‘Adherence to prudent fiscal discipline will propel economic growth’
Ghana’s economy has the potential to recover from its low growth level of 3.6 per cent of total domestic productivity recorded last year to about six per cent of Gross Domestic Product (GDP) in the short run if the government’s economic management team adheres to prudent fiscal discipline.
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World Bank’s Chief Economist for African Region, Dr Albert G. Zeufack, who made the observation at an interactive session with the media in Accra yesterday, said it was important for regulatory frameworks to be tailored towards creating a conducive environment for private ventures to thrive.
“Ghana and Malaysia got independence at the same time with the same development challenges, but today Malaysia’s economy is almost nine times better than that of Ghana and other African countries.”
“The reason is that African countries continue to rely on export earnings which are subject to commodity price fluctuations at the world stage,” he said.
Diversification
Dr Zeufack underscored the need for countries in Africa to diversify their economies by having a paradigm shift from over-reliance on exports to a more industrialised economy based on value addition to generate more jobs.
He said even though Ghana and Cote d’Ivoire accounted for about 70 per cent of the world’s cocoa, the failure to add value to the commodity had made the two countries to lose out in terms of returns on the commodity.
He further asked Ghana and other African countries to diversify their markets and begin to look at opportunities in East Asia, describing the latter as the “emerging trade hub” that could spur the growth of developing economies.
Challenges
Touching on the development challenges of African economies, he observed that the major setbacks were institutional and leadership lapses.
“Most African countries continue to spend in good times, leaving nothing to hold on to during challenging times due to bad management and institutional weaknesses.”
“Times are changing and it is about time that the continent embarked on prudent fiscal policies to build and improve infrastructure, boost energy production, and explore regulatory frameworks that will enhance microeconomic stability,” he said.
Leadership
Dr Zeufack said the quality of leadership in African countries ought to be strengthened through capacity building programmes on fiscal policies, stressing that economic policy coordination was critically for economic development.
He lauded the structure in Ghana where the vice-president coordinated the government’s economic policies, saying that the arrangement helped to streamline and sequence economic activities of the government.
The economist gave an assurance that the officials of the World Bank were ready to improve on the human resource potential of developing economies by lending their depth of knowledge and expertise to the local managers of those economies.
Industrialisation policy
The World Bank Country Director, Dr Henry G.R. Kerali, touched on the industrialisation policies of the government, describing the “one district, one factory” and the “one village, one dam” initiatives as having the potential to spur economic growth and reduce poverty.
He, however, observed that the successful implementation of those initiatives would depend on how friendly the business environment was to encourage the private sector to invest in those initiatives.
“The dam project, for instance, should be capable of being linked to agricultural productivity to improve on the livelihood of the beneficiaries,” he said.
Dr Kerali urged the government to create a platform to encourage Ghanaians who were staff of the World Bank and others in the Diaspora to plough back their knowledge and resources to develop the local economy.