Nigerian and South African finance ministers have said that Europe’s economic plight threatens to hinder Africa’s recovery. But Ghana’s data reflect positive trends as businesses expand in poorly served African markets, and emerging powers such as China compete with multinationals for the continent’s rich natural resources.
African officials are cheered, too, by a certain reversal of roles. After the debt write-offs of the past decade, many countries have relatively healthy balance sheets compared with Europe.
Ghana has often led the pack – in winning independence, tumbling into bankruptcy, establishing democracy and now in its potentially transformational economic growth.
Last year, the country became one of only a few on the continent to be categorised as lower middle income. This was after the national accounts were re-appraised and annual gross domestic product per capita raised by $500 to $1,300.
On top of a record cocoa harvest of more than 1m tonnes, and soaring gold revenues, Ghana began pumping oil for the first time this year. The additional earnings will help to cushion the economy against the kind of past external shocks that sent it reeling when the cost of oil imports rose and gold and cocoa prices fell.
The oil, discovered in 2007, has also allowed the government to leverage loans towards building infrastructure to process gas, increase electricity output and lower costs.
Almost by default, as a result of its relative political stability, the country is becoming the regional base for business. But Joe Abbey, a former finance minister who runs the Centre for Policy Analysis, an independent Accra-based think-tank, points out that much of the growth has been “jobless”.
At least 7 per cent is attributable to the onset of oil production. Increased cocoa production was partly the result of good weather , and more needs to be done to boost productivity. Beyond the jobs it provides, gold mining delivers little to the state – the reason the government has given for raising corporate taxes on miners and imposing a 10 per cent windfall tax.
An election year is now approaching. Ghana has undergone three years of austerity and stabilisation following the last round of election spending, which badly hit the budget deficit. Mr Abbey says it would be a tragedy if the same were to happen again, just as interest rates have come down, inflation has been brought under control, and the conditions for investment in productive and labour-intensive sectors are falling into place.