UNIVERSITY OF EDUCATION, WINNEBA
SCHOOL OF BUSINESS
Second SEMESTER 2021/2022 ACADEMIC YEAR
ECONOMY OF GHANA (BBA 241)
AN OVERVIEW OF THE ECONOMY OF GHANA
Ramatu Ussif (PhD)
Jonas Ladime (PhD)
Mr. Abass Adams
Presentation Outline
❑ Students Learning Outcomes
❑ An overview of the Ghanaian economy
❑ Growth and Macroeconomics Performance
❑ Sectorial development
❑ Poverty and Development
❑ The State, Institutions and Social-Economic development
BBA 241 Lecture One
Ice Breaking Session
Let’s define ‘Economy’ together!
▪ Write a word to mean ‘ECONOMY’
▪ Get a partner
▪ Join your two words to form a phrase
▪ Join another two partners to be four
▪ Join the two phrase to form a sentence
▪ Does it define economy?
BBA 241 Lecture One
AN OVERVIEW OF THE ECONOMY OF GHANA
Introduction
•Economy is the state of a country in terms of production and consumption of goods
and services and the supply of money or the prudent management of the available
resources for the total benefit of the country citizenry.
•Ghana's independence in March 1957 allowed Ghana to follow an independent
political course, and to experiment with an independent economic direction.
• Ghana’s economy thrive on sectorial development, economic growth,
macroeconomic performance and political stability.
BBA 241 Lecture One
AN OVERVIEW OF THE ECONOMY OF GHANA
Introduction
• The Ghanaian economy significantly outperformed the global economy and all major
sub-groupings in 2017.
• Ghana’s economic growth rate was higher than that of the global economy and most
of sub-Saharan Africa in 2017.
•The country has been an attractive investment destination as a result of the relative
political stability and improved macroeconomic conditions over the last two decades.
BBA 241 Lecture One
AN OVERVIEW OF THE ECONOMY OF GHANA
Growth and Macroeconomic Performance
• Macroeconomic conditions in Ghana have been relatively stable. This stability contrasts
quite considerably with performance in the preceding decade.
• The 2018 Budget Statement estimates that significant growth was achieved in the
economy in 2017, with real GDP growth estimated at 7.9% at the end of 2017, higher than
the target growth of 6.3%.
•Real economic growth for 2019 was 6.5 per cent as against 6.3 per cent in 2018. Non-oil
GDP grew at 5.8 per cent in 2019 as against 6.5 per cent in 2018.
BBA 241 Lecture One
AN OVERVIEW OF THE ECONOMY OF GHANA
Sectorial Developments
• The services sector is the largest contributor to Ghana’s GDP (44.1% as of 2019).
• The industrial sector is the next largest sector of the economy (31.9% as of 2019),
followed by the agricultural sector with a 17.31% contribution to GDP at the end of
the 2019.
• Ghana is currently a net importer of petroleum products. However, expected
production of oil and gas from the Tweneboa, Enyenera, and Ntomme (TEN) and
Sankofa oilfields has increase output in 2019 and improve the balance of trade
position.
BBA 241 Lecture One
AN OVERVIEW OF THE ECONOMY OF GHANA
Poverty and Social Development
• The overall rate of poverty reduction over the period suggests a
growth elasticity of poverty incidence of 0.98, a figure which is
comparable with other African countries (Christiaensen et al., 2003).
• Ghana’s strong economic growth in the past two decades helped
cut the country’s poverty rate in half, from 52.6% to 21.4% between
1991 and 2012.
BBA 241 Lecture One
AN OVERVIEW OF THE ECONOMY OF GHANA
The State, Institutions and Socio-Economic Development
• The state is defined as ‘a set of institutions that possess the means of legitimate
coercion, exercised over a defined territory and its population, known as society’, then
the role that each institution plays in bringing more rapid development to that society
should be paramount.
• Economic and political reforms are redefining the role of the state, but the process
often remains ad hoc in poor countries, including Ghana.
BBA 241 Lecture One
AN OVERVIEW OF THE ECONOMY OF GHANA
• Many studies have identified several key areas that need to be addressed. These include
(i) Discipline in control of the fiscal deficit through effective public expenditure
management.
(ii) The development of an efficient and competitive financial sector which can
meet the needs of a developing private sector.
(iii) Enhanced effectiveness of public service delivery.
(iv) Policies to transform the agricultural sector, beginning with the land-tenure
question.
All of these involve difficult political choices and institutional reform (Booth et al., 2004).
BBA 241 Lecture One
END OF FIRST LECTURE
BBA 241 Lecture One
UNIVERSITY OF EDUCATION, WINNEBA
SCHOOL OF BUSINESS
Second SEMESTER 2021/2022 ACADEMIC YEAR
ECONOMY OF GHANA (BBA 241)
THE POLITICAL STRUCTURE OF THE GHANAIAN ECONOMY
Ramatu Ussif (PhD)
Jonas Ladime (PhD)
Mr. Abass Adams
Presentation Outline
❑ Nkrumah’s Regime
❑ The National Liberation Council (NLC)
❑ Busia Government
❑ National Redemption Council (NLC)
❑ The First Rawlings Intervention
❑ Liman’s Regime
❑ The Second Rawlings Intervention (NDC I)
❑ The NPP Regime I
❑ NDC Regime II
❑ NDC Regime III
❑ Exercise
BBA 241 Lecture 2-3
Political Structure in Ghana
Let’s define ‘Politics’ together!
▪ Government / State
▪ Regimes
▪ Policies
▪ Theories and Systems
▪ Elected
▪ Coup de’ tat
▪ Political Parties
▪ Does it mean Political Structure?
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
Nkrumah’s Regime
Ghana started independence with over $269 million of reserves.
• In addition, there was virtually no external or domestic debt and Ghana's population was only 6.5 million.
• Nkrumah had the conviction that growth and development in Ghana could only be achieved through two
major channels:
– Massive Investment (mechanization of Agric)
– Industrial development
The CPP embarked on a policy of Import-Substituting Industrialization (ISI).
• CPP constitution therefore made the following provisions:
– Establishment of Socialist State (equal opportunity for men and women)
– Free Education up to age 16
– Free National Health Service
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
Nkrumah’s Regime
Other initiative embarked by Nkrumah includes;
• Establishment of a Seven (7) year development plan
– 1963/4 – 1969/70
• The plan was aimed among other things at modernizing the Economy through
Industrialization.
– Fiscal policy was expansionary
• Expenditure on Education, Health, and Physical Infrastructure dramatically
increased from their colonial levels.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
Nkrumah’s Regime
The external reserve position deteriorated significantly to a negative (-US$391 million) in
1966.
• The country registered three consecutive years of negative growth in per capita
GDP between 1964 and 1966 and inflation increased from 1 percent in 1957 to 22.7
percent in 1965.
– The deteriorating economic and political situation was used by a group of military
and police officers as an excuse to stage a coup d'état that led to the overthrown of
the CPP on February 24, 1966.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The National Liberation Council (NLC)
The leaders of the coup that overthrew Nkrumah in early 1966 installed a government called the
National Liberation Council (NLC) which was heavily dominated by Military Officers.
• The membership of the NLC
– Major A.A. Afrifa
– Mr. B. A. Yakubu
– Brig. A. K. Ocran
– Mr. W. K. Harley
– Col. E. K Kotoka
– Mr. A. K. Deku
– Mr. J. E. O. Nunoo.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The National Liberation Council (NLC)
The NLC development strategy shifted from being statist to liberal where market forces and capitalism
led by the private sector.
• The NLC embarked on an IMF supported stabilization program in April 1966.
– The program was aimed at improving the adverse balance of payments, cutting down the
budget deficit, reducing the government sector, and stimulating private enterprise.
• In July 1967 the NLC finally decided to devalue the cedi 43%.
– The devaluation package also included an increase in the fixed nominal producer price of
cocoa by 30%, and modest increases in the minimum wage (7.7%) and government wages
(5%), plus a commitment to liberalize import controls.
– The NLC also managed to cut Public Employment.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The Busia Government
Elections in August 1969 was won by the Progress Party (PP), led by Dr. K. A. Busia, with
59% of the votes and 75% of the seats.
• The government of Prime Minister Busia initiated some economic reforms, and modest
economic growth ensued.
• However, his administration faced two major problems as follows:
– A fragile political system
– A mishandled import liberalization policy
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The Busia Government
• Other challenges included:
– The government lacked some legitimacy in view of the fact that they got to power
on the back of the disqualification of most of the politicians on the other side by the
military.
– Total ban on importations of some commodities (e.g. cars, cigarette etc.)
– Introduction of National Development Levy
– Cuts in Government Budgetary Allocations for the military,
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The National Redemption Council/Supreme Military Council
After taking over in 1972, the Acheampong-led Military Government (the National
Redemption Council (NRC)) focused its economic policy on Nationalization which involved
• A revaluation of the cedi from c/1.82/$ to c/1.28/$;
• A refusal to pay “unjust foreign” loans that had been taken out by previous civilian
governments;
• Restored student and public sector allowances
• A fourfold increase in the minimum wage, and
• Also launched of “operation feed yourself,” to achieve national food self-sufficiency.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The National Redemption Council/Supreme Military Council (cont..)
Key achievements
• As a policy to boost domestic food supply, OFY had some success.
– In its first two years, Ghana's cocoa export volume expanded while the world cocoa price increased moving from a
constant dollar price of $201/kg to $641/kg, Gold prices too, soared from about $35 per troy ounce in 1970 to
$161 in 1974.
Key challenges
• Massive shortages of foreign exchange and virtually collapsed during the tenure of the NRC/SMC .
– Industry and transportation suffered greatly as world oil prices rose up from $6 to $11 a barrel during and after
1974, and the lack of credit of foreign exchange and credit left the country with no fuel.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The National Redemption Council/Supreme Military Council (cont..)
The military’s solution to the problem of the deteriorating economic and political
situation was to remove the non-military participants in the NRC, creating instead the
Supreme Military Council (SMC).
• The other SMC officers acting in response to continuing pressures to find a
solution to the country’s economic dilemma in July 1978, forced Acheampong
to resign, replacing him with Lieutenant General Frederick W.K. Akuffo.
– First there were tentative steps towards a more “flexible” exchange rate
policy, a substantial formal devaluation of the Cedi from c/1.69/$ to c/2.75/$
took place in August.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The First Rawlings Intervention
Extraordinary events in May and June 1979 intruded before the elections were held.
• Growing unrest, sparked by the generals’ attempt to grant themselves immunity
from prosecution after they left office, led a group of young Army officers to
overthrow the SMC government.
– This ushered in a government of the Armed Forces Revolutionary Council
(AFRC) Government under Flight Lieutenant Jerry John Rawlings.
– The AFRC launched a massive anti-corruption campaign from early June
until late September.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
Limann’s PNP regime
The 1979 elections were won by the People’s National Party (PNP).
• The Liman government faced a daunting task:
– restore the institutions of civil society that had been set aside during more
than seven years of increasingly corrupt and autocratic military rule;
– rejuvenate an economy that was collapsing;
– to do this with Rawlings watching from the wings.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The government was clearly not up to the task.
• It did nothing about the exchange rate or the abysmal state of infrastructure, both of
which were necessary for a successful resuscitation of agriculture.
– Government revenue dropped, sliding to less than 5% of GDP in 1981.
– Money supply growth was not brought under control and inflation rose to over
100% again in 1981.
– The Limann administration recorded 66 and 51 workers strikes in 1980 and 1981
BBA 241 Lecture 1-3
respectively.
The Political Structure of the Ghanaian Economy
The Second Rawlings Intervention (NDC I)
While the government was still debating on how to deal with these problems when the Provisional
National Defense Council (PNDC) led by J.J. Rawlings staged another coup in December 1981.
• The second Rawlings government, as with the first, was concerned primarily with the corruption that had
permeated Ghanaian society.
– The regime immediately began another housecleaning and as part of the exercise, four persons, including three
senior judges, were kidnapped and murdered.
In January 1993, the PNDC military government transformed into a democratically elected
government under a new name, National Democratic Congress (NDC).
• Macroeconomic imbalances re-emerged, fueled in part by election-inspired government overspending.
– Parliament, dominated by Rawlings‘ own party, failed to approve a petroleum tax in 1993, which worsened the
government‘s fiscal balance.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The Second Rawlings Intervention (NDC I)….
The re-establishment of constitutionalism came with some key governance structures.
• These are the Executive, the legislature , the judiciary, the local government institutions, the CHRAJ, the
Council of State, NDPC and the NCCE among others whose functions are critical to realizing the
development goals of the country.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
The NPP Regime I
In January 2001, the opposition New Patriotic Party (NPP) led by J.A. Kufuor took office from the
NDC. The Kufour administration's domestic policy was aimed at macroeconomic stability.
• This socio-economic vision was outlined in the five priority areas:
– the pursuit of good governance,
– modernization of agriculture for rural development,
– private sector participation,
– enhanced social services and
– vigorous infrastructure development.
• Social interventions introduced;
– School feeding programme
– LEAP
– MASLOC
– National Health Insurance etc.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
NDC Regime II
This covers the regime of the National Democratic Congress government from 2008 to 2012 led by
Prof. Evans Atta Mills.
• Key highlights of the regime:
– This period has been characterized by measures aimed at the stabilization of the economy arising out of the huge
budget deficit the government incurred in 2008 resulting from the huge capital expenditure.
– Embarked on a programme to provide free school uniforms, abolish the shift systems, and removing schools under
trees
– Establishment of development authority
• SADA
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
NDC Regime II (cont..)
Main Policy thrust:
• Ghana Shared Growth and Development Agenda (GSGDA) anchored on the following themes:
– Ensuring and sustaining macroeconomic stability;
– Enhanced competitiveness of Ghana’s private sector;
– Accelerated agricultural modernization and natural resource management;
– Oil and gas development;
– Infrastructure, energy and human settlements development;
– Human development, employment and productivity; and
– Transparent and Accountable Governance
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
NDC Regime III
The death of the sitting president, Prof. Evans Atta Mills in 2012, led to NDC regime III led by John
D. Mahama.
• The Mahama administration, in 2016, during the government’s last budget reading before Parliament,
revealed that the agricultural sector, which is touted as the ‘backbone’ of the country’s economy, did not
see significant growth in performance despite the many investments.
– The sector hit 7-year low record by contributing only 19% to the country’s GDP, down from the 2009 contribution
of 31.8%.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
. NPP Regime II (current regime)
The current President of the Republic of Ghana
• Nana Addo Dankwa Akufo-Addo, has stated that the vision of his government:
– create an optimistic, self-confident and prosperous nation, through the
creative exploitation of the country’s human and natural resources, and
operating within a democratic, open and fair society, in which mutual trust
and economic opportunities exist for all.
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
. NPP Regime II (current regime)
• The present Government’s policy direction, according to the President, is
founded on five pillars of growth and development, namely;
I. Revitalizing the economy
II.Transforming agric and industry
III.Revamping economic and social infrastructure
IV.Strengthening social protection and inclusion
V.Reforming delivery of public service institutions
BBA 241 Lecture 1-3
The Political Structure of the Ghanaian Economy
Class Exercise
What is GDP? Distinguish between nominal GDP and Real GDP?
Can Ghana’s economy be described as a “resource curse” one? Discuss.
BBA 241 Lecture 1-3
References
World Bank. 2020. Ghana Poverty Assessment. World Bank, Washington, DC. © World Bank.
https://openknowledge.worldbank.org/handle/10986/34804 License: CC BY 3.0 IGO.
BBA 241 Lecture 1-3
END OF LECTURE
BBA 241 Lecture 1-3
