Accra, Ghana//-A report released by World Bank put forward six strategic measures that could transform Ghana’s economy within the short, medium and long terms.
According to the report titled: ‘5th Ghana Economic Update: Structural Transformation and Labor Market Performance: Challenges and Opportunities’, to successfully transform the economy and boost labour market performance, Ghana needs to: i. Identify and nurture economic activities and enterprises that can potentially increase product complexity; ii. Strengthen the participation of enterprises in global value chains;
iii. Harness the potential of digital technologies and proactively adjust to the changing world of work;
- Increase and enhance the participation of women, the youth, and the poor and vulnerable in the labour market;
- Improve human capital in the current and future workforce; and vi. Design systems and interventions to be resilient and responsive to protect the economy and labour market against disasters and shocks.
It added while medium- and long-term policies are needed to structurally transform and diversify the economy, immediate, short-term relief measures are also needed for households, workers, and businesses affected by the COVID-19 pandemic.
Only once the spread of COVID-19 is effectively controlled in Ghana and its major external markets can return the country to its structural transformation agenda.
Speaking at the virtual launch of the report in Accra on Tuesday 16, March 2021, World Bank Country Director for Ghana, Frank Pierre Laporte commended the Ghanaian authorities for acting swiftly, since the start of the COVID-19 pandemic in Ghana, to mitigate and contain its impact on the health and livelihoods of Ghanaians.
The crisis has put an end to Ghana’s impressive growth track record
He however noted: “This crisis has put an end to Ghana’s impressive growth track record. Prior to 2020, Ghana’s economy was one of the fastest growing in Africa, growing by an average of 7 percent per year in 2017-19”.
Mr Laporte continued: “The pandemic has resulted in the slowdown of growth in 2020 to an estimated 1.1 percent (0.9 percent according to recent government numbers); and the economy contracted for two consecutive quarters in 2020 for the first time in 38 years”.
The crisis has already led to the suspension of the fiscal rule and substantially drove upfinancing needs, according to him.
What should be done?
“To meet these exceptional financing needs and maintain macroeconomic stability, the government will need to resume fiscal consolidation efforts as soon as possible, with particular focus on reforms to increase public revenue.
Authorities should consider reforms to widen the tax base, strengthen tax administration, reduce tax exemptions, plug revenue loopholes and leakages, and combat tax evasion”, Mr Laporte said.
The Ghana Economic Update authored by Kwabena Gyan Kwakye, David Elmaleh, Dhushyanth Raju, and Mpumelelo Nxumalo, is part of a World Bank Advisory Services and Analytics (ASA) series on Ghana.
The report provides a snapshot of recent economic development and medium-term prospects. Every edition includes a broad overview of the country’s macroeconomic and structural dynamics, as well as a Special Topic, dedicated to a current policy issue.
The Special Topic for this 5th edition is ‘Structural Transformation and Labor Market Performance: Challenges and Opportunities’.
Kwame Gyan Kwakye, David Elmaleh, and Mpumelelo Nxumalo, authors of the report and economists at the World Bank Ghana office, added: “Public interventions across multiple sectors will require coherent and coordinated efforts between multiple government ministries and agencies”.
It will also be crucial to secure effective private sector and civil society participation in the design, implementation, and monitoring and evaluation of policies and interventions. A diverse set of interventions is needed”.
These interventions comprise support and incentives (including favourable rules and regulations) for international and domestic private investors to enter into specific sectors, locations, and value chains, as well as to develop and provide specific goods and services for domestic and international markets in a labour-intensive and socially inclusive manner.
Incentives
Incentives are also needed for private and public providers to develop the skills of current and future workers that are valuable for employment and will increase productivity and raise earnings, ranging from vocational and technical, digital, and business management skills to cognitive and socioemotional skills.
Interventions need to go beyond skills development to address other potential constraints to productive and gainful private wage and self-employment, including support related to knowledge diffusion; technology adoption; labour, land, and property rights; access to physical and financial capital; development of networks; and market entry.
Efforts are also needed to create a wide-reaching, robust, and flexible social protection system that is sufficiently delinked from formal employment or organizational arrangements and can effectively address the main risks faced by households, workers, and enterprises.
By Masahudu Ankiilu Kunateh, African Eye Report
