Ghana Economy Facts
Ghana’s economy is based on gold, oil and cocoa production. The country is also in the process of developing a natural gas industry. The oil sector provides good revenue to the state, but creates few jobs for the Ghanaians. The vast majority of residents rely on agriculture instead.
Ghana was early called the Gold Coast, and the country has long been exporting gold and cocoa on a large scale. In 2014, Ghana was the world’s second largest cocoa producer (after the Ivory Coast) and one of Africa’s most important gold exporters.
- Countryaah.com: Major imports by Ghana, covering a full list of top products imported by the country and trade value for each product category.
In 2010, Ghana began extracting oil from a field called Jubilee. One year later, the country’s GDP growth became one of the highest in the world, thanks to oil revenues. In the same year, Ghana was upgraded from low-income countries to lower-middle-income countries by the UN. Extraction of natural gas began in November 2014 (see Natural Resources and Energy).
An initial review of how the oil money was used, carried out in 2013 by the Africa Center for Energy Policy in Accra, showed that the promised major investments in infrastructure, payments on foreign debt and agricultural development were only partially realized. In 2012, as much as 18 percent of the state’s use of oil money went to nonproductive administration, for example in the presidential office. Initial renovation of bridges and roads had not been completed in several cases because the government’s efforts were too limited, said the report. In addition, Parliament had failed to clog loopholes in tax legislation, which caused the state to lose hundreds of millions of SEK through missing tax revenue.
- Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including GHA which represents the country of Ghana. Check findjobdescriptions to learn more about Ghana.
Gap between south and north
Even before oil and gas was found, Ghana was one of the countries in sub-Saharan Africa that was considered to have the best political and economic conditions to get out of poverty. However, there is an old divide between southern Ghana, with most of the natural resources and the largest investments, and northern Ghana, which is drier, poorer and more sparsely populated. In recent times, governments have tried to reduce the differences by expanding the electricity grid in the north, raising the level of education there and improving the roads from north to south.
At independence in 1957, Ghana was one of Africa’s most prosperous countries with the world’s largest cocoa exports. Two decades later, the country was one of the world’s ten poorest, with a huge foreign debt. Behind the downturn was economic neglect and corruption, but also a decline in the price of cocoa. The country’s economy is vulnerable to shifts in world market prices and weather.
Tightening according to the World Bank and International Monetary Fund (IMF) model began in the 1980s and continued after democratization in the 1990s. The changes sometimes led to mass protests but could mainly be implemented. Among other things, close to 300 of 350 state-owned companies were sold or wound up.
The measures followed economic growth in the late 1990s. It gained even more momentum after John Kufuor won the democratically run presidential election in 2000. High gold and cocoa prices contributed to the upturn. In 2006, the World Bank ranked Ghana as the ninth in the world in terms of improved business climate.
Lower middle income country
By then, the Kufuor government had also managed to reduce its budget deficit and inflation, which fell from 40 percent in 2000 to 11 percent in 2006. International debt relief more than halved Ghana’s foreign debt to $ 3.3 billion in 2006.
Growth continued to be good in 2007 and 2008, but the situation hardened as world market prices for fuel and food were raised. The government responded with subsidies and abolished import duties. At the same time, demand for Ghana’s export goods fell as the global financial crisis intensified, and in 2009, money transfers from guest workers abroad decreased. They had accounted for more than a tenth of the country’s GDP. Both debt and budget deficits increased. To keep track of progress made, Ghana received $ 1.2 billion in interest-free loans from the World Bank in 2009.
The transition to middle income country 2011 made it more difficult for Ghana to obtain loans from the IMF and the World Bank. The same year, the country borrowed $ 3 billion from China’s development bank instead. The money was intended to go towards developing a natural gas industry and improving infrastructure such as roads, railways and ports.
Ghana was one of the emerging economies that in 2013 saw its currency lose in value as international investors returned to the US market after signs that the US economy was recovering. In February 2014, the Ghanaian central bank was forced to regulate the handling of foreign currency to protect its own cedin. Despite this, cedin lost more than a third of its value in relation to the dollar between January and August 2014.
In 2014, there were several signals that the country’s economy was facing downward, partly as a result of falling oil prices. Ghana fought against excessive inflation, and growing deficits in the state budget were combated with frozen salaries for civil servants, increased fuel prices and increased tax collection, which triggered popular dissatisfaction.
The Mahama government’s promises of plenty of new jobs and higher living standards for the Ghanaians came to shame. Estimates show that about six million jobs must be created within the next two decades. This corresponds to more than half the current workforce.
Despite the weak economic development, Ghana received praise from the outside world when the country in 2014 was able to demonstrate that it has managed to live up to the UN Millennium Development Goal of halving extreme poverty.
In order to create more jobs and improve living conditions for the majority of people, oil income and aid money must be invested in agriculture, where most of the working people are found. The IMF has assisted with poverty reduction programs and in February 2015, the loan agency granted a loan of about $ 940 million to Ghana to overcome the large budget deficit. Not least, the Treasury is burdened by very high public wage costs and a foreign debt, which in relation to the gross domestic product (GDP) increased from 46 percent in 2012 to 65 percent in 2014.
FACTS – FINANCE
GDP per person
US $ 2,202 (2018)
US $ 65,556 million (2018)
6.3 percent (2018)
Agriculture’s share of GDP
19.7 percent (2017)
Manufacturing industry’s share of GDP
10.9 percent (2017)
The service sector’s share of GDP
42.3 percent (2017)
9.3 percent (2019)
Government debt’s share of GDP
59.3 percent (2018)
US $ 22,022 million (2017)
US $ 13,835 million (2017)
US $ 12 648 million (2017)
– USD 2,003 million (2017)
Commodity trade’s share of GDP
42 percent (2018)
Main export goods
oil, gold, cocoa, wood products, manganese, diamonds
Largest trading partner
Netherlands, UK, France, USA, China, Nigeria, Ivory Coast