentiates Ghana from the rest of resource-based developing economies in Africa.

Within the context of Africa, Ghana has a relatively advanced industrial base. There are assembly plants operational in the country, putting together goods from electronic circuit boards to car parts.

Arguably the most important specialty of Ghana, however, are smelting, cement, chemicals, and textiles, which are—for the time being—largely bound for internal market, allowing a degree of self-sufficiency.

Down the line, Ghana could use this potential to become a regional manufacturing base in West Africa.

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