Ghana - Economy

Economy

Main article: Economy of Ghana

Ghana is a Middle Income Economy and is ranked as a Lower–Middle Income Economy by the World Bank. In 2011, 27% of Ghana's population were living on less than $1.25 per day (excluding Ghanaian citizens), and in 2011 there was a rate of 25% youth unemployment (excluding Ghanaian citizens).

Ghana has more than twice the per capita output of the poorer countries in West Africa. Known for its gold in colonial times, Ghana remains one of the world's top gold producers and second largest producer of gold in Africa, behind South Africa. Gold is mined and produced in the southern regions. Other exports such as cocoa, crude oil, natural gas, timber, electricity, diamond, bauxite, and manganese which are all located in Southern regions, are major sources of foreign exchange, although Ghana is a developing nation after 55 years of independence.

1st President of the 4th Republic of Ghana, Jerry Rawlings speaking at the Faculty of Law, University of Oxford on 18 May 2009 2nd President of the 4th Republic of Ghana, John Agyekum Kufuor with then-President of Brazil, Lula da Silva in Osu Castle on 12 April 2005 3rd President of the 4th Republic of Ghana, John Atta Mills on a meeting with the Minister of Development of Brazil, Miguel Jorge in Osu Castle on 8 June 2009

The Akosombo Dam, which was built on the Volta River in 1965 by Osagyefo Dr. Kwame Nkrumah provides hydro-electricity for Ghana and its neighbouring countries.

The Ghana Stock Exchange (GSE) is the third largest stock exchange in Africa after the Johannesburg Stock Exchange (JSE) and the Nigerian Stock Exchange (NSE).

At the end of December 2011, Ghana's total external debt escalated to an all-time high of $18 billion (GH¢ 23.4 billion) up from $8 billion (GH¢ 8.8 billion) at the end of December 2008. Ghana's debt totaled US$1 billion in 1966 by Nkrumah's government and Ghana was among the wealthiest and most socially advanced areas in Africa, which in the 1960s Ghana had a per capita income comparable to South Korea’s, then the debt significantly increased from US$1 billion to $7.5 billion during Rawlings' 20 years as head of Ghana, which ended in 2001. The escalation of borrowing from the International Monetary Fund (IMF) and creditors by successive governments have put a burden of debt on future generations of Ghanaians. Typical among these is the borrowing of $3 billion in December 2011 from China Development Bank in exchange of oil from Ghana National Petroleum Corporation (GNPC) to the China crude oil Off-Takers for an undisclosed fee to offset the loan, and was met with objections from an overwhelmingly majority of the Parliament of Ghana, as the loan would cause a net drain of Ghana's oil wealth to China and put Ghana at risk of default. Despite having an abundant amount of natural resources, Ghana receives foreign aid from the United States and European nations.

Ghana’s labour force in 2008 totalled 11.5 million people. The domestic economy revolves around services, which accounts for 48.5% of GDP and employs 28% of the work force. Manufacturing accounts for 25.9% of GDP and provides employment for 20% of the work force. Agriculture accounts for 25.6% of GDP and provides employment for 52% of the work force, mainly small landholders.

Ineffective economic policies of past military governments and regional peacekeeping commitments have led to continued inflationary deficit financing, depreciation of the cedi, and rising public discontent with Ghana's austerity measures. In July 2007, the Bank of Ghana embarked on a currency re-denomination exercise, from the cedi (₵) to a new currency, the Ghana Cedi (GH₵). The transfer rate was 1 Ghana Cedi for every 10,000 cedis. The Bank of Ghana employed aggressive media campaigns to educate the public about the re-denomination. The new Ghana Cedi is relatively stable and in 2009 generally exchanged at a rate of US$1 = GH₵1.4

The value added tax is a consumption tax administered in Ghana. The tax regime which started in 1998 had a single rate but since September 2007 entered into a multiple rate regime. In 1998, the rate of tax was 10% and amended in 2000 to 12.5%. However with the passage of Act 734 of 2007, a 3% VAT Flat Rate Scheme (VFRS) began to operate for the retail distribution sector. This allows retailers of taxable goods under Act 546 to charge a marginal 3% on their sales and account on same to the VAT Service. It is aimed at simplifying the tax system and increasing compliance.

Tourism is a rapidly growing sector particularly among Europeans, Americans, and other internationals connected to the Ghanaian Diaspora abroad. Ghana's political and economic stability, low crime rate, and wide use of English make the country an attractive entrypoint to West Africa for foreigners. UNESCO World Heritage Sites including Cape Coast Castle and Elmina Castle, national parks such as Kakum National Park and Mole National Park, as well as cultural celebrations such as Panafest are major centers of tourist activity.