Stratification of Africa requires appropriate policy choices
In November 2010, Ghana rebased its gross domestic product (GDP) and instantly, the economy expanded by about 60 , mainly by applying higher indexes to services and construction
increase confirmed Ghana’s lower middle-income country (MIC) when its per capita income (i.e., GDP/population) exceeded the World Bank’s MIC criteria of US$1,005 or more. The International Monetary Fund (IMF), African Development Bank (AfDB), and development partners (DPs) use this income classification to make decisions on tapering or stopping grants and concessional loans to low-income countries (LICs).In November 2011, Ghana consolidated its MIC-status with exports of about 70,000 of crude oil from its Jubilee Fields and using the gas to produce thermal power. This later “gas-to-power” strategy involved the construction of offshore pipelines, a processing plant, and other infrastructure. This ‘self-financing’ facility, new debt management strategy, became controversial for and economic reasons—given China’s role in Africa and Ghana’s potentially unsustainable post-HIPC (Heavily-Indebted Poor Country) debt profile. The to get a waiver for the loan under an IMF Program.Transition blueprintFrom 2012 to 2016, certain factors adversely affected Ghana’s per capita income and growth rates but its MIC status remained. They include the 2010 census increasing the population by 30.4 per cent (18.9 to 24.7 million); Nigerian gas supply disruption (2012 to 2015); fiscal slippages from subsidies and wages; and the continuing global crisis leading to slowdown in emerging market demand and sharp falls in prices for exports – gold, cocoa, and crude oil.Ghana and other Sub-Saharan African (SSA) MIC states survived the downturn but a transition plan could help the ensuing economic recovery and managing future inevitable setbacks. These MIC and resource-rich (RR) states need to improve and sustain economic performance, in Ghana’s case managing additional crude supplies from the TEN and Sankofa fields from 2017. The projected growth of 6.5 to 8 for three second September 2018 that led to 25 growth implies revenue but less aid and concessional loans. The consolidated MIC-status will entrench the country’s exposure to the capital markets. Ghana and other SSA states such as Kenya, Mozambique, Sierra Leone, Tanzania, and Uganda expect to get more incomes from new natural resource flows.