WHAT A YEAR GHANA

Ghana 2018 | DIPLOMACY | YEAR IN REVIEW

Ghana recently enjoyed a peaceful transition of power, and while the mood is good the country has long-term economic issues that it must address.

Ghana's new president, Nana Akufo-Addo, has promised to cut waste across the public sector and tackle the country's budget deficit. The government hopes to bring the fiscal deficit to 6.3% of GDP by the end of the year, a target many analysis expect will be met. The country is currently considered at high risk for debt distress, and any additional, unforeseen economic roadblocks could result in a significantly negative impact on debts.

That said, 2017 was a good year for Ghana, with the economy expanding in the 6% region, supported mostly by a boost in oil production.
Other significant sectors include agriculture, which grew by 7.6% in 2016, compared to 5% the previous year; the World Bank cites successful harvests with crops and cocoa as well as fisheries. The services sector saw a decline in growth, from 6.6% in 2016 to 3.7% for 2017, with stagnation in the finance, information, and communication sectors to blame. Throughout the same period in 2017, all non-oil growth fell to 3.9% from 6.3% YoY.
The country's recent economic stabilization has benefitted to citizens throughout the country and has worked to improve living conditions considerably in rural areas. However, the country's informal economy is still a giant, especially in areas where infrastructure is not as advanced as the capital and major cities and where development is still needed. According to the Ghanaian paper Daily Guide, of the country's more than 25 million citizens, only about 1.5 million are taxpayers, and approximately 70% of the economy is deemed informal. One way of ensuring the country's long-term economic stability would be to reverse this dynamic and bring more citizens not only into the formal economy, but also to the realm of tax paying.
Ghana's aforementioned new president, sworn in in early 2017, represents Ghana's fifth peaceful transfer of power since 2000. Akufo-Addo has been quick out of the gate, making good on campaign promises by sending a huge trade delegation to China to secure a USD10-billion deal to extract bauxite in exchange for extensive rail and infrastructure development. Elsewhere, friction with Nigeria continued in regards to Nigerian import controls on Ghanaian products and the quality of private Ghanaian educational facilities servicing Nigerian students. On a more positive note, the countries' respective leaders met in the Nigerian capital of Abuja in June 2017 to hold talks on a number of key bilateral issues, including but not limited to the July 2017 African Union (AU) Summit in Addis Ababa, ongoing negotiations regarding the Continental Free Trade Agreement (CFTA), and how to renew the Ghana-Nigeria Permanent Joint Commission for Cooperation.
Ghana has hedged much of its economic future on its oil resources. In a moment when some of the world's largest oil producers are looking to a future without oil, Ghana is bucking the trend and rededicating itself to oil production. Still fairly new to the petroleum industry, Ghana's production is small in absolute terms but has grown significantly in recent years. New offshore fields recently came online, and exploration is underway at a number of other sites. The recent fall in oil prices has led to a dip in revenue, but analysts are still optimistic about the future of the industry in Ghana, praising its well-constructed regulatory structure and social stability. The industry is projected to become the fourth largest in Sub-Saharan Africa by 2020, but the challenge facing Ghanaian officials will be to ensure that it develops in such a way that contributes to the welfare of the larger population.
Far from the oil fields, Ghana is also hoping that tourism can be a significant revenue earner down the line. Ghana has everything that people look for in a prospective African holiday; unfortunately, the numbers do not yet reflect the potential, so the government has embarked on a comprehensive marketing campaign to put the country on the map. The National Tourism Development Plan 2013-2027, the nation's first 15-year tourism plan, covers everything from hotel taxes to marketing. At the forefront of the plan is creating more jobs in the country. As the sector continues to grow, surplus labor will be required, and the government hopes that this demand will translate to close to 500,000 new jobs, both direct and indirect, by the end of the plan.
Ghana, as one of Africa's better democracy success stories, has a strong foundation to build on. Having come late to the oil game, it will be careful not to rely too heavily on the promise of the black stuff; yet like many developing markets, it needs to significantly boost formality if it is to build a strong, sustainable revenue base from which to invest in growth long term.