2024 Budget review: Balance scorecard of 2017-2023 growth stability pursuit

2024 Budget review: Balance scorecard of 2017-2023 growth stability pursuit

GDP has been spent on compensation between 2017 and 2022. As of August 2023, the ratio was 2.8%. During the pandemic (2019/2020), the figure dropped from 6.6% in 2018 to 6.4% in 2019 before rising to 7.4% in 2020. Since then, the compensation/ GDP ratio has fallen consistently.  

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Compensation dominates the Government’s expenditure basket, above other expenditure items like CAPEX, subsidies, interest payments etc.   The public sector wage bill constitutes a significant portion of government expenditure across all ECOWAS member states averaging 38%.   

Ghana’s wage bill since 2016 has been less than the subregional average of 38% indicating a relatively decent management of compensation as an expenditure item.   Public sector employees agitated for an increment in wages in 2022 following hyperinflation and the depreciation of the Cedi causing the wage bill to balloon to a record high. 

Given Ghana’s huge infrastructure gap, it may be time to take a more critical look at our expenditure priorities. Government cannot continue to be the biggest employer and expect to facilitate private sector growth to drive employment when the infrastructural support to the private sector required is inadequate.
 
Are we going to industrialize at this pace?

“Invested in strategically establishing over 160 factories across all districts under the 1D1F program.”

The industrial sector’s contribution to GDP has steadily increased from GHS60.8 bn in 2016 to GHS189.2 bn in 2022. The 2023 performance is expected to be at least GHS200 bn given the half-year contribution of GHS120 bn. The sector’s export value has also increased by 45% in the period under review.   The industrial sector has increasingly employed more people as shown in the chart adjacent. The sector share of employment has risen from 17.5% in 2017 to 19.1% in 2021.   Sector growth peaked in 2017 at 15.6% and has since remained depressed for a number of reasons that the 1D1F and other policy interventions are yet to tackle. The rising cost of production on account of high inflation, high cost of credit and significant hikes in utility tariffs have not helped the situation.The 1D1F must focus on manufacturing products for which Ghana has a competitive advantage.   Six out of Ghana’s top 10 exports are agricultural products. These include cocoa, fruits and nuts, animal and vegetable fats, wood, rubber and meat/seafood. 

Our abundant arable land, youthful population, and agriculture-friendly climate to name a few make the case for why our industrialization strategy must revolve around the agriculture sector.   Leveraging the agro-processing industry would be prudent as the majority of our agricultural exports are unprocessed. The hurdles to successful industrialization centred on agro-processing are fewer than those of the many other industries under the 1D1F (e.g. steel and aluminium fabrication) for which feedstock remains a challenge.   Processing staple foods like rice, tomatoes, cassava would easily lead to import substitution and increased exports in due course. The success of local fruit juice brands Ekumfi Juice and Blue Skies in export markets is evidence of the huge potential for the agroprocessing industry to spearhead industrialization.
 
Real sector performance | agriculture

According to the World Bank, Ghana's gross domestic product (GDP) at constant 2015 prices increased from $51.9 billion in 2017 to US$70 billion in 2020 and further to US$75 billion post-pandemic.

In 2017, the government introduced four new programs i.e. Planting for Food and Jobs (PFJ), Rearing for Food and Jobs, Planting for Export and Development (PERD) and the Youth in Agriculture program in the Agriculture sector. These programs were borne under the Agenda to Transform Ghana’s Agriculture Sector as outlined in the Medium-Term National Development Policy Framework (MTNDPF). The anticipated transformation of the agriculture sector was intended to increase capacity, realize potentials, increase incomes, create jobs, and provide inputs with a strong focus on creating an enabling environment for private sector operators within the agriculture value chain.   

Since 2017, agriculture has seen some level of improvement. The sector growth rate has improved from the 1.9% annual average recorded between 2014 and 2016 to almost 6% in the last six years. Crop production has increased significantly. The annual production has increased from the average of 33,253 Mt recorded between 2014 and 2016 to 43,814 Mt registered between 2017 and 2022. The higher level of productivity coincided with an appreciable increase in fertilizer application.
 
Ghana’s score on food security has deteriorated and for it to improve, we must achieve the following metrics used by the Global Food Security Index to rank countries’ ample supplies, high incomes for participants in the value chain, low costs for food relative to other expenditure and significant research and development concentrated on food production

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