Ghana’s reliance on core commodities – gold, cocoa and crude oil – makes the economy vulnerable to external shocks, says the Oxford Business Group.
This is despite the enormous contribution of the three main commodities export to Ghana’s trade surplus of $2.26 billion (3.4% of GDP) in 2019.
An increase of more than $460 million compared to the $1.8 billion (2.8%) trade surplus recorded in 2018.
The vulnerability of the nation’s reliance on the three commodities as pointed out by the Oxford Business Group is evidenced by the astronomical fall in government’s oil revenue for 2020 when the Covid-19 pandemic struck.
Despite the gains recorded in the price of gold due to the flocking of investors’ funds into safe haven asset on the back of the pandemic, the gains made was however not enough to offset the large revenue losses of government. Demand for the country’s cocoa also dropped.
Government, as noted by the Oxford Business Group in its ‘Ghana Covid-19 Response Report,’ has however, rolled out a number of initiatives to boost exports of other products.
Chief among them is the promotion of non-cocoa tree crops such as cashew, mango, coffee, oil palm, coconut and rubber which have all seen success in recent years.
Gold’s contribution to 2019 total commodities exports
Gold remained the most important export product in 2019 providing 36 per cent of the value generated by commodities exports at $6.23 billion.
Gold production makes up the majority of activity in the mining sector with 90 per cent of sector revenue generated by its extraction.
Cocoa’s contribution
Cocoa provided Ghana approximately $2.71 billion in foreign exchange earnings in 2019.
While cocoa beans as a raw material continue to make up the bulk of cocoa-related exports, some domestic producers have started building chocolate value chains, setting the stage for increased earnings in the future in the form of finished products.
Oil and gas’ contribution
Total petroleum revenue generated since first production in 2010 to Q2 2020 is $5.31 billion.
Oil revenue for government in 2019 amounted to $937.7 million through crude oil liftings, surface rentals, royalties and corporate taxes.
