Strategies to stimulate Ghana’s economic transformation and diversification

Date
2016-07
Authors
Armah, Stephen Emmanuel
Journal Title
Journal ISSN
Volume Title
Publisher
Ashesi University College, published by Mot Juste
Abstract
After metamorphosing into a lower middle income country, Ghana needs to transform and diversify its economy if it is to consolidate its lower middle income status, reach upper middle income status and drag more of its people out of poverty. Pertinent questions that remain unanswered include: what are the principal self-imposed problems Ghana needs to resolve; what are the institutional changes Ghana needs to make to transform and diversify its economy and what lessons can Ghana glean out of the experiences of other countries that have transformed their economies? Using a comparative analysis of published research and economic analyses, based on the available literature, this paper provides some answers to these questions. Key self-imposed problems include: weak institutions highlighted by a ‘winner takes all’ democratic governance structure that disenfranchises Ghanaians with no connections to the ruling party; weak management of the macro-economy; extremely high cost of borrowing; an unstable exchange rate; high import taxes; a narrow tax bracket with the majority in the informal sector paying zero taxes reducing government revenue; endemic corruption; ineffective land tenure; an inadequate transportation network; unreliable access to electric power; inability to engage in manufacturing; poor sanitation; difficulties in curtailing illegal mining and widespread indiscipline that makes management of people unduly challenging. Critical institutional reform needed includes a constitutional review that limits the power of the executive and makes him accountable for his actions. The number of appointments that the executive has to make to technical and professional leadership positions in the public service and production sectors must also be reduced. The status quo forces the President to make appointments to leadership positions in which he has no experience and confounds the political and economic lives of Ghanaians. Public institutions must be rid of political influence to purge them of political sycophancy, improve the technical capabilities of their leadership and increase their effectiveness. Ghana also needs to get aggressive about limiting avenues for corruption. This can be achieved by eliminating the loopholes and conflict of interest inherent in the constitution that allows corrupt practices to go unpunished especially on the grounds of technicalities: an independent corruption prosecution agency is essential in this regard. The rule of law must be strengthened – particularly in the rural areas and inner cities – and progressive land reform must be carried out. The current situation where fertile southern agricultural land is being co-opted for real estate must be halted to reduce the twin risks of food inflation and food insecurity in the future. A real effort must also be made to break through long-held and negative socialist and traditional views about private ownership so property rights can be properly acknowledged and enforced.
Description
Keywords
Ghana, economic transformation, corruption, institutional changes
Citation
Armah, Stephen E. (2016) "Strategies to stimulate Ghana’s economic transformation and diversification". Ashesi Economics Lecture Series Journal, 2 (1): 9-16