Review of the Political and Economic Climate of Ghana.
Ghana’s civil liberties, freedom of the press and political rights standards rank high among African countries; similar to those of developed countries (UNDP, 2010). Economically, Ghana highly relies on international technical and financial support emanating from the World Bank and International Monetary Fund. The regional Conference in West Africa, Accra accentuated challenges and opportunities of deeper economic integration in West Africa (IMF, 2013). They resolved to allow banks to serve customers across various countries with the aim of creating a wider pool of funding with better diversification and customer bases. That makes it an attractive site for investors to venture in and set up businesses with the assurance of a homey business environment. Some of the challenges accorded to this move include creation of an avenue for more risks and increased supervisory duties.
Ghana’s economy is still agriculture oriented. It accounts for 36 percent of Gross Domestic Product (GDP) and provides employment to about 60 percent of the country’s workforce, majorly small landholders. Ghana is a top producer of coffee and cocoa in the world. It would be convenient for an investor to start a business that complements these key exports since it would harbor more prospects of success (Business Africa, 2014).
Every successful and peaceful transition of power within Ghana presents her as a citadel for democracy. Alongside transition, however, comes the responsibility of the government to enhance diversity by removing the country from its die-hard dependency on cash crops and provide alternative dependable sources of income for the country. The economy of Ghana. However, remains enslaved to the ever-fluctuating prices of the World Market on its major export earners (Business Africa, 2014).
In spite of Ghana’s flowery political and economic situation, there is a rising concern on whether the country is a haven for investment. A listing of certain events within the country that might spark up butterflies in the investors includes the recent labor unrest agitated by Ghanaian workers. They advocated better pay amid high inflation like the teachers strike experienced early in the year 2014 dims its chances of attracting potential investors. Even though, the prolonged high inflation risk is igniting the unrest, the country’s strong democracy keeps the risk low (AL-hAJJ, 2014).
Ghana’s oil boom spiked GDP growth rate above 8 per cent making her an upcoming country with a stable democratic government and a population of 25million. That steadily moved its status up the income status ladder. Now, however, she gets dismayed by the rise in the cost of living as her visions and dreams of more wealth are put on hold due to a number of complications (UNDP, 2010). In response to this, the president, John Mahama, said they would adopt a ‘home grown’ stabilizing policy rather than turn to IMF financial assistance program.
The move involved cutting spending, increasing revenue and rationing costly public wages. Since increased revenue gets associated with increased taxes that translate to the government digging into the plowed back profits of various businesses, Ghana has a limited prospective investment base.
Another impediment to attracting foreign investors is the tension in the political sector within the country due to stiff competition between the ruling National Democratic Congress and the opposition. The government transition also makes the government more vulnerable to voter sentiment (UNDP, 2010).
Ghana’s working population in 2009 approximated 14.3 million and labor force made up 9.6 million. Those employed were 17.5 percent with 20.4 percent in self-employment yielding a vulnerability employment rate of about 75.4 percent. About 26 percent of those employed are working poor just below the upper poverty line while 16 percent are considered to be working and extremely poor. That signifies availability of unskilled labor for hire within Ghana. Apparently, just 24 percent of the rural people reside within 2 kilometers of an all-season road which is 36 percent shy of the 60 percent threshold of Africa’s middle-income countries. The poor infrastructure limits access to remote areas of the country.
In conclusion, Ghana is an industrially promising country since it is politically stable and economically conducive for investment. Its rosy advantages should not blind one to its thorns of inflation, poor infrastructure and high level of poverty.
AL-hAJJ. (2014, May 20). Cedi falls, inflation rises: Macro-Stability elusive? GhanaWeb. Retrieved from http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=309897
Business Africa. (2014). The Republic of Ghana: Briefs. Retrieved from http://businessafrica.net/africabiz/countries/ghana.php
International Monetary Fund (IMF). (2013, October 28). Opportunities and Challenges of Financial Integration in West Africa. Regional Conference in West Africa, Accra. Retrieved from http://www.imf.org/external/np/seminars/eng/2013/accra/
United Nations Development Fund (UNDP). (2010, September 15). Ghana Country Analysis. Retrieved from http://www.gh.undp.org/content/dam/ghana/docs/UNDAF/UNDP_GH_IG_GhanaCountryAnalysis2010_10102013.pdf.pdf