Economists are calling for priority to be placed on high-productive sectors and diversification of the economy, in a bid to accelerate recovery, achieve sustainable economic growth and transformation.
This is seen as a sine qua non with the country’s economic transformation having been on the decline – below the African average in all the areas used to measure success, such as diversification of products and exports, technology and labour productivity. Economic challenges have been further exacerbated by debt and energy crises, large trade and fiscal imbalances, and lack of a cohesive long-term vision for sustainable growth.
During an interview following the K.B. Amissah-Arthur [a former Vice President of the Republic] Economic Forum at the University of Ghana in Accra, Mavis Owusu-Gyamfi, Executive Vice President at the African Centre for Economic Transformation (ACET), stressed the need for a shift toward high-productive sectors to foster long-term economic growth.
Ms. Owusu-Gyamfi highlighted the significance of utilising available resources to diversify the economy, improve export competitiveness and adopt technology while investing in human well-being. Prioritizing these factors over short-term gains, she argued, will enable the country to achieve sustained growth and transform its economy.
Ms. Owusu-Gyamfi stated: “For a country to transform, it cannot just grow; it has to grow and use the resources from that growth to diversify its economy while focusing on export competitiveness and productivity”.
She further emphasised that while the service sector is important, it primarily provides specialised roles for a small percentage of the population – leaving the majority engaged in low-income and low-productivity jobs within the informal sector, saying that urgent action is needed to address this situation as it hinders the generation of sufficient income for sustainable growth.
ACET’s upcoming African Transformation Index, scheduled for publication by the end of September 2023, reveals setbacks in Ghana’s economic transformation between 2000 and 2020. The index indicates a decline in economic transformation, positioning the country below the African average in critical areas such as product and export diversification, technology adoption and labour productivity. While Ghana has made some progress in terms of human capital, overall transformation and resilience to external shocks remain challenges.
The ACET index underscores the importance of utilising resources from economic growth to diversify the economy. Over-reliance on one or two sectors for growth leaves countries vulnerable when demand declines. Diversification into sectors such as manufacturing, agriculture and technology ensures sustained growth even in the face of shocks affecting specific sectors.
Export competitiveness is another area highlighted by experts. Countries must be competitive in exporting goods and services to earn the necessary revenue for further development. Improving export competitiveness is closely linked to diversification efforts, allowing countries to depend on multiple sectors for growth.
Ms. Owusu-Gyamfi also emphasised the need to enhance productivity and cost-effectiveness to maintain competitiveness in the global market. She explained: “Improving productivity and being competitive are essential. If Ghana produces a phone for US$30 due to expensive labour and lacking infrastructure, while another country produces it for US$5, people will likely buy it from the cheaper source”.
Professor Ebo Turkson, an associate professor at the Economics Department of the University of Ghana, added his perspective on achieving economic transformation and enhancing competitiveness. He highlighted key challenges faced by the private sector and stressed the importance of consistent policies, infrastructure development and supportive government policies.
He specifically pointed out the consistently high cost of electricity as a major concern that burdens businesses and impedes economic growth. Prof. Turkson urged government and political parties to prioritise infrastructure development and foster a favourable investment climate to ensure competitiveness on the global market.
Consistency and commitment were recurring themes emphasised by Prof. Turkson as critical factors in driving economic progress. He called for adherence to laws and long-term objectives by governments, rather than making false promises or constantly changing enforcement practices.