Ghana's Poor Economic Performance

Ghana is one of the West African countries which gain its independence on
the 06 of March 1967 headed by Osagyefo Dr. Kwame Nkrumah. It is made
up of ten Regions.

Ghana's poor economic performance over the past decades since independence is
actually the result of a combination of different reasons. From independence, Ghana
was seen as one of the bright stars of Africa and the developing third world.
However, successive regimes and policy failures have reduced the performance of
its economy below expectations.

The first of the reasons that Ghana's economy has performed poorly is political
instability. Since 1967 when Ghana had its independence, there have been over 7
different changes in government, some of which were by the brutal hands of the
military. This did not lead to the necessary smooth growth since each change of
government meant that economic projects and policies of the previous government
were scrapped. This led to a lack of continuity of growth, and also it led to the lack
of a clear cut lasting policy that could have ensured constant growth. Instead what
happened were projects that were started and never finished, with scarce resources
that used to fund them not having any returns whatsoever.

Another reason for poor economic performance is a low level of human

development in terms of education. According to the World Bank, only 38% of
children of school going age were attending school in 1960. Although this has
increased to about 76% in 1997, it by no means implies that our human resource is
underutilized, and poor education means that economic opportunities for growth
are not taken, therefore poorer skilled people who can only do menial jobs that do
not pay much and hence reduce their productive potential.

Thirdly, Ghana started off as a producer of primary goods like cocoa, timber and
gold. Just like Malaysia at the time of independence, raw materials exports were the
main components. In 1960, Malaysia had 60% of its export earnings from rubber, as
Ghana at the same time had 66% of its export earnings from cocoa. However,
Malaysia pursued an aggressive program of diversification, investing heavily in
resources and manpower such that they had a diversified economy. Ghana's
economy on the other hand has still remained largely primary commodity based,
with agriculture still being the main occupation. This has meant that Ghana has not
been able to diversify widely to mitigate the changes in market price of its primary
export commodity, cocoa, which still accounts for 35% of its foreign exchange
revenue, compared with 1% for rubber for Malaysia today.
Another reason for Ghana's poor economic performance is the lack of foreign direct
investment. Africa in itself has been seen as a relatively unattractive investment
destination due to political instability and civil unrest. Africa attracts only 5% of
total foreign direct investment worldwide. This means that there is little investment
in an economy that already has little domestic savings. This then results in the fact
that there are little opportunities for economic growth because there is very little
invested.