Investment improvement and prudent government spending gave Ghana a rise in the rankings on the 2013 Index of Economic Freedom released by the American Heritage Foundation in partnership with the Wall Street Journal.
Ghana’s economic freedom scored 61.3 out of 100, making the economy 77th freest in the 2013 Index. In the sub-Saharan Africa region, Ghana placed 7th out of 46 countries in the region.
Ghana’s overall score was 0.6 point better than last year due to” improvements in investment freedom, the control of government spending, and fiscal freedom.” In the 2012 Index, Ghana placed 84th worldwide out of 179 countries with a score of 60.7.
Ghana’s 61.3 score beats both the 2013 Index of world and regional averages of 59.6 and 53.7 respectively.
Mauritius, Botswana, Rwanda, Cape Verde, Madagascar and South Africa placed first to sixth respectively in the region ahead of Ghana. The country was ranked 9th out of 46 countries in the sub-Saharan Africa region in the 2012 edition of the Index.
According to the Index, Ghana’s notable economic growth rate of 8% over the past five years has been supported by strong improvements in economic freedom, with reforms focused on spurring private sector–led development.
“Institutions that enhance economic growth are becoming more efficient and effective, supported by stable macroeconomic policies and ongoing reforms. The new president’s commitment to continued reform will be crucial in improving Ghana’s economic health and freedom,” it added.
But despite significant progress, obstacles do remain, and particular institutions need development and reform, the report observes indicating that “Property rights are poorly protected, and high levels of corruption persists due to overall weakness in the rule of law.”
It added that tackling these issues will be necessary if rapid growth is to be maintained.
On the rule of law, the report said Ghana’s judicial system is subject to “political influence and suffers from corruption, albeit to a somewhat lesser extent than elsewhere in the region”.
It stated that the country’s courts are slow to dispose of cases and face challenges in enforcing decisions, largely because of resource constraints and institutional inefficiencies.
On regulatory efficiency in Ghana, the Index reported that business start-up process has become less burdensome, taking only seven procedures, but obtaining necessary permits takes 218 days and costs over four times the level of average annual income.
The Index noted that Ghana generally “does not discriminate against foreign investors except in key sectors, but the overall investment regime lacks efficiency and transparency”.
The financial sector has undergone privatizations, but the banking sector is undercapitalized, and access to financing remains limited, said the report.
By Ekow Quandzie
Read more about Ghana Economy on the 2013 Index