The State of Ghana’s Economy Beyond GDP | ILAPI

Globally, a lot are considering moving beyond Gross Domestic Product (GDP) to get the whole picture of economic health and sustainable development of their countries. In the 1950s and 1960s, most developing countries met their growth targets, however, the standard of living of the masses remain unchanged. In recent times, according to World Bank, the economic wealth of low income countries doubled which was almost more than the global average of 66%, but the increase in population growth in low income countries mean that the per capita income grew at a slower rate than the global average. This is the situation in most parts of sub-Sahara Africa.

In Ghana, 3rd and 4th April, 2019 was full of the ruling government and the opposition party giving the true state of the economy and its related facts and figures. The unfortunate thing about the series of town hall meeting and public lecture was that it only yielded plethora of comparison between the New Patriotic Party (NPP) and the opposition National Democratic Party (NDC) periods of managing the economy.

My disappointment emerged from the fact that, in all the series of lectures little effort was made to compare the state of Ghana’s economy to other countries within the sub-region or beyond. Also, the economic management team concentrated their efforts on the traditional definition of development and growth, thus using Gross Domestic Product (GDP), Debt to GDP ratio and the exchange rate. These indicators are helpful to get a uniform basis in comparing country’s economic growth.

However, the GDP figures are not enough in determining the general well-being of the masses. This has become a problem for International Monetary Fund and World Bank as most economic indicators like Gross National Income (GNI), GDP per Capita seems to detach itself from the livelihood of the general population. Dudley Seers worrying about this problem decided to raise questions on what has happened to poverty, inequality and unemployment. Even though, I share in the believe that inequality will remain so far as man compares himself with his fellow man, however absolute poverty can be reduced. This will mean Ghana’s economic management team should consider enhancing lives and including the vulnerable groups in an all-inclusive development.

I cannot talk about Human goals in economic development without mentioning, Amartya Sen, the 1998 Nobel laureate in economics, who contributed in the publication in the first Human Development Index report in 1990 with Mahbub ul Haq. According to Sen, “Economic growth cannot be sensibly treated as an end in itself. Development has to be more concerned with enhancing the lives we lead and the freedoms we enjoy”. Sen stipulate “capacity to function” that is what a person is, can do, and does or can do. Simply, instead of measuring the total output produced in a country, or the characteristics of commodity consume, using the utility approach, it is important to look at what people do or can do with the commodities of given characteristics that they come to possess or control. For instance, what become the value of a book to an illiterate or giving a bicycle to a cripple, hence capacity to function.

United Nation Development Programme includes indicators such as Education, Health (lifespan) and decent standard of living in preparing the Human Development Index (HDI). On Education alone, Ghana Standard Living Survey round 6 (2013) reports that among 15years and above adults, 19.7 percent has never been to school while 44.6 percent have attained a level below Basic Education Certificate Examination (BECE).  About 21 percent of the population has BECE and only 14.7 percent have acquired Senior High School (SHS) or a higher level of education.

Ghana’s HDI value for 2017 is 0.592, which positions the country on 140 out of 189 in the world. Selectively, countries such as Mauritius 65, Libya 108, Gabon 110, Namibia 129, Congo 137 are ahead of Ghana. Amidst the political instability, a person from Libya may be more educated and have longer lifespan than someone in Ghana. The least said about Congo, the better.

I gained insight from the awesome book Factfulness, as Hans Rosling made me realized how wrong I was about the world and more importantly how he argued that the notion “developed” and “developing” tags on countries is irrelevant. Hans Rosling’s four-level categories gives and broad and vivid understanding to human development whereas the statistical figures of GDP, GNI etc cannot. Allow me to share Hans Rosling four-levels below:

Level 1: One billion people live on level 1. This is what we think of as extreme poverty. If you’re on level 1, you survive on less than Ghs10 ($2) a day and get around by walking barefoot. Your food is cooked over an open fire, and you spend most of your day traveling to fetch water. At night, you and your children sleep on a dirt floor.

Level 2: Three billion people live on level 2, between Ghs10 ($2) and Ghs40 ($8) a day. Level 2 means that you can buy shoes and maybe a bike, so it doesn’t take so long to get water. Your kids go to school instead of working all day. Dinner is made over a gas stove, and your family sleeps on mattresses instead of the floor.

Level 3: Two billion people live on level 3, between Ghs40 ($8) and Ghs160 ($32) a day. You have running water and a fridge in your home. You can also afford a motorbike to make getting around easier. Some of your kids start (and even finish) high school.

Level 4: One billion people live on level 4. If you spend more than Ghs160 ($32) a day, you’re on level 4. You have at least a high school education and can probably afford to buy a car and take a vacation once in a while.

Having known this, NPP and NDC can play with the economic figures but you as a citizen, you can clearly tell which level you belong without any boring economics lectures. This situation becomes frightening when you plot Per capita income to lifespan. Most African countries including Ghana’s per capita income range from $500 to $5000 and the lifespan is below 65years. According to 2018 HDI report Ghana’s life expectancy has increased by 6.2%, yet it still falls below 65years.

According to World Health Organization (WHO) Ghana recorded cholera outbreak in June, 2014. Starting at 18 August, about 6,018 cases including 47 deaths had been recorded from 34 districts in five regions, hence causing a fatality rate of 0.9%. More noteworthy Accra was the most affected region, with 5,558 cases and 45 deaths. UNICEF on 8 September, 2014 revealed that quantity of cases had expanded to more than 15,000, including 126 deaths. The cholera situation was finally controlled as revealed by Who on 31st October, 2014, in all a total of 23,622 cases recorded including 190 deaths. The cholera infection had affected all the 10 regions of Ghana at the time with Greater Accra (capital of Ghana) being the most affected with 75 percent of cases and 60 percent of deaths. I have nature to thank, since most of the hinterlands are closed to nature perhaps made the hinterlands cleaner and hygienic than the capital city of Ghana.

As if it’s not enough, malaria was responsible for 19% of all deaths in Ghana from 2010, however this has declined in 2016 to 4% but under 5 years’ deaths is around11% as observed by Severe Malaria. This is how well our health institutions is in the face of common disease.

Although, reduction in malaria fatality can also be greatly attributed to the National Health Insurance Scheme (NHIS), the National Health Insurance Fund is in a terrible state with little being said about it. Maybe we should praise government for paying the NHIS debt even though you and I don’t know whether those loans were given out with interest or not. After all, the NHIS does not account to the citizenry as its last annual report is dated back at 2013.

As Ghanaians, we can rally behind the politicians as they compare whether the debt to GDP is 48% or 58%. However, I believe this piece helps you identify your true level in this economy where loans are recorded as revenue and rainfall is a disaster.

The economic values are very important and easy to calculate such quantitative variables, but the economic indicators only should not always be the metric for measurement, true development should include human freedom centered goals.




Nathaniel Dwamena

He is the Researcher and Development manager at the Institute for Liberty and Policy Innovation.

Source: ILAPI