Accra, February 19, 2013 - The World Bank has urged Ghana to focus on job creation, on improving the productivity of its labor force and in building a value chain in the extractive sector that would maximize the benefits to local communities of revenue from gas, oil and mining and minimize the proverbial oil curse.
The call came during two days (14-15 February 2013) of talks held with Ghanaian government officials, leaders of the private sector, civil society, and media and other development stakeholders by visiting World Bank Vice President for the Africa Region, Makhtar Diop.
While Ghana’s economy posted a robust 14.4 percent GDP growth in 2011, up from 8.0 percent in 2010, labor productivity remains low and urgent improvements are needed in its technical and vocational education to equip young Ghanaians with the cutting edge skills in demand by the private sector.
During a courtesy call, Ghanaian President John Dramani Mahama said the visit could not have come at a “better time” than now when Ghana seeks the World Bank’s in ensuring that its private sector remains the driving force behind growth and Ghana’s transition into full middle-income status.
In 2011, Ghana’s Gross National Income per capita reached $1,410.
A diversified economy that creates good jobs for Ghanaians can only come from the ingenuity and enterprise of the private sector, Mr. Diop told reporters during a press conference and Google+ hangout just before the close of the visit. Creating the environment for this to happen and improving the quality and reliability of key business inputs such as energy, water and transport infrastructure should be the key focus of Government and its development partners, Mr. Diop added.
The obstacles to the development of Ghana’s private sector include limited access to finance and the high cost of credit. According to business leaders who met with Mr. Diop, the situation is further complicated by the burgeoning public sector deficit and the likelihood that government borrowing has not only triggered higher interest rates but may also be “crowding out” the private sector from financing.
The World Bank official reaffirmed support for Ghana’s ongoing reforms to curb the public sector deficit, better target subsidies to reach the most vulnerable and poorest segments of the population and to diversity Ghana’s sources of revenue.
“I’m confident, as Ghana has done in the past, that they will be able to bring that deficit down,” said Shanta Devarajan, the World Bank’s Chief Economist for the Africa Region.
Ghana’s deficit is estimated at 12 percent of its GDP in 2012.
A former World Bank Country Director for Brazil, Mr. Diop drew parallels with the public sector deficits experienced by Brazil and discussed the possibility that the introduction of a fiscal responsibility law similar to what Brazil did a decade ago culminating in its current economic success could benefit Ghana.
Notwithstanding concerns about its budget deficit, Ghana’s medium-term growth outlook remains encouraging, driven by large investments in the extractive industries, public infrastructure investments, the expansion and modernization of the financial sector and social services, and spike in commercial agriculture venture.
Success, Mr. Diop explained, would come only if successive governments in Ghana stuck to the goals laid out in such a fiscal responsibility law as governments did in Brazil.
He encouraged Ghana’s private sector, civil society and the media to engage candidly with the government on key policy issues affecting business and development, and urged the government to welcome their participation and contribution in policy dialogue as well as welcome and use global development knowledge on what has worked elsewhere to leap frog some of Ghana’s development challenges.