S05 ATR April 2022 Opinion_ATR - New Master Template 2016 30/03/2022 06:35 Page 16
GHANA | REPORT
Ghana recovery back on track Traditional industries such as oil and gas, mining and agriculture remain strong in Ghana, providing a platform for the growth and emergence of new technologies and innovation, though key financial challenges persist.
Image Credit: Adobe Stock
Ghana’s economy is recovering with the health crisis easing.
L
ike so many other countries, Ghana’s economy hit a roadblock when Covid-19 struck. This slashed real growth rates from 6.5% in 2019, down to 0.4% by 2020, according to the International Monetary Fund (IMF). However, with the health crisis easing, there are hopes of a return to more significant economic growth soon – in 2021, this eased back up again to reach 4.7%. Despite major financial and other challenges, Moody's Investors Service recently upped its outlook for Ghana’s Government and its credit rating to ‘stable’ from ‘negative’. This was, in part, recognition of its achievements prior to Covid-19. “The stable outlook balances Ghana’s significant fiscal challenges, large refinancing needs and constraints on access to funding against the Government’s prepandemic track record of relatively effective policy delivery and
16
maintenance of a variety of funding sources,” Moody’s noted in a February 4, 2022 update. It added that Ghana's institutional framework and “dynamic economy” remain key credit supports, with growth forecasts of around 5% over the medium term. The challenges are substantial, however, with Government debt estimated at around 80% of GDP by the end of 2021 – interest payments alone consumed half of government revenues last year. This trade-off – between meeting a large debt and delivering services to the Ghanaian
AFRICAN REVIEW OF BUSINESS AND TECHNOLOGY | APRIL 2022
population, where average incomes are still low at about US$6,000 per capita – greatly reduces Accra’s scope for policy action.
The net zero factor The country is also caught in the crosswinds of the West’s net zero push, which may further thwart economic progress. While Ghana is only a relative newcomer to Africa’s club of oil and gas exporting nations – following the launch of its flagship Jubilee field in 2010 – the industry has already become an important pillar of the economy.
Potentially we could bring in billions of dollars if we are given the chance to develop these multiple blocks.” KEN OFORI-ATTA, GHANA’S MINISTER OF FINANCE
But the Government may need to find alternative ways of looking to bankroll its hydrocarbons ambitions, with traditional sources of funding drying up, a point echoed by Finance Minister Ken Ofori-Atta recently. Speaking at an energy transition forum in Accra organised by the Ministry of Energy, he highlighted the potential of new offshore blocks that could be developed and boost the wider economy. “Potentially, we could bring in billions of dollars if we are given the chance to develop these multiple blocks. But now, all of a sudden, the West is saying we should move to clean energy,” he was quoted as saying in local press. Taking funding off the table for new oil and gas investments is not the solution, he added. While there is a national commitment to sustainable development and decarbonisation efforts, Ghana’s challenges are clearly not the same as those in
www.africanreview.com
