A recent report released by the World Bank has revealed that the decline of Ghana’s manufacturing sector has adversely impacted the industry sector.
This, it says, has resulted in the industry sector reaching its peak at a time when the total value of the country’s output is lower.
Comparing the situation in Ghana to other countries, the report noted that unlike Ghana, the growth of the share of manufacturing in employment in countries like Malaysia, Korea, and Brazil grew with their national income.
The World Bank report titled ‘Ghana’s Economic Update: Structural Transformation and Labour Market Performance, Challenges and Opportunities’ notes that “Traditionally, manufacturing is a marker of industrialization. But economic indicators show that Ghana’s economy may have begun to deindustrialize prematurely…”
“In Ghana, the share of manufacturing in employment peaked in 1978, at a time when the country’s national income was lower than what it was in other countries when their manufacturing employment peaked, such as in the Republic of Korea (which peaked in 1989), Malaysia (1997), and Brazil (1986). As a further indication of deindustrialization in Ghana, the share of manufacturing in exports fell by 7 percentage points between 1990 and 2017. The country’s premature deindustrialization can partly be attributed to economic openness, which accelerated between 1990 and 2019.”
While some may argue that the comparison with non-African countries in itself may have some limitations, the report pointed out the impact Ghana’s dependence on primary goods such as gold and cocoa for export has magnificently hindered the nation’s industry sector.
“Ghana’s economy also lacks complexity, as suggested by its exports, which are dominated by primary products, such as oil, cocoa, and gold. And the level of complexity in the economy appears to have changed little over the last decade.”
The report, which is the fifth in the World Bank’s annual series on Ghana’s economic development and prospects and was published in October 2020 is coming at a time the government is celebrating its achievements in increasing industrial activities to grow the economy.