- Ghana’s Manufacturing Catch-Up Requires US$41.00 Billion Over Five Years — Prof. Ackah
Ghana would need to mobilise about US$8.20 billion every year between 2026 and 2030 to meaningfully close its manufacturing competitiveness gap with Malaysia, according to Professor Charles Godfred Ackah, Professor of Development Economics at the Institute of Statistical, Social and Economic Research.
The estimate, equivalent to roughly US$41.00 billion over five years, forms part of a broader argument that Ghana’s economic difficulties are rooted less in short-term macroeconomic instability than in decades of weak structural transformation and insufficient investment in productive sectors.
Presenting findings from a policy paper at an ISSER seminar, Prof. Ackah argued that Ghana requires a more deliberate investment-led industrial strategy focused particularly on manufacturing and agriculture if it is to achieve sustained growth, stronger employment creation and greater export competitiveness.
“Over the next five years (2026–2030), Ghana may need to invest around US$8.20 billion per annum in supporting manufacturing in order to catch up with Malaysia,” he said.
The analysis estimates that Ghana faces a structural transformation deficit of approximately 45%, reflecting the gap between the productive structure of the Ghanaian economy and that of more industrialised emerging markets.
According to the study, narrowing that deficit would require about US$3.70 billion in additional manufacturing value-added annually, while fully approaching Malaysia’s industrial trajectory would require approximately US$22.40 billion in additional manufacturing output.
Those numbers underline the scale of the challenge. Ghana has pursued repeated industrialisation programmes over several decades, but manufacturing has yet to become the dominant engine of productivity, exports and employment seen in several successful Asian emerging economies.
Prof. Ackah’s analysis therefore questions whether macroeconomic stabilisation, while necessary, can on its own generate the transformation required.
His argument is that fiscal consolidation, lower inflation and exchange-rate stability should create the platform for productive investment rather than becoming the final objectives of economic policy.
That marks a significant departure from approaches that have placed deficit reduction, debt sustainability and inflation control at the centre of economic management.
Prof. Ackah argued that development thinking itself has evolved beyond the assumption that markets alone will generate sufficient industrial transformation.
“Economists have acknowledged the need to move away from simple market dogmas in favour of policies aimed at fixing the damage caused by past policies,” he said.
Drawing on the work of the United Nations Conference on Trade and Development, he advocated strategic public investment, targeted industrial policies and deliberate state intervention where market failures limit private investment in productive sectors.
The implication is not necessarily that government should replace private enterprise, but that the state must create infrastructure, financing systems and policy incentives that make industrial investment commercially viable.
The presentation also challenged the dominance of inflation targeting within monetary policy.
Referencing Nobel laureate Joseph Stiglitz, Prof. Ackah argued that central banks in developing economies should give greater consideration to employment and long-term growth, particularly where inflation arises mainly from supply constraints rather than excessive domestic demand.
In such circumstances, he argued, high interest rates may suppress productive investment without addressing the underlying causes of rising prices.
That argument is likely to generate debate because Ghana’s recent macroeconomic stabilisation has depended heavily on tighter monetary and fiscal policy.
The policy question is therefore how far authorities can shift towards investment-led expansion without recreating the fiscal and inflationary imbalances that have periodically undermined the economy.
Prof. Ackah also drew on economist Abba Lerner’s Functional Finance framework, which places greater emphasis on using government spending and taxation to maintain employment and productive demand rather than treating balanced budgets as an end in themselves.
Under that approach, borrowing for productive investments that expand future economic capacity could be treated differently from borrowing used to finance recurrent expenditure.
Agriculture forms another critical component of the proposed transformation strategy.
Using the industrialisation framework associated with Nobel Prize-winning economist W. Arthur Lewis, Prof. Ackah argued that Ghana cannot sustainably industrialise without first achieving substantial improvements in agricultural productivity.
He called for greater investment in agricultural research, rural infrastructure, extension services, science education and farmer financing, alongside renewed consideration of agricultural credit systems that weakened during the structural adjustment era.
The logic is that higher farm productivity can support industrialisation through several channels.
It can increase rural incomes, provide cheaper and more reliable raw materials for agro-processing, expand domestic demand and release labour into higher-productivity manufacturing activities.
That relationship between agriculture and manufacturing is central to successful structural transformation.
Ammishaddai Kotey Djanie, a PhD candidate at ISSER who provided formal commentary on the paper, described its treatment of Ghana’s development challenges as a connected structural problem as one of its main strengths.
“The strongest contribution is treating Ghana’s underperformance as a system problem, not a single macroeconomic variable,” he said.
He nevertheless suggested broadening the indicators used to measure structural transformation.
Rather than relying heavily on manufacturing value-added relative to agriculture, he proposed incorporating manufacturing employment, labour productivity, export diversification and firm-level technological upgrading.
Those additions would provide a fuller picture of whether Ghana is genuinely transforming or simply recording higher industrial output without corresponding improvements in productivity and technological capability.
The discussion ultimately raises a much larger policy question: what kind of economy does Ghana want to build over the next decade?
An annual manufacturing investment requirement of US$8.20 billion illustrates how far the country remains from the industrial scale required to compete with economies such as Malaysia.
But the figure also highlights the financing challenge. Mobilising that level of investment would require significant participation from domestic capital, foreign direct investment, development finance institutions and public investment, alongside reforms to infrastructure, energy, logistics and industrial policy.
For Ghana, the core message from Prof. Ackah’s analysis is that macroeconomic stability cannot substitute for structural transformation.
Stability can provide the conditions for investment, but prosperity ultimately depends on what the economy produces, how productively it produces it and whether domestic firms can compete in higher-value markets.
The US$8.20 billion annual target therefore represents more than a financing estimate.
It is a measure of the scale of industrial ambition Ghana may need if it intends to move beyond recurrent stabilisation programmes and build a more productive, export-oriented economy.
