Ghana’s 2013 economy and labour front – matters arising

Ghana’s 2013 economy and labour front – matters arising

The last quarter of 2013 is posting what a street vendor of newspapers has described as “interesting times” in Ghana’s economic outlook and labour productivity.

According to financial market analysts, the outlook for the equities market remains optimistic for the final four months of 2013, as they anticipate the successful adjudication of Ghana’s electoral dispute to restore business and consumer confidence and to speed up recovery of the larger economy.

The country’s growth had slowed in the first two quarters of the year and deep into the third quarter.

Power rationing, coupled with the introduction of new taxes has impacted heavily on manufacturing and industrial production.

There was a 20% hike in petroleum prices and transport fares in September and from October utility tariffs are going up – 78.9% for electricity and 52% for water.

These are expected to raise the cost of living, against the 17% increase in the National Daily Minimum Wage announced in September.

Crude oil, Ghana’s second biggest export earner, generated some revenue to sustain the economy, but targets for cocoa sale are unstable and gold is losing its shine prices on the international market drop steadily.

Industry is worried at the rising cost of production, high taxation and unbridled import of cheap inferior imports.

There are fears of business collapse, employee redundancy and high unemployment – mining firms have already taken steps to downsize in order to contain the rising cost of production.

Ghanaian businesses want government to reduce the cost of borrowing to mitigate the effect of the utility tariff and tax hikes to ease the cost of doing business.

Already, strategic State economic institutions have indicated government is likely to miss three of the most important economic targets for 2013 - overall economic growth (Gross Domestic Product), inflation (Consumer Price Index), and the fiscal deficit.

The International Monetary Fund (IMF) is also not so confident, concluding that it will be difficult for the government to keep the deficit below 10% of GDP.

Yet, the some foreign investors, including the Australian Trade Commission, sees Ghana as a destination of choice for many of its companies, identifying investments in natural resources, agribusiness and education as the main opportunity areas for investors.

The Commission has however identified lack of reliable infrastructure, statistical information and data for decision making as well as lack of highly skilled workforce as areas that need attention.

Kofi Adu Domfeh’s observation…