WHY IS GHANA SO RICH?
Ghana is the verge of emergence as an African superpower.
Once an African success story molded on gold, oil and cocoa, it used its natural resources
to produce strong economic growth in the early years of this century.
Ghana met the millennium development goal of halving poverty rates by 2015, and was
hailed as a model of political stability after peaceful elections.
But for the success story of Ghana to be fully understood, it’s important to understand
a bit of where the modern Ghana we see today came from.
Modern-day Ghana, which gained independence on March 6, 1957 and Kwame Nkrumah, a nationalist
and Pan-African leader, led the colony's push for independence, believing that Ghana's sovereignty
was crucial not only for the Ghanaian people but for all of Africa, saying “Our independence
is meaningless unless it is linked up with the total liberation of the African continent.”
Indeed, encouraged on by Ghana's example, more than 30 other African countries declared
their independence within the next decade.
In addition, the new government lead by Nkrumah swiftly built the groundwork for budgetary
independence, launching a slew of economic development initiatives.
Years of corruption, inefficiency, and military rule stifled progress and achievement.
However, by the 1990s, the country's situation had improved, and Ghana is now regarded as
an example of successful economic recovery and political reform in Africa.
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Accra, Ghana's administrative capital, is located on the coast.
Accra, which was constructed on the site of many Ga settlements, grew into a rich trading
hub and now serves as the county's commercial and educational center.
Kumasi, another important economic center in Ghana, is located in the country's south-central
region.
Kumasi, popularly known as the "Garden City of West Africa," is the seat of the Asante
ruler, a relic of an empire that flourished in the 18th and 19th centuries.
Ghana's inhabitants may be classified as belonging to one broad ethnic group within the African
family, however there are other subgroups.
At least 75 of these can be distinguished based on their language.
Many of them are insignificant, with only ten being quantitatively significant.
However, ethnic consciousness exists in many communities, and tensions have occasionally
exploded into violent battles that have resulted in numerous deaths, particularly in northern
Ghana.
An effort has been made at all levels of government and public life to minimize ethnic disparities,
a goal that has been aided by the adoption of English as the official language.
Almost all of the current peoples are said to have arrived in the country in a series
of migrations from the north during the previous 700 to 1,000 years, with the Ewe and Ga-Adangme,
who occupy the country's southeastern region, arriving from the east and southeast.
More than half of the population is Christian, around a fifth is Muslim, and a minor percentage
of the population practices traditional indigenous religions.
Indigenous religions lack a coherent set of doctrines, despite their vast and deep roots.
Though they are all rooted on the belief in the existence of a supreme being, they recognize
a number of minor deities linked to various natural events.
But we are not here to talk about religion, we want to get to know Ghana’s economic
success story, it can’t just be luck or chance so let’s get right into that.
The economy is made up of both private and public businesses.
The services sector accounts for almost three-fifths of GDP, agriculture for nearly one-fifth,
and industry for one-fourth.
Prior to independence, the government's involvement was primarily limited to providing essential
amenities such as water, electricity, railroads, roads, and postal services.
Except for agriculture, agriculture, trade, banking, and industry were virtually totally
in private hands, with foreign interests owning the majority of them.
The government set out shortly after independence to expand its economic authority by establishing
a huge number of state-owned firms in agriculture and industry.
Measures were taken to entice international investors to operate independently or in conjunction
with the government in order to compensate for the local shortage of money and entrepreneurial
capabilities.
Because of poor planning and unethical administration, these initiatives did not produce the expected
results.
By the time President Kwame Nkrumah's administration was toppled in 1966, the government's massive
foreign borrowing had depleted almost all of the country's abroad reserves and resulted
in external and domestic debts exceeding $1 billion.
New governments time and again have attempted to address the negative balance of payments,
reduce inflation, restructure overseas loans, boost agricultural productivity, and rationalize
industrial development, as well as save precious foreign exchange by encouraging the export
of locally created goods.
There was a significant reduction in government participation in economic affairs from 1966
and 1972.
Despite this, the government maintained to provide basic services and was the single
largest employer of workers.
Following the coup of 1972, officials reverted to the idea of a centralized economy.
Imports were curtailed, industrial projects that had been abandoned following Nkrumah's
collapse were resurrected, and a program of further nationalization and state control
was initiated.
After a two-year suspension of foreign loans and aid, the government agreed to a repayment
schedule for its obligations in 1974.
Although political instability resulted in a number of unstable economic decisions, this
was complemented with a more welcoming approach toward investment by richer countries.
Ghana's external debt and trade deficit grew, prompting a devaluation of the cedi ( its
national currency) in 1978, a currency conversion in 1979, and interest rate reductions and
the demonetization of lower-value cedi notes in 1982.
Foreign corporations and private entrepreneurs were urged to participate in private or joint
private and public projects and assist in the economy's rehabilitation under the World
Bank's restructuring program in the late 1980s; in general, the tendency was toward increased
privatization of the economy.
The cedi's continued depreciation (from 1.02 cedis to the US dollar in 1970 to 9,145 cedis
to the US dollar in 2006) had mixed impacts on trade and the cost of living, but by the
1990s, Ghana's economy had begun to recover.
The government began focusing on enhancing economic stability and openness in the late
1990s, and it continued with privatization measures and by far the biggest contributor
to this effort was agriculture.
Agriculture, forestry, and fishing employ more than half of the people, in addition
to supplying the majority of national income.
Cacao, which is grown commercially for its seeds, cocoa beans, is planted on more than
half of Ghana's arable territory and is a major source of export earnings.
As a result, the world price of cocoa beans has a direct impact on Ghana's economic fortunes.
In the 1970s, old and sick trees, drought, bushfires, insufficient transportation facilities,
a lack of adequate price and other incentives for farmers, and extensive smuggling over
Ghana's borders all contributed to a dramatic drop in cocoa bean production.
The Cocoa Marketing Board (founded in 1947 to regulate cocoa prices) was decommissioned
in 1979 due to corruption allegations, but was resurrected in 1985 as the Ghana Cocoa
Board.
Private traders were first allowed to compete in domestic trading in 1992 by the government.
Farmers' share of world market price had been increased from 25% to 60% by the late 1990s,
and the additional money provided to farmers spurred production.
Ghana is one of the world's top cocoa producers, and its sun-dried (rather than mechanically
dried) cocoa is prized for its exceptional quality.
Timber has also been a significant source of revenue in terms of foreign exchange.
However, limits on cutting and exporting round logs reduced the importance of timber exports
toward the end of the twentieth century.
Logging permits are limited by the government.
Ghana's local market is significant.
Food produced for local use has a high monetary value.
The land and climate are ideal for a variety of crops.
The northern savanna zone is mostly known for producing yams and cereals like as rice
and millet, as well as raising cattle.
Shea and kola nuts are found in ghanaian the forests as well.
Successive administrations have pushed for food diversification to minimize reliance
on a few commodities and lessen the demand for imported goods, but their policies have
frequently been inconsistent due to the emphasis on exports that generate foreign cash.
Sugar, coffee, palm oil, palm kernels, copra, and a variety of fruits and vegetables are
among the agricultural items exported, in addition to cocoa beans and timber.
Ghana's offshore seas are teeming with fish, and the development of Lake Volta has added
to the home market's fish supply.
Cape hake, grunt, sea bream, tilapia, herring, mackerel, barracuda, and tuna are among the
fish caught.
The majority of the catch is sun-dried or smoked and consumed locally, but a growing
amount is refrigerated; certain fishes, particularly tuna, are primarily targeted for export, and
canned and fresh tuna exports rose in the late twentieth century.
Although Ghana offers a diverse range of minerals, only a few are exploited: gold, diamonds,
manganese, and bauxite (the primary source of aluminum).
The oldest of these extraction businesses is gold mining, which dates back to the 15th
century; the others are from the 20th century, with manganese mining dating back to 1916,
diamond mining to 1919, and bauxite mining to 1942.
There are also limestone and iron ore reserves.
Salt is derived from the sea and lagoons, where the country is self-sufficient with
a surplus for sale.
There are also plenty of building stone, gravel, and sand to go around.
Ghana has natural gas and oil reserves.
The Ghana National Petroleum Corporation (GNPC), a state-owned company, is involved in all
facets of the country's oil and gas business.
Oil was discovered off the coast of Saltpond and Cape Coast in 1970.
Although this discovery was initially categorized as noncommercial, the government reclassified
it as commercial in 1974 after substantial spikes in world oil prices in 1973–74 prompted
it to be developed.
Significant volumes of natural gas were discovered offshore to the south and west of Cape Three
Points in 1974 and 1980.
In 1978, a small amount of oil was produced in the Saltpond area.
Additional comprehensive explorations proceeded into the twenty-first century, resulting in
the discovery of more profitable oil reserves off the coast near the Côte d'Ivoire border.
The offshore Jubilee field began producing oil in 2010, and Ghana's output increased
significantly.
The initiation of production at the Tweneboa-Enyenra-Ntomme (TEN) field in 2016 and the Offshore Cape
Three Points field in 2017 complemented this.
The above-mentioned fields also produce natural gas.
Oil or gas-fired power facilities, such as those at Kpone, Tema, and Takoradi, provide
about three-fifths of Ghana's electricity.
Many of Ghana's rivers have the necessary flow regimes and rates to allow for hydroelectric
power production, which accounts for around two-fifths of the country's electricity and
is primarily provided by the Akosombo Dam on the Volta River.
A second dam, the Kpong, is a few kilometers downstream, and the Bui, on the Black Volta
River, is another dam.
Drought conditions, on the other hand, can have a detrimental impact on hydroelectricity
output and result in power outages.
Since independence, Ghana's government has pursued various industrialization policies,
resulting in the establishment of a diverse range of manufacturing industries, including
food, beverages, tobacco, textiles, clothing, footwear, timber and wood products, chemicals
and pharmaceuticals, and metals, including steel and steel products.
These are primarily produced for domestic consumption.
The maintenance of a reasonable balance of external trade was one of the program directions
of the five-year plan for 1975–80, and a number of industrial initiatives were geared
at the export market in the medium or long term.
The shortage of money has impeded Ghana's industrial development, and national industrial
development policy in the early 1980s recognized the significance of recruiting foreign capital
for a successful economic takeoff.
In the 1990s and 2000s, a push to privatize Ghana's parastatals helped boost output and
exports in several industries while also attracting international investment.
In the 1960s and 1970s, a lack of equipment, trained employees, and foreign exchange capital
impeded the development of Ghana's mineral sector.
In 1985–86, new investment rules and mining legislation eliminated tariffs on plant and
equipment imports, boosting output and growth.
Gold mining, in particular, grew significantly as a result of increased efforts to revitalize
the industry, which included substantial international investments and incentives for local and foreign
companies.
In the 1990s, more than a half-dozen new mining companies started, resulting in a significant
rise in Ghana's gold production.
Ghana's oil and natural gas business grew in the 2000s after more oil reserves were
discovered.
The Tarkwa mining area's high-quality sand serves as the foundation for a modest but
substantial glass industry.
Tema, Takoradi, and other cities have established cement plants, while Tema is home to an aluminum
smelter.
Many financial institutions, including commercial, development, and foreign banks, are located
in Ghana.
The Bank of Ghana is the country's central bank and issues the Ghana cedi, the country's
currency.
Accra is home to the Ghana Stock Exchange.
In the late twentieth century, tourism became a key source of foreign exchange revenues
for Ghana, more than tripling in the 1990s as a result of the restoration of ancient
monuments and the growth of ecotourism at Kakum National Park.
Elmina Castle, built by the Portuguese in 1482, and Cape Coast, erected by the British
in 1655, had the most extensive renovations.
They are two of around 30 remaining stone forts peculiar to Ghana's coast, intended
to serve as commercial and administrative hubs for Europeans interested in the early
gold trade and later the transatlantic slave trade.
As a result of additional tourists and a free market economy, the private hotel business
has flourished, and tourist hotels can now be found in practically all major Ghanaian
cities.
Ghana's main exports—cocoa, gold, and sawn wood—are mostly purchased by European Union
countries, India, and the United Arab Emirates.
Petroleum, equipment, and food goods are Ghana's main imports, principally from China, the
United Kingdom, and the United States.
Various taxes, including as the value-added tax (VAT), income tax, property tax, and other
taxes, account for a major portion of government revenue.
Certain types of businesses are eligible for tax breaks.
The trade union movement played an important part in the war for independence, and the
government sought to make it a more direct instrument of policy after independence, recognizing
the movement's importance as a political force.
The Trades Union Congress (TUC), which was almost an integral component of the government,
was given control over all trade unions in the country, restricting workers' ability
to bargain with employers and the government.
The TUC's monopoly was abolished after the Nkrumah administration fell, and other unions
were permitted to function.
The Ghana Federation of Labour, in addition to the TUC, functions as a trade union center.
The southern section of the country has a higher density of roads and railways than
the northern part.
Only approximately a quarter of the roads in the country are paved.
Around 1912, motor transportation was introduced in the towns, and it swiftly extended to the
cacao-growing areas.
Between the bigger towns, there are municipal bus services, as well as express coach and
freight services.
Rail transportation became popular in the early twentieth century.
The train system connects Sekondi-Takoradi, Kumasi, and Accra in a triangle.
Within the triangle, there are further lines and branches that connect to other towns,
including as the mining towns of Tarkwa and Dunkwa, as well as the port of Tema.
Rail transportation is less prevalent than road transportation and is mostly utilized
for freight transport.
Domestic flights are handled by small airports such as those in Takoradi and Sunyani, while
international flights are handled by airports in Tamale in the north, Kumasi in the south-central
region, and Kotoka International Airport in Accra in the south.
Passengers are the primary users of air transportation.
The majority of products that enter and leave the country are transported by water.
Takoradi (opened in 1928) and Tema both have ports (opened 1961).
Takoradi focuses in oil, gas, manganese, and bauxite exports, while Tema specializes in
cocoa bean exports.
Passengers are handled by both ports.
All these sectors from agriculture to transportation have a synergy which has encapsulated all
of Ghana’s efforts into a masterpiece that is the modern day Ghanaian economy.
And to all those Ghanaians who doubt if their country is truly successful because they are
yet to feel the actual implications of economic resurgence on the ground level.
Our message is of reassurance, change is coming, it’s already here and it’s not only for
you but for children and their children after.
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