Posted by: rumnet | June 29, 2011

Ghana’s Middle Income

Ghana’s Middle Income Status Faces Challenges 

(published in the June 2011 edition of the advocate)

Dr. Kwabena Duffuor, Minister of Finance and Economic Planning.... Ruby Sandhu-Rojon, UNDP Resident Coordinator, Ghana

Though Ghana has been described as a middle income country, she is not yet a middle income society due to the numerous serious developmental challenges, Mrs Ruby Sandhu-Rojon, United Nations Resident Coordinator, said in Accra on Tuesday.

She explained that despite the progress made in achieving the Millennium Development Goals (MDG), there were still a lot more to be done regarding MDGs 4, 5 and sanitation aspect of MDG 7, and the continuous high dependence on subsistence agriculture and inequality between the north and the south.

Other challenges include burgeoning youth population that have difficulty in finding productive employment, limited capacities for development management and lack of reliable data for planning, monitoring and evaluation.

Mrs Sandhu-Rojon made this known at a Validation Workshop on the Middle Income Country Status Paper, organised by the Institute of Economic Affairs (IEA) in collaboration with United Nations Development Programme (UNDP), in Accra.

The paper was on the theme: “Moving Towards Middle Income Country Status: Potential Implications for Development Assistance and Achievement of MDGs in Ghana”.

Mrs Sandhu-Rojon said Ghana’s economic growth over recent decades had been based on having strong macroeconomic fundamentals, significant levels of support from development partners as well as peace and security; but prosperity had failed to trickle-down.

“The result is that, wide disparities exist within regions in terms of poverty incidence, access to basics of human development. Perhaps the main disparity is that the North of the country seriously lags behind the South,” she said.

Mrs Sandhu-Rojon called for policies to ensure that income continued to grow in all sectors, institutional and individual capacities are strengthened, and for policymakers to fully comprehend what is meant to have middle income status.

Foreign Affairs and Regional Integration Minister Alhaji, Muhammad Mumuni, said although Ghanaians had been in anticipation of the much awaited middle income status, the announcement caught most people on the wrong foot probably because it was so sudden and therefore unexpected.

For Ghana, he said middle income status had been a long standing development aspiration and noted that there had been a perception that Ghana per capita income had been understated.

The Minister said though on the positive side, it indicated an improvement in many macroeconomics indicators, a significant reduction in budget deficit and a transformation of minimal poverty statistics in addition to an improved credit rating, the status also comes with a cost.

“One of the costs is marshalling development assistance to support the government’s poverty reduction agenda. Meanwhile many countries including Ghana, which have achieved middle income status continue to face the same structural problem afflicting low income countries and need to boost incomes in order to meet the MDGs,” he stressed.

According to the Sector Minister, the reality of the situation was that despite the impressive outlook of the Ghanaian economy, there were still challenges which would require external support , adding that aid would continue to be an important source of financing as Ghana worked towards achieving the MDGs.

However, the Minister noted that Government had taken cognisance of the need to reduce dependence on aid in the medium to long term and therefore intended to redouble the  mobilisation of non-aid resources.

Alhaji Mumuni stated that attainment of the middle income status did not automatically eliminate poverty and other development constraints. He said that any immediate and significant cut in aid flows to Ghana as a middle income country might hamper the gains already made by the country.

“Ghana can only anchor its standing among the rank of middle income countries, if it assumes primary responsibility for her own development.  This calls for efficient management of revenues from oil and gas as well as other natural resources, infrastructural development, prudent macro-economic management and resource mobilization and allocation,” the Minister said.

Professor John Kwakye, Senior Economist of IEA, who gave an overview of the paper, said though Ghana might have become a middle income country based on her higher rebased Gross Domestic Product, she might still lack important attributes of a middle income country.

He said the paper had proposed a seven-pronged priority agenda, which included the development of dynamic agriculture and achievement of food security, human capacity development, strengthen institutional capacities and provision of social protections.


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