If Ghana is to achieve a per capita income of US$815 and US$1020 by 2010 and 2012 respectively, its growth rate must increase three-fold from the current level, writes Boahene Asamoah.
Analysts and market watchers agree that Ghana has enjoyed impressive growth rates over the years, significantly improving on an annual growth of 3.7 per cent in 2000 to 6.4 per cent by the end of 2007.
The government has projected a per capita income of US$1,000 by 2015, a tall order that many analysts see as unrealistic, looking at the current economic development. Analysts at Renaissance Capital, for example, are of the view that Gross Domestic Product (GDP) growth has to triple to attain this feat.
This means that economic expansion, which will have to involve all sectors, must be firm.
It is true that the economy has held its own quite well, and that despite all the problems or credit crunch and its attendant problems in some economies, it has managed to steer clear of trouble — at least for now.
“We think that the US$1,000 threshold in income per capita [by 2015] will represent an important psychological boost at a time when oil production starts accelerating structural change,” the analysts said.
In fact, what are needed mostly in the Ghanaian economy are structural changes, since the economy has not changed structurally for more than 50 years.
Analysts are also not sure how even a GDP per capita growth could affect the lives of ordinary Ghanaians, many of whom live below the UN-backed poverty line of less?????????????? than US$1 dollar a day.
GDP per capita growth may not be fully indicative of actual income dynamics as a result of endowment differentials. Even with cross-border comparisons this distortion exists, notably in countries with small populations or oil exporters, leading, in some cases, to inflated GPD per capita levels.
According to Renaissance Capital, in terms of inequality, Ghana's Gini-Co-efficient stands at 40.8 on a scale of 100, thus Ghana is ranked 135th among 177 countries.
This is far below that of most sub-Saharan African countries having a relative level of development.
Research has revealed that recent economic reforms have sustained the consolidation of a domestic middle class, which would become more evident when the results of new surveys are released in the future.
The other worry with the structure of the Ghanaian economy is that there are a large number of people in the informal sector who constitute the bulk of the population whose lives may not be necessarily improved by a GDP growth. Therefore, the anticipation is that any increase in per capita income could be skewed and may only affect the small middle class and so may not be indicative of a real growth in GDP.
???According to the United Nations Development Programme (UNDP) Human Development Report for 2007-2008, Ghana has one of the lowest shares of income held by the 10 and 20 per cents richest segments of the population in the group of the sub-Sahara Africa frontier markets.
It was expected that Ghana would achieve a growth rate of seven per cent at the beginning of the year, but this has been revised downwards to 6.8 per cent as a result of the effects of the volatile oil market and rising food prices.
????The rising food and oil prices have taken a serious hit on the economy, threatening the macro-economic stability at has achieved so far.
This, however, does not derail the focus of the economic managers as government officials are adamant that the economy is strong enough to withstand such external shocks.
Inflation soared in the past months, but has recently shown signs of marginal decline.
Agriculture
Procredit to support sector
Procredit Savings and Loans Company Limited, Ghana, a member of the Procredit Group and a leading savings and loans company in Ghana, has earmarked 50 per cent of its total loan portfolio to support the agricultural sector in the next five years.
According to Ms Edwige Takassi, Managing Director of Procredit Ghana, currently Procredit Agro Loan (which is loans specifically earmarked for the agriculture sector) stands at GH¢1.5 million, representing just eight per cent of its total loan portfolio.
Procredit has made commitment to the agricultural sector, and according to Takassi, even though the current Procredit agro loan was its single largest loan portfolio, it was still not enough to meet the growing need for credit in agriculture.
"Procredit projects that within the next five years, agro loans would account for at least 50 per cent of the institution's loan portfolio," she said.
It estimates that if it is able to raise its funds available for disbursement to a portfolio of GH¢500 million, about GH¢250-million increase within the next five years, GH¢250 million would go to farmers, food processors and other stakeholders in agriculture.
Agriculture continues to be the mainstay of the Ghanaian economy, but it is also the sector that is so much dominated by peasant farmers who are unable to secure the needed credit to expand their farms. However, Procredit hopes to change all this, by providing them with the much needed credit facilities.
"Procredit is determined to become the leading provider of financial services to the agricultural sector," she said. According to Takassi, even though the agricultural sector is the backbone of the Ghanaian economy and employs over 60 per cent of the country's workforce, the sector is hugely underserved by traditional banks and financial services institutions, probably due to the inherent risk in the sector.
"Our agro loans would target farmers and people in agriculture-related businesses who constitute a very significant part of the sector, providing jobs and food for our people and yet do not have access to credit because banks usually require expensive business plans and huge collaterals from them," she said.
"The minimum loan amount is 50 Ghana cedis - loan amount will vary from one farmer to another, depending on the size and value of what the farmer already has," she said.
Meanwhile, Mr Ernest Debrah, the Minister of Food and Agriculture, on Thursday said in order for Ghana to achieve a middle income status by 2015, the country should not only increase its traditional agricultural export, but also diversify and modernise the agricultural sector.
"The horticultural sector, especially the fruits, vegetables and ornamentals, therefore presents an opportunity for the needed diversification, modernisation and accelerating economic growth due to its high potential economic returns," he said.
Mr Debrah said this at the Ninth Annual General Meeting and Scientific Workshop of the Ghana Institute of Horticulturists organised on the theme: "Achieving Middle Income Status in Ghana; The Role of the Horticultural Industry in the Millennium Challenge Account." The workshop, which was organised on September 11, brought together about 200 professionals and students in the industry to deliberate on issues affecting it and find common grounds for advancement.
He said the horticulture industry could play an important role in supporting the government's efforts at wealth creation and poverty reduction.
"The Ghanaian horticultural industry has grown rapidly within the last decade and has enabled Ghana to establish herself among the top six exporters of horticultural produce to Europe."
Databank left off the hook
The Securities and Exchange Commission (SEC) on September 10 announced that it had resolved the impasse between the Ghana Stock Exchange (GSE) and Databank Brokerage Limited (DBL) over the sale and purchase of Cal Bank shares.
A statement issued by Mr K. Okwabi, Deputy Director General, SEC, said subsequently the penalty levied on Databank by the GSE had been waived.
DBL was suspended from trading on the exchange by the GSE in what many analysts see as “improper” their conduct with regard to the Cal Bank shares.
The statement assured the public that the parties in the dispute, as industry participants in the capital market, were committed to the growth of the stock market.
SEC, the statement said, would continue to ensure that conflicts between market participants would be resolved in good time to foster the development of the market.
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