Friday, March 18, 2011

Ghana's Trade Minister wants diversified economies

Ghana-The Minister of Trade and Industry, Hanna Tetteh, has called for a continental effort aimed at diversifying national economies away from primary production to ensure sustainable growth.

She noted the need for the establishment of strong institutions as key prerequisites to development and growth, as well as for the diversification of economies.

Ms. Tetteh was addressing the opening session of a two-day International Policy Conference in Accra.

The Conference, themed “Competitiveness and Diversification: Strategic Challenges in a Petroleum-Rich Economy”, is the first of its kind and was co-sponsored by the Ministry of Trade and Industry and the United Nations Industrial Development Organisation (UNIDO).

“Ghana has commenced the production of oil and the Draft Oil Bill has recently been passed by parliament, awaiting presidential assent; but apart from conversations around oil revenue, have we heard of diversification into other related industries?” she queried, noting government’s commitment to use the oil resources to ensure that industry becomes the anchor for national development.

In recent times, industrialists in the country have complained about increasing costs of doing business, mainly as a result of a crunch on credits as well as high lending rates by commercial banks to small and medium sized enterprises - which incidentally form the bulk of manufacturing and other industrial enterprises.

President of the Association of Ghana Industries, Nana Owusu-Afari, has noted that the situation has led to consistent underperformance of industry vis a vis the services and agricultural sectors, thus undermining efforts at adding value to Ghana’s exports.

Presently, the services sector has surpassed agriculture as the biggest contributor to Ghana’s GDP.

Worryingly, Ghana’s exports have not diversified in the past 25 years, and commodities such as cocoa, gold, timber, and fish continue to account for approximately the same proportion of total exports as they did before economic growth accelerated: 48 percent of GDP; 90 percent of foreign export earnings; and 70 percent of total employment respectively.

Consequently, Ghana’s economic base remains narrow, inward-looking and - to the extent it does export commodities - vulnerable to commodity price shocks.

The recent discovery of oil and gas reserves and subsequent production and exports have reinforced concerns about the risk of Dutch Disease, especially if a broad economic base is not built by productivity gains in other key economic sectors, including manufacturing, agriculture and services.

The ability of Ghana’s firms to cope with the effects of an anticipated oil-boom remains unclear.

In a speech read on his behalf by Hanna Tetteh, the Vice President John Mahama said the underlying economic dynamics and structural forces of the resource curse, to be addressed by the Conference, will enable the policy-making community and other African oil economies to have pragmatic policy options.

The Secretary General of UNIDO, Dr. Kandeh Yumkella, admonished African leaders to move away from rhetoric and take bold initiatives that will help build competitive and diversified economies.

He called for African leaders to be ambitious, since that is the catalyst needed to propel them to bring about the needed structural changes that create wealth and opportunities for decent jobs on a sustainable basis.

Source:B&FT

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