Ghana’s economic fundamentals are strong, Vice President Mahamudu Bawumia remarked at the Economic Management Team town hall meeting Wednesday, but a senior finance expert is not sold.
On the Super Morning Show Thursday, Professor Godfred Alufar Bokpin, an economist and Professor of Finance at the University of Ghana, agreed with Dr Bawumia’s observations, but said that in spite of the figures, the country is growing far below its potential.
“There is an increasing inequality in Ghana,” said Bokpin, who is also an IMANI fellow.
He explained that most capital in the country comes from foreign investors. In exchange, Ghana provides them with resources, but that return on capital is low for locals.
Professor Godfred Alufar Bokpin is an economist, Professor of Finance at the University of Ghana and IMANI fellow.
“Foreign investors are benefiting but we are lagging,” he said. “Growth is driven by internal sectors and job creation.”
Hydrocarbon production, mining, oil and gas were economic drivers for the economy last year, but because of foreign capital, “we recorded growth that we were unable to sustain.”
But of all the issues rattling Ghana’s economy – even more than the cedi, which is currently struggling against the dollar – resource allocation and efficiency has been the country’s biggest challenge.
This year, Ghana is hoping to generate GH¢45 billion through tax revenue, but we will fail to maintain those funds if the government spends as it did last year, he insisted.
Twenty-three billion cedis went to wages and salaries alone. Eighteen billion went to debt management. Capital spending? Eight billion.
“[Government] is imposing restrictions on growth. It is unacceptable.”
At Wednesday’s town hall meeting, Bawumia applauded his economic team for exceeding sub-Saharan Africa’s economic growth rate.
In 2017, Ghana’s economy grew by 8.1%, “one of the highest in the world,” he said.
He boasted that the country’s GDP rate was robust and mentioned that non-oil growth has increased from 4.6% - 5.8%, increasing the per capita income to GH¢9864 – 30% higher than in 2016.
“Our challenge is to make the distribution fair,” he said. “This is the ultimate goal.”