Business News of Tuesday, 24 February 2015
The Ghanaian economy has been rated as the 11th most competitive market in Africa to attract investors’ funds.
This puts the country behind the league of top-ten economies in Africa in terms of competitiveness, even though the economy has moved four places up from the 2013 rankings.
According to the latest edition of the World Economic Forum’s Global Competitiveness Report 2014, Ghana falls behind the economies of Mauritius, South Africa, Rwanda, Botswana, Namibia, Kenya, Seychelles, Zambia, Gabon, and Lesotho.
The report, which assesses 144 economies across the world found sub-Saharan economies to register impressive growth rates of close to 5% in 2013 — with rising projections for the next two years.
The World Economic Forum report ranked the economies on 12 key pillars that influence competitiveness — including the quality of institutions to generate wealth, infrastructure development, quality of higher education and training, innovation, macroeconomic environment, health service provision, goods and labour market efficiency, financial market development, technological readiness, market size, and business sophistication.
The report cited the poor nature of the institutions, infrastructure, higher education and training, and macroeconomic environment as the principal factors affecting the country’s competitiveness.
“The quality of institutions has a strong bearing on competitiveness and growth. It influences investments decisions and the organisation of production, and plays a key role in the ways in which societies distribute the benefits and bear the costs of developments strategies and policies.
“Ghana over the years has been deficient in establishing institutions for growth, and ensuring that the existing institutions are strong and efficient enough to compete at the global level.
“A second factor important for economic growth is infrastructure. Extensive and efficient infrastructure is critical for ensuring effective functioning of the economy. Well-developed infrastructure reduces the effect of distance between regions, integrating the national market and connecting it at low cost to markets in other countries and regions,” it said.
Conservative estimates by government indicate that the country’s huge infrastructure deficit requires sustained spending of at least US$1.5billion per annum over the next 10 years to address the shortfall. The report further added: “Quality higher education and training is crucial for economies that want to move up the value chain beyond simple production processes and products.
“The extent of staff training is also taken into consideration because the importance of vocational and continues on-the-job training — which is neglected in many economies — for ensuring a constant upgrading of workers’ skills.
“Nonetheless, statistics about Ghana’s education system shows that the eight public universities are not enough to meet the growing demand of students applying to be in public universities each year.” On the macroeconomic environment, the report expressed concern about erratic growth in some key indicators, saying: “Inflation rate keeps fluctuating, and interest rate keeps rising, the cedi persists in depreciating against major currencies, debt to GDP keeps skyrocketing, and GDP growth has not been so expansive.
“Although it is certainly true that macroeconomic stability alone cannot increase the productivity of a nation, it is also recognised that macroeconomic disarray harms the economy.
“Firms cannot operate efficiently when inflation rates are out of control.”