When will Ghana become an upper-income country?
In an interesting conversation with my good friend Kwame Sarpong Asiedu yesterday, he made the following interesting observation: “Ghana has a GDP per capita of US$2176. Its GDP growth rate is 1.5% and its population growth rate is 2.1%.
The population of the country is 31.8 million. Calculate the years it will take to increase GDP per capita to US$4000. I am getting approximately -106 years, meaning at our current growth rate, it’s nearly impossible to double our GDP per capita in our lifetime. Are my numbers right?”
MY RESPONSE
You’re right. Ghana has to do a consistent 7% per annum growth rate to get anywhere close to US$5,000 GDP per capita (that is, taking the total value of all goods and services produced in the country and dividing it by the population size in the year in question).
To illustrate this further, I decided to pull data from the World Bank’s development indicators and plot graphically to appreciate the momentous but not impossible task that our policymakers and Ghanaians must address to create economic growth and translate the gains into improved living standards.
SCENARIOS
In my projections up to 2050, I considered three scenarios: Scenario 1 assumes a 4% annual GDP/GNI growth rate, Scenario 2 assumes a sustained 5% annual growth rate, and Scenario 3 assumes a sustained 6% yearly growth rate.
As the latest data shows, the annual population growth rate in all three scenarios is kept at 1.9%.
FINDINGS
1. At a 4% growth rate, Ghana’s gross national income per capita gets close, but it does not reach the lower end of the World Bank’s Upper Middle Income category of $4,466 GNI per capita. In essence, the country will remain a lower-middle-income country by 2050.
2. At a 5% growth rate, Ghana will become an upper-middle-income country by 2043.
3. At a 6% growth rate, Ghana will become an upper-middle-income country by 2028.
CONCLUSION
Some Chinese Miracle is needed to significantly improve economic well-being in the next 15 years. Ghana’s GDP needs to grow by 7% to 10% annually to drastically reduce inequality.
First, a massive agricultural revolution and value addition (serious agribusiness) is needed, coupled with major public works programmes, especially transport infrastructure and connectivity (digitalisation).
But I worry that this may not be attainable, given the entrenched nature of our Fourth Republican politics.
