1.1.1 Ghana Vision 2020

Vision 2020, originally entitled National Development Policy Framework, was a wide ranging, twenty five year perspective dedicated to the improvement of individual and social well being. The development of the vision 2020 was preceded by the National Development Goal Setting Exercise, which all districts and regions participated in. The latter exercise produced the underlying national goal which was to improve the quality of life of all Ghanaians by reducing poverty, raising living standards through a sustained increase in national wealth and a more equitable distribution of the benefits therefrom. Issues addressed in the report included the role of the public and private sector, poverty, gender equity, employment generation and rural development.

1.2.2 The First Medium Term Development Plan (MTDP) 1997-2000

The MTDP was the first of the series of 5-year development plans that were to be developed from the 25-year vision. The MTDP, referred to as Vision 2020–the First Step, was based upon collaborative work among Ministries, Departments, Agencies (MDA), Regions, Districts and consultations with civil society. Collaboration at national level had been achieved through broad Cross Sectoral Planning Groups, for each thematic area, representing MDA and representative interest groups. The MTDP covered five thematic areas; economic growth, human development, rural development, urban development and the development of an enabling environment

Analysis of these thematic areas indicates that the plan had strictly limited success. This was largely due to limited coordination between the National Development Planning Commission (NDPC) responsible for plan formulation and the Ministry of Finance (MOF) responsible for economic and fiscal management. In the event, annual budgetary allocations did not reflect MTDP Programme objectives. There also appeared to be a lack of political commitment to implementation of the plan.

2.4.1 Dissemination Activities

Dissemination activities vary depending on the target group and level. The following activities at the different levels have been identified:

National Level:

• Printing and distribution of the two major documents on GPRS and

• Preparation, printing and dissemination of shorter/simplified versions

• Official launching of the GPRS at national level

• Exhibitions of GPRS performance (in its second year)

• Seminars and Workshops for various national level target groups

• TV and Radio Discussion programmes

• GPRS documentaries on TV and radio

• Development of a website on GPRS

• Information posters for publicising GPRS events

Regional/District Levels:

• Dissemination of the two major documents on GPRS and simplified versions

• Seminars and workshops for various regional/district level groups (non-technical groups)

• TV & radio discussion programme in local languages

• Seminars and workshops for Area/Town councils members and staff

• GPRS documentary/drama (on its essence) in major local languages

• Exhibitions at regional and district levels

• Information posters for publicising GPRS events

Community Level

• Discussion forums on local radio (FM)

• Seminars and workshops for assemblypersons

• Durbars

• Workshops for CBOs

• GPRS summary versions (25-page, one-page leaflets) translated into local languages

• Information posters

All of the above activities form part of a multimedia campaign at all levels, which uses radio and TV as the major channels because of the low literacy rate, especially among the poor. Some of the GPRS programmes will be conducted in local languages. Considering the gender dimensions of poverty, attention will be given to make dissemination and publicity of the GPRS gender-sensitive.

3.1.1 Geographical Disparities

There are significant differences in the spatial distribution of poverty. Five out of the 10 regions in Ghana had more than 40% of their population living in poverty in 1999. By income measure, poverty levels are highest in the three northern savannah regions (the Upper East, Upper West and Northern Regions), ranging between 69% and 88%. Nine out of ten people in the Upper East, eight out of ten in Upper West, seven out of ten in Northern Region and five out of ten in Central and Eastern Regions were classified as poor in 1999 (Figure 3.1). Of the ten regions, the Upper East, Northern and Central regions experienced increases in poverty levels and extreme poverty in the 1990s. Urban areas in the northern savannah also experienced significant increases in poverty levels during the period.

Regional Poverty Profile

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Regional Poverty Profile

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Regional Poverty Profile

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Figure 3.2 provides another perspective of the incidence of poverty for the country as a whole and by localities that span different administrative regions. At the national level, despite the 10 percent drop between 1991-92 and 1998-99, nearly one-quarter of the population (27%) in 1989-99 was unable to meet their basic nutritional requirement even if they devoted their entire consumption budget to food. The geographical variations of extreme poverty ranged from 2% in Greater Accra to 59% in Rural Savannah, which spans much of the Northern, Upper West and Upper East administrative regions. The 1% increase in extreme poverty between the two census periods in rural savannah is in contrast with the no-change in extreme poverty in the urban savannah. The increase in overall poverty across these three administrative regions is therefore largely a rural phenomenon, a case of the poor getting poorer, and an indication that policy measures to alleviate poverty could not have taken hold in this region of the country.

Extreme Poverty Incidence by Locality

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

Source: Ghana Statistical Service

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Extreme Poverty Incidence by Locality

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

Source: Ghana Statistical Service

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Extreme Poverty Incidence by Locality

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

Source: Ghana Statistical Service

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In contrast, reductions in extreme poverty have occurred noticeably in rural forest belt (covering Brong Ahafo, Western, Ashanti regions) and moderately in the rural coastal (covering parts of Eastern, Central and Volta regions). Despite these reductions, the levels of poverty in Brong Ahafo, Volta, and Eastern regions remain high. The information in Figure 3.2 also suggests that apart from Accra average reductions in extreme poverty in the urban areas have been marginal, falling from 18% in 1991/92 to 17.3% in 1998/99.

The lack of disaggregated data covering districts and communities is a major limitation of poverty analysis in Ghana which future surveys must rectify. For example, although rural poverty in Coastal belt is around 30%, (Figure 2) there is evidence that this figure like all the broad geographical income poverty indicators masks significant variations that may exist at the district levels. It is conceivable that some districts in larger areas classified with higher incomes (lower poverty) have significantly higher poverty incidences. For example, a 1993-94 research study of Osudoku, a sub-district of Dangme-West, a rural coastal area, suggested poverty levels as high as 70%. The GLSS 4 therefore fails to uncover the true incidence of poverty even based on consumption levels.

3.1.2 Disparities Among Occupational Groups

Figure 3.3 presents the incidence of poverty by main economic activity of households based on the upper poverty line. Poverty is by far highest among food crop farmers. Their poverty remains nearly 19% above the national average of 40% in 1998/99 and they, together with those in non-farm self-employment, experienced the least reduction (9%) in poverty. This is of concern for three reasons: (1) the contribution of food crop farmers to the national incidence of poverty is much in excess of their population share, (2) poverty among food crop farmers is also much more pronounced based on the measure of extreme poverty, and (3) women are more predominant in both the food crop and non-farm self-employment sectors. Although the incidence of poverty among export farmers remains relatively high (39%), they experienced the largest reduction in poverty (25%). The strength of their poverty reduction reflects a number of factors including the conscious policy effort to promote the growth of the non-traditional exports in the 1990s, the relatively easier access to financing, and access to markets.

Poverty by Socio-Economic Groups

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Poverty by Socio-Economic Groups

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Poverty by Socio-Economic Groups

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Also experiencing noticeable reductions in poverty are those in formal private sector employment followed by those in the informal private sector and wage employees in the public sector. Looking forward, the trends in poverty reduction in the 1990s suggest that the growth in the private sector and access to marketing opportunities, especially for exportable products, may hold greater promise for poverty reduction. The range of policies to reduce poverty must address the constraints on food crop farmers (predominantly rural, small scale) and the non-farm self-employed, also predominantly women engaged in micro enterprises.

3.2.1 Health-Based Indicators of Poverty

Social indicators point to mixed progress in the 1990s. Although early mortality rates decreased (66/1000 to 56/1000 for infants and 119/1000 to 108/1000 for under five) from 1992 to 1998, there are deep geographical disparities. Infant and under five mortality in the three northern regions are generally higher than in the south. In comparison with the Greater Accra Region, they are twice and three times as high respectively. A contributory cause is the fact that over 30% of children in the north are not fully immunized before their first birthday. The 31% incidence of diarrhoea in the north is unacceptably high compared to the national average of 18%. The immediate contributory factors to this problem are the lack of access to health-determining facilities, in this case, water and sanitation.

Poverty and Access to Health Care

Use of health facilities (as indicated by the number of individuals seeking modern medical care following an illness or injury) is also low and on the decline (Figure 3.4), a feature observed to be closely linked with the introduction of increases in health user fees. Delivery assistance signals the depth of delivery of health services. Data for 1998 indicate that about 45% of all deliveries at the national level were supervised by a medical practitioner, about 31% by Traditional Birth Attendant, and 25% by unsupervised self help. The percentage of supervised births by a medical practitioner in the urban areas of nearly 79% is more than twice the rural figure of 33%. For 56% of the population who are predominantly rural, unsupervised deliveries is nearly one-third of all deliveries. On regional basis and for no apparent reason, Traditional Birth Attendant delivery is highest in the Eastern region. Unsupervised delivery appears to be the norm in the Upper East region.

Access to Medical Personnel and Delivery Assistance

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Access to Medical Personnel and Delivery Assistance

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Access to Medical Personnel and Delivery Assistance

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Nearly 70% of the sample population (especially among the rural and urban poor) cited cost as one key reason for non-use of medical services. Physical location of health facilities, which is not directly related to household income and affordability, is another important factor. The not-for-profit religious missions sector operates 43 hospitals outside the regional capitals, making them relatively accessible to rural populations in districts where they are sited. Dyna Arhin remarked that in other rural districts where neither mission nor state hospitals are located, distance represents a major obstacle for the rural population even when incomes in these districts may be higher than the national average⁴. By the GLSS 4, the proportion of the population in rural areas who needs more than 30 minutes to reach the nearest health facility increases by the level of poverty. It ranges from 51% for the non-poor to 70% for the lowest 2 poverty groups.

Poverty and the Incidence of HIV/AIDS

Table 3.3 below highlights the incidence of HIV/AIDS and the prevalence rates in 1999. The sharp geographical variations are just as important as the incidence by age groups. Of the half a million afflicted Ghanaians the majority are within the ages of 15-49 years, and the prevalence rate is twice as high for females as males. The implications for poverty are many especially in the areas of socio economic development. The loss of the youth in their productive years will diminish the capabilities of households to support themselves. In agriculture, the loss of labour may compel farmers to shift from export or cash to food crops. And in industry, the loss of skilled manpower will increase the costs for training and replacement training, and health bills. Moreover, for households, the increase in the prevalence rate will mean the loss of the first social safety net, loss of income to the family as a result of loss of breadwinners, increase the dependency of children on the aged, selling of family assets to pay for bills, increased orphans, and children may not attend school.

Table 3.2:

Source of Drinking Water

Source: GLSS 4

Table 3.2:

Source of Drinking Water

Source of drinking water	Ghana	Urban	Rural
Pipe-borne	41.6	80.3	18.8
Well	33.9	10.8	47.2
Natural Sources	24.6	8.83	3.9

Source: GLSS 4

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Table 3.2:

Source of Drinking Water

Source of drinking water	Ghana	Urban	Rural
Pipe-borne	41.6	80.3	18.8
Well	33.9	10.8	47.2
Natural Sources	24.6	8.83	3.9

Source: GLSS 4

Table 3.3:

HIV Prevalence Rate (1999)

Source: Information supplied by Ghana Aids Commission from NACP, HIV Sentinel Surveillance 2001 (May 2002).

Table 3.3:

HIV Prevalence Rate (1999)

Prevalence Rate (in absolute numbers): National	3.6%
Southern belt- Gt. Accra, Eastern, Volta, Coastal	2.3% (Accra) 6.6% (Agomanya district)
Middle belt- Ashanti, Brong Ahafo, parts of Western and Volta	4.8%
Northern belt - Northern, Upper East and West.	6.9% (Wa in Upper West) 1.6% (Bolgatanga in Upper East)
HIV Hardest hit regions	Eastern, Volta, Gt. Accra, Western, Ashanti
Ratio of female to male HIV infected	2 to 1 (2001)
Young women of child-bearing age (15-49 years)	Twice likely to be infected as men in same age group

Source: Information supplied by Ghana Aids Commission from NACP, HIV Sentinel Surveillance 2001 (May 2002).

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Table 3.3:

HIV Prevalence Rate (1999)

Prevalence Rate (in absolute numbers): National	3.6%
Southern belt- Gt. Accra, Eastern, Volta, Coastal	2.3% (Accra) 6.6% (Agomanya district)
Middle belt- Ashanti, Brong Ahafo, parts of Western and Volta	4.8%
Northern belt - Northern, Upper East and West.	6.9% (Wa in Upper West) 1.6% (Bolgatanga in Upper East)
HIV Hardest hit regions	Eastern, Volta, Gt. Accra, Western, Ashanti
Ratio of female to male HIV infected	2 to 1 (2001)
Young women of child-bearing age (15-49 years)	Twice likely to be infected as men in same age group

Source: Information supplied by Ghana Aids Commission from NACP, HIV Sentinel Surveillance 2001 (May 2002).

The above evidence suggests a number of priority areas for the country’s efforts at addressing access to health and health related causes of poverty. The key major areas are financial and physical barriers to accessing health care, diarrhoea, malaria, early childhood vaccination and immunization against killer diseases, maternal care, source of drinking water, and reducing the spread of HIV/AIDS. Several aspects of the above areas relate to efficiency and effectiveness of the use of existing resources, improved physical location of health care facilities, additional manpower needs, improved community education, and additional resource mobilization.

3.2.2 Education and Poverty

The level of education attained is a signal of the income earning potential of individuals and households and therefore a predictor of the population segment likely to be vulnerable to income shocks especially with ageing. Table 4 highlights the education attainment of people aged 15 years and above. About 32 percent of adults and nearly twice as many females as men had never been to school. And not a negligible number (25%) went to school but did not complete the minimum years for any certificate.

Table 3.4:

Levels of Educational Attainment

(Population aged 15 and above)

Source: GLSS 4

Table 3.4:

Levels of Educational Attainment

(Population aged 15 and above)

	Percent
Highest level attained	Males	Females	All
Never been to school	21	41	32
Less than MSLC/BECE	25	26	25
MSLC/BECE	39	29	33
Secondary or higher	16	6	10
Total	100	100	100

Source: GLSS 4

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Table 3.4:

Levels of Educational Attainment

(Population aged 15 and above)

	Percent
Highest level attained	Males	Females	All
Never been to school	21	41	32
Less than MSLC/BECE	25	26	25
MSLC/BECE	39	29	33
Secondary or higher	16	6	10
Total	100	100	100

Source: GLSS 4

Table 3.5 summarizes further the rural-urban and regional analysis of individual characteristics of education by gender. There is a substantial difference between girls and boys in their school attendance, noticeably so in the rural areas and in the Northern, Upper East and Upper West regions. For example, for every 100 girls who never attended school there were 45 (Urban) and 64 (rural) boys who also never attended school. For those who attend school, the higher girl’s school dropout rate is evident in the ratio of girls to boys who finally complete secondary school education.

Table 3.5:

Gender Analysis of Education by Region

Table 3.5:

Gender Analysis of Education by Region

Number of Males to Every 100 Females by Indicator
		National			Rural			Urban
Literacy rate		170			192			149
Never attended School		59			64			45
Primary school not completed		74			79			60
Junior Secondary completed		150			164			132
Senior Secondary completed		256			417			201
Gender Analysis of Education: Regional Analysis of Individual Characteristics in the Rural Areas
	Western	Central	Greater Accra	Volta	Eastern	Ashanti	Brong Ahafo	Northern	Upper East	Upper West
Literacy rate	210	241	183	161	170	211	250	414	201	196
Never attended School	37	44	63	50	51	54	53	83	86	90
Primary school not completed	90	71	97	81	104	45	43	252	332	100
Junior Secondary completed	211	218	217	154	145	159	176	395	145	176
Senior Secondary completed	300	600	240	277	463	91	833	440	247	190
Gender Analysis of Education: Regional Analysis of Individual Characteristics in the Urban Areas
	Western	Central	Greater Accra	Volta	Eastern	Ashanti	Ahafo	Northern	Upper East	Upper West
Literacy rate	146	178	130	146	156	166	169	235	193	110
Never attended School	42	36	43	36	33	49	55	55	39	72
Primary school not completed	46	89	45	66	37	47	77	148	112	83
Junior school completed	137	161	113	160	140	130	146	230	182	120
Senior Secondary completed	274	303	180	230	175	258	279	139	203	79

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Table 3.5:

Gender Analysis of Education by Region

Number of Males to Every 100 Females by Indicator
		National			Rural			Urban
Literacy rate		170			192			149
Never attended School		59			64			45
Primary school not completed		74			79			60
Junior Secondary completed		150			164			132
Senior Secondary completed		256			417			201
Gender Analysis of Education: Regional Analysis of Individual Characteristics in the Rural Areas
	Western	Central	Greater Accra	Volta	Eastern	Ashanti	Brong Ahafo	Northern	Upper East	Upper West
Literacy rate	210	241	183	161	170	211	250	414	201	196
Never attended School	37	44	63	50	51	54	53	83	86	90
Primary school not completed	90	71	97	81	104	45	43	252	332	100
Junior Secondary completed	211	218	217	154	145	159	176	395	145	176
Senior Secondary completed	300	600	240	277	463	91	833	440	247	190
Gender Analysis of Education: Regional Analysis of Individual Characteristics in the Urban Areas
	Western	Central	Greater Accra	Volta	Eastern	Ashanti	Ahafo	Northern	Upper East	Upper West
Literacy rate	146	178	130	146	156	166	169	235	193	110
Never attended School	42	36	43	36	33	49	55	55	39	72
Primary school not completed	46	89	45	66	37	47	77	148	112	83
Junior school completed	137	161	113	160	140	130	146	230	182	120
Senior Secondary completed	274	303	180	230	175	258	279	139	203	79

Table 3.5:

Education Characteristics by Poverty Quintile

Source: CWIQ Survey 1997, Ghana Statistical Service March 1998

Table 3.5:

Education Characteristics by Poverty Quintile

Education Characteristics by Poverty Quintile
	NATIONAL	RURAL			URBAN
	National	All Rural	Very Poor Rural	Non-Poor Rural	All Urban	Very Poor Urban	Non-Poor Urban
Literacy rate >15yrs	48	40	24	62	63	40	85
Time to reach the nearest primary school % greater than 30 minutes.
	8	10	14	6	3	6	1
Time to reach the nearest secondary school % greater than 30 minutes.
	65	77	86	69	42	57	27
Satisfaction with school attended
Primary
No Problem	39	30	18	43	61	49	76
Lack of books/supplies	37	42	45	36	25	36	14
Poor teaching	6	8	10	5	3	4	3
Lack of teachers & overcrowding	16	21	32	13	6	11	3
Facilities in bad condition	32	40	50	31	13	15	8
Secondary
No Problem	60	30	18	45	58	42	74
Lack of books/supplies	38	45	54	34	28	41	18
Poor teaching	7	8	8	5	5	8	2
Lack of teachers & overcrowding	15	20	27	13	7	15	2
Facilities in bad condition	28	36	45	24	13	19	8
Reasons for not attending school
Too far	7	9	11	8	4	7	2
Too expensive	29	32	36	27	24	32	20
Must work in home	34	36	33	38	31	20	43
Find school useless	9	11	18	7	6	12	3
Illness	2	3	4	2	1	2	0
Pregnancy	3	4	4	3	2	4	1
Failed Exam	5	5	5	6	4	5	3
Got Married	4	5	6	4	3	3	3

Source: CWIQ Survey 1997, Ghana Statistical Service March 1998

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Table 3.5:

Education Characteristics by Poverty Quintile

Education Characteristics by Poverty Quintile
	NATIONAL	RURAL			URBAN
	National	All Rural	Very Poor Rural	Non-Poor Rural	All Urban	Very Poor Urban	Non-Poor Urban
Literacy rate >15yrs	48	40	24	62	63	40	85
Time to reach the nearest primary school % greater than 30 minutes.
	8	10	14	6	3	6	1
Time to reach the nearest secondary school % greater than 30 minutes.
	65	77	86	69	42	57	27
Satisfaction with school attended
Primary
No Problem	39	30	18	43	61	49	76
Lack of books/supplies	37	42	45	36	25	36	14
Poor teaching	6	8	10	5	3	4	3
Lack of teachers & overcrowding	16	21	32	13	6	11	3
Facilities in bad condition	32	40	50	31	13	15	8
Secondary
No Problem	60	30	18	45	58	42	74
Lack of books/supplies	38	45	54	34	28	41	18
Poor teaching	7	8	8	5	5	8	2
Lack of teachers & overcrowding	15	20	27	13	7	15	2
Facilities in bad condition	28	36	45	24	13	19	8
Reasons for not attending school
Too far	7	9	11	8	4	7	2
Too expensive	29	32	36	27	24	32	20
Must work in home	34	36	33	38	31	20	43
Find school useless	9	11	18	7	6	12	3
Illness	2	3	4	2	1	2	0
Pregnancy	3	4	4	3	2	4	1
Failed Exam	5	5	5	6	4	5	3
Got Married	4	5	6	4	3	3	3

Source: CWIQ Survey 1997, Ghana Statistical Service March 1998

As we see from Table 3.5, the ratio is 100 girls to 201 boys in the urban areas and to 417 boys in the rural areas. The regional disparities in the level of highest school attained are also evident in Table 3.5, and are more noticeable in regions with higher rural population concentration. In terms of school completion, the results show that the poorest regions also tend to have the highest girl’s school dropout rate at the primary and junior school level. The dropout rate picture is different at the secondary school level. For every 100 girls who managed to complete Senior Secondary school, there were 833 boys in Brong Ahafo, 600 boys in Central region, 460 boys in the Eastern region, 440 in Northern region and 190 in Upper West.

Table 3.6 highlights some of the reasons that might contribute to dropout rates by poverty quintile in the rural and urban areas. The reasons range from the lack of books and supplies, poor teaching, lack of teachers and overcrowding, distance, high cost, child labour, disease, pregnancy, and early marriage. Nearly one-third of children cited the need to work as the reason for not attending school. Another third cited cost as the reason. The two reasons are closely linked because children from poor to poorer homes are the ones most likely to be in need of work to earn income or provide supplementary family labour. Child labour therefore is a national problem. It breeds another cycle of people who most likely will be less well off or end up in poverty later. Participatory assessments further reveal the depth of social problems, particularly, the phenomenon of street children, kayayei and harmful tradition practices as both causes and effects of school dropout rates.

Overall, gross primary one admission and primary school enrolment ratios have not significantly improved since 1992. Dropout rates remain high at about 20% for boys and 30% for girls at Primary School and 15% for boys and 30% for girls at Junior Secondary School. Gender and location disparities are evident. The quality of education is alarmingly low (Figure 3.5) further impinging on enrolment and retention.

Share of Pupils Reaching Mastery Levels⁷ in English and Mathematics (1999)

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

Source: Ministry of Education, Criterion Reference Test, 1999

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Share of Pupils Reaching Mastery Levels⁷ in English and Mathematics (1999)

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

Source: Ministry of Education, Criterion Reference Test, 1999

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Share of Pupils Reaching Mastery Levels⁷ in English and Mathematics (1999)

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

Source: Ministry of Education, Criterion Reference Test, 1999

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3.2.3 Poverty and Landlessness

Until recently landlessness in Ghana was not perceived to be a problem. Almost all communities were self-sufficient in their basic land requirements for subsistence and related needs, thanks to progressive customary tenurial systems.⁸ However, emerging land use patterns, urbanization, and gender insecurity especially in communities adjacent to sprawling urban centers pose problems. Rapid urbanization is likely to threaten overwhelming majority of the indigenous communities given their weakened or non-existent land rights, the lack of alternative sources of livelihoods and employment avenues. With the current population growth of 2.6%, the growth of urban centers and their peripheries is likely to be at least double the national rate and it can be expected that the pressure of landlessness and homelessness on the poor and the very poor can be intense. A case study of Ofankor lands, a peripheral community of the nation’s capital, Accra, shows that the poor and indigenous communities are often the victims of land expropriation into government lands which are subsequently allocated to individuals outside the community often with paltry compensation to the indigenous people.⁹ Besides high population growth pressures, rapid urbanization and emergent informal land markets, many point to failures of formal land policy interventions by government at the misinterpretation and misapplication of the basic tenets of the law to the disadvantage of the poor and vulnerable groups.

3.2.4 Disparities By Gender

The analysis so far indicates that poverty in Ghana has important gender dimensions and therefore requires focused public policy measures. Females represent 50.5% of the total population, with regional variations of 49% in the Western region to 52% in the Central region. The evidence also suggest that regions experiencing the least reductions (or experiencing increases) in poverty levels (Central, Eastern, Northern, Upper East and Upper West - Figure 3.1) also tend to have female population in the range of 50 - 52 percent. Incidentally, these regions also tend to have greater population concentrations in the rural areas.

Studies have shown that women experience greater poverty, have heavier time burdens, lower rates of utilisation of productive resources and lower literacy rates. Gender disparities exist with respect to access to and control of a range of assets including direct productive assets such as land and credit, human capital assets including education and health, and social capital assets such as participation at various levels, legal rights and protection. Lack of startup capital and resources for any kind of income generating enterprise and lack of labour in smaller households prevent women from escaping poverty.¹⁰

Some socio-cultural factors continue to perpetuate the gender inequities in access to and use of services and also contribute to such situations as the inequitable allocation of food within the household, leading to malnutrition - notably among women and children. Gender-based violence also has important health, economic and political implications.

The connection between education, female household heads and income earning capability is a good reason to worry about the fact that only 6% of females aged 15 years and over had attained higher than secondary school education. Nearly 35% of all household heads are females. About 61% (53%) of female household heads in the urban (rural) areas fall in the poorest 20% of the population. ¹¹ Most important of this statistics is that female poverty entails further deprivations that manifest in children’s significant under nourishment and infant mortality.

The different HIV prevalence rate (Table 3.3) among women and men between the ages 15-49 is also another cause for concern. The risk factors and vulnerability are different for men and women as are the implications for the impact of HIV/AIDS by gender. There are implications for care, treatment and for addressing the needs of AIDS orphans, which falls disproportionately on women.

Gender differences also exist with regard to legal status and also in their rights and protection under the law. Women’s legal rights with regard to access and control of land differ by the diverse lineage systems. Women are also poorly represented at all levels of decision-making. Women’s decision-making choices at the community and household levels, especially in rural areas, are constrained by cultural taboos and resistance from men.

3.2.5 Poverty and Infrastructure Support

It is hard to conceive of any poverty reduction measures without devising appropriate policy measures to address issues of deprivations as reflected in inequitable access to health facilities, opportunities for children to go to school, availability of electricity and safe water, and access to markets. These have direct and indirect bearings on a number of poverty indicators, varying from the income poverty of food crop farmers, limited access to health, and the vulnerability of the rural population to internal shocks.

It is generally acknowledged that while feeder roads are in very bad conditions and trunk roads bad, the problems of transportation along the coast and connecting most of the food growing regions - Central, Western, Ashanti and Brong Ahafo - are not any better. Poor road network is a constraint to a resource-based expansion for 2 reasons. On the production side, it severely limits access to prime agricultural lands, especially in the Brong Ahafo, Western and Ashanti regions. On the distribution side, it limits opportunities and access to markets, raises costs to producers and the predominantly self-employed women in the distributive trade, and serves as disincentives to those who wish to invest in the agricultural sector. For food crop farmers, as an example, increasing productivity may not be sufficient to alleviate their plight, especially if farmers in the same geographical area tend to grow similar products and therefore cannot find markets among themselves. A study of peripheral communities around Kumasi, the second largest metropolis, found that improvements in road infrastructure enabled some farmers to supply a much bigger market than they had previously been able to serve. This led to an increase in the proportion of higher value horticultural and intensive poultry enterprises.¹²

Granted that bad roads conditions are not the sole reason for accidents, the high incidents of road accidents in Ghana and the consequent handicaps and lost of lives, are as inimical to growth as diseases that lead to premature death of the working population.

As with access to water and sanitation, Figure 3.6 suggests that initiative by government in the 1990s to improve rural electrification has yielded positive results, but more marked for richer groups than for poorer groups. While there was a 37% and 40% increase in access to electricity for the urban and rural top two income quintiles, there was only a net gain of 17% for the lowest three groups in the rural areas, and a 10% reduction in access for their urban counterparts. The overall picture indicates that the proportion of “poor” and “very poor” using electricity increased from 29.8% to 31.7% between 1991/92 and 1998/99.

Percentage of households using electricity

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Percentage of households using electricity

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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Percentage of households using electricity

Citation: IMF Staff Country Reports 2003, 056; 10.5089/9781451814798.002.A001

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3.3.1 Attitudes to Poverty

Participatory Poverty Analysis (PPA) was administered in thirty- six sample communities from fourteen Districts and six Regions. It was evident in the course of the survey that communities, on the whole, had an innate understanding of the symptoms and causes of poverty. There was also ample evidence that over the past decades there had been a marked attitudinal change. Only in a small minority of cases was poverty seen, as in the past, as an inevitable condition expressed by a few as destiny, fate, and incurable disease. The large majority were aware that with help communities and individuals had the ability to intervene in the pattern and rhythm of life, to improve their social and economic environments and to enlarge choice.

At the District and Regional levels there was optimism that policy measures, programmes and projects when properly planned and effectively delivered, were the means of first reducing and then eliminating poverty. This awareness is important to the role of District Assemblies as,

• - Change agent for the transformation of society and the local economy

• - Mobilizer of human and physical resources

• - Protector of vulnerable groups and

• - Provider of information to occupational and social groups

To most communities sampled poverty was represented by a lack of basic necessities and facilities, an inability to provide education and medical care for the family, a lack of access to assets and a lack of education. In all communities there was a noticeable gender differentiation in relation to poverty. Men gave priority to the need for support to agriculture, non-farming activities and other alternative employment. Women stressed the importance of being able to support the family by provision of basic necessities with particular reference to education and health. Lack of access by women to land and other assets was also noted.

3.3.2 Manifestations of Poverty

There was a differentiation between communities in the north of the country and those in the south. The former saw a priority need for irrigation, potable water, health facilities and employment generation alternative to farming. In the southern communities there was considerable emphasis on skill training, general education, transparency, good governance and provision of economic and social infrastructure. In both north and south lack of access to credit was a factor noted as exacerbating conditions of poverty particularly affecting the farming community and the informal industrial sector. There was a similar concurrence regarding the effects and manifestation of poverty. A loss of dignity and respect was noted in a number of northern communities and some in the south. The north in particular noted out-migration as a direct result of poverty. All communities recorded hunger, malnutrition, ill health, high mortality rates, low life expectancy, increase in school dropouts, low levels of education, increase in crime, personal conflicts, loss of integrity as some of the consequences of poverty. In the urban areas crime, increase of children living on the streets and commercial sex were noted.

4.312 Economic Crises

Ghana is currently suffering one of many periodic economic crises, which have characterized its modern economic history. These crises manifest in several ways. Double-digit inflation has been fuelled by donor aid and the monetising of fiscal deficits. The excessive growth of money supply has resulted in the depreciation of the nominal value of the cedi. Persistent deficit financing has resulted in a massive debt overhang giving a ratio of external debt to GDP of 120%, the highest in Africa. The current crisis is a symptom of the domestic policy framework that has retarded Ghana’s economic growth and development. In this context, crises are the consequences of past policy regimes. The mismanagement of each crisis lays the foundations for the next. The fundamental reasons for economic stagnation and for Ghana’s susceptibility to crises is that the state has attempted to accomplish more than it is able given the limited resources it can command. It is also constrained by a weak administrative apparatus. Poor prioritisation has exacerbated the situation. The State has reached beyond its means and capabilities throughout Ghana’s post-colonial history. The only difference in the performance of the various governments have been in the explicit policy means that have been used to express the presence of the state in the economic affairs of the nation.

4.3.2 Geographical Distribution of Resources

Past policies for a more equitable distribution of resource investment have not been implemented. Failure to allocate investment on the basis of a rational analysis of prevailing conditions has led to very high levels of deprivation in some parts of the country. A disproportionate per capita investment in Accra has dramatically skewed opportunities, life styles and quality of life in favour of this metropolitan area to the disadvantage of those living elsewhere. The northern parts of the country suffer enduring high levels of poverty. Poverty has deepened and become more intractable in the Northern, Upper East and Central Regions. High rates of under-five mortality and infant mortality occur in Central Region and under-five mortality in Brong Ahafo. Inadequate levels of economic infrastructure occur in Brong Ahafo, Volta and parts of Western Region.

Positive action to redress gross imbalances in geographical distribution of resource investment must be taken in the interests of the more effective use of human and physical resources and of equity.

4.3.3 Governance and the Global Economy

Governance, that is the manner of governing, is a dynamic element in which the role of the state is adjusted as demanded by political philosophy and internal and external factors. The art of governance is the ability to balance national aims with a changing global environment. Most African states were borne out of commercial and political coercion resulting in national boundaries, which are without political, geographical, historical or ethnic relevance. These circumstances are inhibiting to development and growth. Global financial markets currently beyond the control of national and international authority impose an additional constraint. An economy with undue reliance on market forces has a propensity to increase and magnify the gap between rich and poor. A global economy with the same characteristics widens the gap between the rich and poor nations. The fact is that financial markets have moved with greater speed, skill and positive intuition than national and international political systems. Global market mechanisms are penetrating into fields of activity such as societal values in which they do not belong. Unless adjustments are made undue reliance on market forces may override democratic national determination and collective interests. The world has entered into a period of profound imbalance in which effective collective decision making mechanisms for the global economy do no exist at present. Uncontrolled global trends, which tend to stimulate cyclical conditions of boom and bust, may inhibit structural change. Action to counteract or ameliorate this may be needed at a continental or intercontinental scale.

4.4.1 Limited Structural Change

The GPRS strategy is informed by the experiences of the past reform programmes. The economic reform programmes undertaken from the early 1980s represented the first serious attempt to introduce important market principles into Ghana’s economy. The programmes met with some success in macroeconomic recovery and stabilization, albeit short-lived but largely failed in structural reform. The programmes produced a limited success in the growth of agriculture and manufacturing, propelling expansion only in services on the back of a debt financed import/consumption boom. In the 1970s, agriculture accounted for more than half of the nation’s total value added, but declined to just over 40 percent in the 1990s. By 1998 agricultural growth rose to 5.1% but fell to 3.9% and 2.1% in 1999 and 2000 respectively.

The structure of the agriculture sector remained unchanged. Farm gate expenditure in agriculture has been derisory. Industry also declined from about 20 percent to 14 percent of GDP during the same period. Services on the other hand rose from about 30 percent to 44 percent, overtaking agriculture as the most dominant sector. The sharp expansion of services coincided with a virtual disappearance of private savings during the 1980s and 90s while the imports/GDP ratio rose thirteen-fold, far surpassing the exports/GDP ratio and opening up a wide trade gap. The public saving ratio that improved during the 1980s under the reform programmes lapsed again into dissaving during the 1990s. The reform programmes left in their wake large and persistent fiscal and external gaps, the fiscal deficits creating a heavy debt burden, External deficits put pressure on the balance of payments. This culminated in a crisis situation at the end of the 1990s. As a result Ghana had no recourse but to seek relief under the HIPC Initiative.

Structural rigidities in agriculture remain intractable largely because of the predominance of subsistence farming. Cash crops are subject to prohibitively high transaction costs, as evidenced by large differentials between producer and consumer prices, arising from monopolistic and inadequate distribution systems. Agricultural policy, notwithstanding massive donor support, has failed to address these market impediments. Another important structural rigidity is the predominance of parastatals in several sectors of the economy. Two out of every three workers in the modem formal sector are employed in the public sector.¹⁴They tend to be immobile. Many parastatals are vested with quasi monopoly power, inefficient with budgetary allocations and no tax obligations, and with preferential access to bank credit. These parastatals crowd out private business and create deep-rooted mistrust between the public and private sectors. A credible privatisation programme is needed to restore sound public finance and create incentives for private activity together with actions to curb monopolistic tendencies.

4.4.2 Low Private Sector Response

Private sector led growth did not occur as intended under the economic reform programmes because not only were the public policies misguided but the structural rigidities inherent in the Ghanaian economy were not recognized. The problem was in large part the combination of an expansionary fiscal policy largely financed by massive externally funded budget support of which little was spent on supporting directly productive activities, productivity or the promotion of sustainable livelihoods. The ensuing pattern of government expenditure tended to be inflationary. A tight monetary policy completely failed to counter the monetary impact of large public capital inflows. These policies led to an overvalued real exchange rate and high real interest rates, which not only penalized the tradable sector but also depressed the entire domestic economy, a case of the public sector crowding out the private sector. Meanwhile, the public capital inflows led to a consumption/import boom that fuelled the service sector expansion. As a result, services expanded while agriculture and industry lagged behind.

4.4.3 Excessive Government Borrowing

Ghana began borrowing heavily from external sources in the early 1980s. The large inflows of external aid never ceased. Aid proceeded through a succession of IMF and World Bank programmes as well as bilateral aid. Donor aid is firmly entrenched in the structure of the Ghanaian public financial systems. Over 70 percent of Government’s development expenditure, is externally funded. Although external aid enabled the Government to restore confidence, increase outlays on infrastructure development and social services, spur economic growth, and contribute significantly to poverty alleviation, especially during the 1980s, it also created a basis for the macroeconomic instability that the IMF and World Bank programmes intended to solve. The deterioration of macroeconomic stability was more manifest during the late 1990s than in the preceding decade. Since 1983 multilateral and bilateral donor support has inadvertently created monetary shocks and quasi-fiscal deficits of a magnitude overwhelming the Government’s capacity for macroeconomic management. The latter was also constrained by the dwindling portion of the budget covered by internally generated funds, Long term, Ghana must grow out of aid dependency before the debt overhang stifles the domestic economy altogether. Aid and debt policy needs to be reassessed with a view to bringing it down, along with the fiscal deficit, to a level that would restore market incentives for private sector activity, i.e., macroeconomic stability and competitiveness as well as long-term creditworthiness. The HIPC Initiative presents an opportunity to do so. Concurrently, efforts must be made to generate greater domestic savings to make up for a reduction in foreign aid. A financial sector development policy, including strengthening of the banking sector and contractual savings institutions, needs to be developed and implemented.

4.4.4 Public and Private Sectors

There has been a persistent lack of clarity in the respective roles of the public and private sectors. Failure to acknowledge and utilize the pre-eminent role of the private sector in promoting growth has severely limited economic opportunities. Failure of the public sector to manage the macro economy has contributed to the deplorable failure of past development policies.

Plans to reform the public service in the 1980s by improved institutional structures and more clearly defined roles had very limited success. There appeared to be a lack of political commitment to the programme. Few of the reforms, including decentralization and the decomposition of power, were implemented. The capacity of the public service remains limited despite available talents and skills. This situation would appear to have been caused by a number of interactive factors including a dysfunctional relationship between political and official decision makers, politicisation of public service posts, patronage, lack of discipline, endemic corruption and unacceptably poor conditions of service. Thirty years of attrition have left their mark. Great commitment and positive action at all levels is required to redress the situation.

4.4.5 Parastatal Sector Reform

Privatisation of the parastatal sector is an integral part of the transition from a government-centred economy to a private sector led economy. Attainment of a sustainable growth path is not possible without completing this transition. It still has a long way to go before the process complete.

A parastatal sector reform programme was launched in 1983 as part of Ghana’s overall economic recovery programme. The efforts for privatisation were renewed in 1988 with creation of the Divestiture Implementation Committee. The reform programme consisted of measures to both improve the performance of state-owed enterprises remaining in state ownership and divesture of enterprises designated for privatisation. While those enterprises that were privatised brought in foreign direct investment, increased efficiency, profitability, and employment, a number of major strategic state-owned enterprises languished in the privatisation process due to political interference and opposition from workers and managers. Government is currently proceeding with plans for the divestiture of four large strategic state enterprises, sixteen medium sized ventures and two small sized enterprises.

4.5.1 Development of a Mature Economy

Action by government progressively to grow out of the high level of aid dependency creating a debt overhang, which is stifling the domestic economy, is of critical importance. Government must restore market confidence and create incentives to promote a private sector environment in which Ghanaian skills, talents, and enterprise can thrive in a globally competitive economy. This environment will be attained by

• - Sustainable and predictable public sector savings through effective control of fiscal excesses in government,

• - A functional financial sector in which market forces, supported by the creative management of the public sector, mobilize private domestic savings for productive investments and attract foreign capital

• - An economic environment in which workers and enterprises are encouraged to be competitive and to capture the legitimate returns for their efforts and risk taking

These processes must be supported by enduring actions which will improve foreign reserves and ensure a competitive exchange rate. Revenue mobilization must be perpetually strengthened with a tariff structure to maximise revenues and minimize unfair competition.

The fundamentals of the strategy are centred on an economic role for the State that is consistent with the realities of Ghana’s current place in the world economy, the nation’s resource base, and the need to create a framework in which Ghanaians and their enterprises can become increasingly competitive in domestic and global markets. Given this context, the state must have limited economic objectives. They must be focused on normative and regulatory functions. Government must also generate positive savings to restore solvency to the financial system and to restore credibility to its economic role, as well as to the economy as a whole. The strategy should be focused on wealth creation and the eradication of poverty through the performance of markets, which must be allowed to carry out their resource allocation functions. The State’s legitimate role in the creative management of the economy and the distribution of social and other appropriate public services is an essential component to this strategy.

Development of the rural environment is seen as the catalyst for the transformation of the national economy and the drive to economic maturity. Reform of the land administration system is pivotal to this revolution. The change of the archaic, near-subsistence agricultural economy into a progressive, dynamic, entrepreneurial and profitable business will bring about structural change and change to the spatial organisation of the rural environment. It will also act as a stepping-stone to widespread industrialization. Appropriate macroeconomic policies supported by the appropriate sectoral strategies will lead to structural changes in economic and social linkages and the geographical pattern of urbanization. Economic and social policies, decomposition of power, decentralization and appropriate investment strategies will bring about desired changes. These processes should ultimately lead to the growth of a mature national economy based upon the optimum use of human and natural resources and manifested by the nesting and overlapping of social and economic systems. The aim is to achieve an optimal geographical pattern of resource investment designed to strengthen and extend national and local connections between both production and trading activities. This will require a determination by both public and private sectors; the former in providing an appropriate environment and the latter by seeking profits in a socially beneficial way.

Initially the provision of economic and social infrastructure, land reform and incentives to entrepreneurs by the public sector must be directed towards creating an environment in which these structural changes will be stimulated to the point of self-perpetuation. What is required is a coordinated and comprehensive approach to develop and then to strengthen socio-economic activity systems by bringing into close proximity, in terms of time and space, the four phases of economic activity, viz. investment, production, processing and distribution. This approach will incorporate more human, physical and financial resources into the economy and significantly increase choice.

Such changes will bring about a more efficient and geographically balanced urbanization process in which town and country offer inter related and complementary services and life styles. Within this structure towns will play a pivotal role as catalysts for social, economic and cultural development and change. To perform this role in the future there must be a departure from the chaotic, inefficient, unplanned urban systems that currently prevail. The planning of towns to serve as an integral part of the national economy is an essential element in national development, growth and poverty reduction.

4.5.2 Financial Sector Development

A well functioning financial sector is indispensable to economic growth and development, and thereby the reduction of poverty. The ability of the financial sector to serve as an effective and low cost intermediary between savers and borrowers for investment purposes has been seriously compromised by problems that threaten its soundness and stability. It is saddled with a large and growing burden of non-performing assets, primarily loans to state-owned enterprises. It has a serious over exposure to foreign exchange liabilities. As a result of excessive government deficit financing, more than one-third of its assets are tied up in the indebtedness of the government and state-owned enterprises. Currently, it is under a great deal of stress, stemming from the deterioration of loan quality as businesses came under increasing pressure due to prohibitively high real interest rates. This has been exacerbated of late by unfavourable terms of trade and the large cedi depreciation in 2000. The non-performing loan problem was exaggerated by loans to state-owned enterprises, including the massive syndicated loan to the Tema Oil Refinery. These problems must be overcome expeditiously.

Long-term capital is at a rudimentary state of development in Ghana. The total capitalization of the Ghana Stock Exchange is small even by emerging market standards. Trading volumes have deteriorated over the past few years. The bulk of Ghana’s long-term funds are concentrated in SSNIT, which is in financial disarray. It has many non-performing loans and low return equity investments in insolvent or distressed state-owned enterprises. As a result SSNIT suffers from liquidity problems. A thorough review needs to be conducted with a view to developing and implementing policies for the reform of the nation’s social security programme. The strategy for financial sector development calls for macroeconomic stabilization, of which sustained fiscal discipline is a sine qua non. Macroeconomic stabilization along with a reduction of domestic debt will help lower interest rates and create incentives for private investment. In parallel, the government will need to deal with non-performing loans through strengthened supervision and regulation, recapitalizing and eventually privatising state-owned banks. The large open position in foreign exchange must be closed.

The government should privatise or otherwise sell its equity in state-owned or state controlled banks. If these banks are bailed out again, it will be the second time in roughly a decade that public funds have been used for this purpose. These resources are very costly. Every cedi spent on a bail out could have been spent on poverty reduction and growth. Returning the financial sector to private sector ownership would also boost credibility in the government’s deficit reduction strategy and in its commitment to private-sector led growth.

4.5.3 Rural Development and Industrialization

Poverty reduction in the rural environment is largely synonymous with growth. The potential for growth is considerable. Under- and un-utilized human and physical resources abound. The long-term growth strategy is predicated on the concept of the modernization, restructuring, and development of the rural environment as the catalyst for the transformation of the national economy. Ghana is predominantly an agricultural country. The entrepreneurial opportunities in large and small-scale farming and the farm gate processing of both food and industrial crops are considerable given an appropriate marketing environment. Agricultural industrialization provides for spin-offs and the creation of backward and forward linkages.

Government must play a supportive role in achieving the transformation of the rural environment from its subsistence orientation to a commercially attractive, viable, and dynamic sector, which is vital for the achievement of sustained equitable growth. The restructuring of the rural environment is an important aspect of devolution and decentralisation and is seen as the catalyst for transformation. It is an essential element in reinforcing macro economic policies for stability and sustainable growth. The need is to change the concept of agricultural activities as simply a way of life to that of a profitable commercial and industrial occupation. The necessary achievement of this objective requires a corresponding transformation in attitudes and conventional societal values. These include attitudes to land. The need is to incorporate the value of land into the national economy as a tradable asset whilst retaining its communality. Representational and gender issues also arise. Habits and conventions based upon superstition and myths which give rise to anti social behaviour and inhibit structural change must be subtly excised by sustained education and demonstration. At the same time traditional values which enrich the culture of life and social stability must be assisted to endure within a changing society.

The transition of Ghana’s economy to a market-oriented policy environment was set in motion in the early 1980s under the economic reform programmes but the process was interrupted by a series of policy and market failures. This is especially so with agriculture, the mainstay of Ghana’s economy. Performance of the agricultural sector has a strong correlation with Ghana’s overall cyclical fluctuations. Agricultural policy, despite massive support from donors and external financial institutions, has generally failed because it has not effectively addressed the fundamental technical and institutional constraints. It has not been accompanied by policies, including macroeconomic policy, to set pricing in a way that is consistent with competitiveness and incentives for production and marketing.¹⁶’¹⁷

Ghana must industrialize. The process should begin with refocusing on its traditional core competency, agriculture. Development in agriculture must be stimulated by policies, which will encourage and facilitate links with agro-industry including simple farm gate processing. Foreign direct investment should be very actively encouraged. Joint ventures can be formed between Ghanaian and foreign firms where foreign technology and capital could be combined with locally grown raw materials and expertise. Policies needed to create an enabling environment for FDI and technology transfer include infrastructure development, establishment of a legal framework for protecting property rights, contract enforcement, and land tenure reform.

In order to establish effective linkages with agro-industry, agriculture must transform itself into an efficient entrepreneurial activity and provide a stable supply of quality raw materials at low costs. The process must start with reforming the present state where subsistence agriculture predominates for historical reasons and because disincentives exist for production and marketing. Policies should focus on removing pricing distortions. The real effective exchange rate of the cedi is inconsistent with competitiveness. This should be corrected by macroeconomic policy. Taxation on agricultural production should be removed. Cocoa marketing should be deregulated while retaining provisions for price stabilization for the farmer. Competition needs to be introduced into the distribution system and monopoly profits that currently drive a wedge between producer and consumer eliminated. Competitiveness should also be enhanced by measures to make the economy more efficient through a reduction of investment risks. These measures include improvement of storage facilities and construction of feeder roads and the connection of these with the national road system. The latter is critically important to opening up the rural sector and to expose it to market incentives. The stimulation of agricultural industrialization will lead the way to a broader industrial environment in both formal and informal sectors.

4.5.4 Natural and Built Environments

The quality of both the built and the natural environments is vital for long-term growth and development. Increased production can only be meaningful on the one hand when it occurs in well-managed, amenable, efficient, safe and healthy built environments. On the other hand, protection of the natural environment to prevent deforestation, land degradation, and loss of ecosystems is paramount.

Safeguarding the environment is therefore an essential condition for sustainable development and improving the quality of life. The long-term objective is to maintain a sound environment and to prevent all forms of environmental degradation. This will be achieved by ensuring that the national policies now in place, such as the requirement that all investment projects are subject to environmental impact assessment and the prohibition on practices, which destroy the environment, are fully implemented. Mining activities, fishing, farming and timber resource exploitation, energy provision and manufacturing industrial production must be subjected to environmental impact assessments and audits. Institutions concerned with environmental protection will be strengthened to enable them enforce regulations.

Generally the adoption of improved technologies will favour the environment. For example, the replacement of shifting cultivation with permanent rotational cropping, which is an objective of agricultural policy, will help to prevent deforestation and soil degradation. A replanting programme must be developed and fully implemented in the lumber industry to ensure regeneration of forestry resources, an important source of foreign exchange earnings. Collaborative natural resource management with communities is essential. The use of administrative regulations must be enforced alongside market based economic incentives. For instance, product quality, especially agricultural, is increasingly a key determinant of marketability, price and profitability. The early preparation of a National Land Use Plan is an essential tool in environmental management.

Concern for the environment requires constant and detailed vigilance and political commitment. The achievement of the environment objectives will to a large extent depend on the effectiveness of the recently formed district level environmental committees and the full implementation of the policy of administrative decentralization.

Sound environmental quality is not achieved by individual countries acting alone. Improved management of trans-boundary resources including water, air, fauna and flora will be pursued in collaboration with countries of ECOWAS and beyond.

4.5.5 Social Development

The ultimate objective of the social development programme in the GPRS is to ensure equitable growth for all Ghanaians, and in particular to upgrade the pre-capitalist rural sector. It seeks to ameliorate the spatial disparities in the growth process and provide social safety nets for the vulnerable and excluded. The prime objective for education must be to achieve near universal literacy and to enable all children to receive at least basic education. The education objectives also provide for increased enrolment rates in secondary and tertiary education, especially for females. The objective is to raise the median level of education of the population as a whole to JSS3 by 2020. Curricula at all levels must place greater emphasis on scientific subjects and mathematics which together with improved vocational training will contribute to achieving the objectives for science, technology and production. Improvement in the general level of health requires not only an expansion and upgrading of the health living environment. Achievement of the health objectives is thus equally dependent on securing adequate food supplies, better understanding of health matters, provision of safe water supply and sewerage, improved housing, well planned settlements and the prevention of environmental pollution as it is on the provision of medical facilities. Access to all these facilities will be affected by the spatial distribution of population and of economic activities and by their location in relation to transport facilities. Social sector investment will be enhanced by the HIPC initiative.

Improvements in the fields of education and health are not simply moral and equity issues. An improved quality of life and the availability of choice are essential to equipping people with a capacity to understand the need for change and the notion that it is possible for communities to intervene and change their economic and social environments. A shift in attitudes is an essential prerequisite to the adjustment to societal values required to embrace, perpetuate and develop new technologies and economic and social structures.

4.5.6 The Role of the State

Government will need to play a supportive role in achieving the transformation of the agricultural sector from its subsistence orientation to a commercially attractive, viable, and dynamic activity. This is vital for the achievement of sustained equitable growth. However, agricultural transformation will not be achieved without a corresponding transformation of the attitudes of individuals to work in general and commercial farming in particular. It requires a transformation from a culture of subsistence to a culture of business focused on profit and accumulation. Pivotal to the process of change in the rural environment is the reform of traditional land administration systems. Under present conditions land as an asset is excluded from the national economy and its value denied to the farmer. It is not tradable. Legal title to land within the concept of communality is an essential prerequisite to attracting entrepreneurship into farming and the promotion of agricultural industry. Without legal title to land there can be no transformation. Effective management of the transformation demands an integrated cross-sectoral approach and dynamic government support.

Ghana must redefine the role of the State as the policy manager for development and the economy, enforcer of laws, rules and regulations and a provider of public utilities and services. Public sector reform involving right-sizing of the public service, restoring competitive conditions of service and SOE reform is a sine qua non for provision of an enabling environment for private sector development and the effective provision of public services. Progressive public sector reform is required significantly to improve capacity and efficiency. A continuous process of reform is also required to enable the public service to accommodate its changing operational role in relation to the private business sector and civil society. New skills are also required to deal with development and economic issues at an international level and to contribute to decision making in relation to the global economy, within international groupings.

Strong regional and continental affiliations offers particular opportunities for forging alliances with states with like-minded, people oriented policies in order to exercise greater influence internationally. Ghana is in a fortunate position as a member of he Economic Commission of West African States with a positive policy for cooperation and integration. The emerging African Union offers particular opportunities for the continent to exercise political and market influences worldwide. International groupings, such as ECOWAS, offer a means to overcome the limitations to effective exploitation of resources imposed by colonial boundaries by, for example, river basin development across national borders. Cooperation between the African Union and other people oriented continental power blocs provides a means of limiting the adverse affects of the imbalances between individual and corporate decisions expressed by global markets and collective decision-making as expressed through political dialogue. Long term futures in governance demand an extra national and continental posture to development and growth within the world economy for sustainable poverty reduction. This will necessitate adjustments to the role of government within the international community of nations.

4.5.7 Decentralization and Equity

In terms of governance at the national level the need is for a vigorous and progressive deepening of decentralization and the devolution of power. A combination of the latter with permanent mechanisms for a symbiotic relationship between communities NGOs, civil society organizations, private business and the public sector and between levels of government will strengthen national government and nation building through dialogue and consensus. The aim must be to decompose power to the District to the extent that Assemblies are in effective and total control of their departments and staff within the context of relevant legislation. Ultimately District departments must have the capacity to carry out all District level programmes and projects funded from their own resources and by central government. In the latter case decisions on resource utilization including priorities and intra-District location must lie with the local authority. Central government should progressively use District Assemblies as agents for the local provision of physical infrastructure and services wholly or part funded by the former. The goal is to provide for a situation where national development plans are an aggregation of local development plans and the latter are a disaggregation of national plans. Dialogue between the national and local level must achieve a synthesis of mutually supportive measures, which bind together national policies and local aspirations.

4.5.8 Resource Investment and the Budgetary Process

The current sectoral and sub sectoral allocations of government expenditure, including the donor component, do not represent an optimum distribution in support of poverty reduction and growth. A better distribution must be achieved within the next few years. This will require experimentation and innovation to move from a somewhat inflexible system of budget planning and to remove the rigidities in the system. The budget is an essential planning tool. Perspective and medium term planning processes must be integrated with the procedures for MTEF and the annual budget. Significant adjustments are required to procedures. The review of MTEF and proposals for the second stage of this instrument must be seen as part of proposals to improve the overall long, medium and short-term government planning machinery. What is needed for the medium term is a process jointly owned by the NDPC and MOF; the latter being concerned with GOG fiscal and economic management and the former with medium term policy planning, including the role of the private sector.

Improvements are also required to ensure the more timely receipt of budget allocations by MDA. Forward planning by sectors requires an assured flow of funds over the three-year period. Failures in provision not only affect GOG funded programmes and projects but also donor programmes where counterpart funds are required.

4.5.9 Growth and Poverty Reduction

In the last analysis the pace of poverty decline will be determined by the rate of economic growth and the appropriate distribution of resources sectorally and geographically.

Analysis¹⁸ has shown the pace of poverty decline to be very sensitive to the rate of growth in total consumption. A consumption growth rate of 7% per annum would eradicate urban poverty by 2020 and reduce rural poverty to just over 10% of the population. Growth in consumption of 6% would also produce a sharp decline in numbers of people in poverty as the table below shows.

Table 4.1.

Poverty Projections in Relation to Growth of Consumption

Table 4.1.

Poverty Projections in Relation to Growth of Consumption

		1998	2005	2010	2015	2020
		Projection 1 (consumption growth of 6 percent per annum)
Consumption poverty headcount (percent):
	Urban	18.6	13.0	8.7	5.0	2.6
	Rural	49.9	38.9	30.7	22.5	15.9
	All Ghana	39.5	30.3	23.4	16.6	11.4
Total poor population (million)		7.29	6.70	5.87	4.76	3.72
		Projection 2 (consumption growth of 4.3 percent per annum)
Consumption poverty headcount (percent):
	Urban	18.6	15.0	12.4	10.4	8.5
	Rural	49.9	43.2	37.9	33.4	29.9
	All Ghana	39.5	33.8	29.4	25.7	22.7
Total poor population (million)		7.29	7.45	7.33	7.26	7.26
		Projection 3 (consumption growth of 7 percent per annum)
Consumption poverty headcount (percent):
	Urban	18.6	11.9	7.2	3.2	1.1
	Rural	49.9	36.7	26.2	17.1	10.5
	All Ghana	39.5	28.5	19.9	12.5	7.3
Total poor population (million)		7.29	6.27	4.96	3.52	2.34

View Table

Table 4.1.

Poverty Projections in Relation to Growth of Consumption

		1998	2005	2010	2015	2020
		Projection 1 (consumption growth of 6 percent per annum)
Consumption poverty headcount (percent):
	Urban	18.6	13.0	8.7	5.0	2.6
	Rural	49.9	38.9	30.7	22.5	15.9
	All Ghana	39.5	30.3	23.4	16.6	11.4
Total poor population (million)		7.29	6.70	5.87	4.76	3.72
		Projection 2 (consumption growth of 4.3 percent per annum)
Consumption poverty headcount (percent):
	Urban	18.6	15.0	12.4	10.4	8.5
	Rural	49.9	43.2	37.9	33.4	29.9
	All Ghana	39.5	33.8	29.4	25.7	22.7
Total poor population (million)		7.29	7.45	7.33	7.26	7.26
		Projection 3 (consumption growth of 7 percent per annum)
Consumption poverty headcount (percent):
	Urban	18.6	11.9	7.2	3.2	1.1
	Rural	49.9	36.7	26.2	17.1	10.5
	All Ghana	39.5	28.5	19.9	12.5	7.3
Total poor population (million)		7.29	6.27	4.96	3.52	2.34

4.6.1 Composition of Expenditure Medium Term to Long Term

The intention is to achieve a better sectoral composition of expenditure, a better balance between administration and development costs and a geographical distribution responding to a rational assessment of need for social protection and the potential for growth. Problems arise in attempting to calculate the proportion devoted to overheads by the classification system used. For purposes of analysis, from a development perspective, the categorization of expenditure tends to lack clarity. This needs resolution together with a rationalization of the process of medium term planning and expenditure forecasts. Proposals are made under the governance section of this document. The aim in the medium to long term is to achieve a division between overheads and development costs of 20-25% and 80-75% respectively. Of development costs the aim is to achieve a distribution between social and economic sectors of about 60% for the former and 40% the latter. Over time the following distributions of development expenditure is suggested as a guide within the social and economic sectors.

Table 4.2.

Suggested Guide for Expenditure within the Social and Economic Sectors

Table 4.2.

Suggested Guide for Expenditure within the Social and Economic Sectors

Social Sector Budget, of the 60%		Economic Sector Budget, of the 40%
Education	60%	Agriculture*	35%
Health & Welfare	40%	Infrastructure	45%
		Industry	20%

View Table

Table 4.2.

Suggested Guide for Expenditure within the Social and Economic Sectors

Social Sector Budget, of the 60%		Economic Sector Budget, of the 40%
Education	60%	Agriculture*	35%
Health & Welfare	40%	Infrastructure	45%
		Industry	20%

These figures are comparable to expenditure allocations in other countries.

Provision is made for the geographical distribution of expenditure by MDA down to Regional level on the basis of twenty-seven parameters¹⁹. Data is currently not available for a further dissaggregation. RCCs are required to consult with District Assemblies using proactive workshop techniques for defining sub Regional distributions. RPCU and DPCU must devise simple methods to facilitate the allocation of resource investment at District level by a rational analysis of prevailing conditions and need. More comprehensive methods for sub Regional allocations of government expenditure related to the preparation and regional coordination of District Development Plans will be provided by NDPC at a later stage.

Considerable additional resources are required in the three northern Regions overall, significantly to ameliorate the very high level of deprivation in this part of the country²⁰. The northern parts of Brong Ahafo and the Volta Regions have similar conditions prevailing. Upper East, Northern and Central Regions record a deepening of poverty; all of these Regions in addition to Eastern Region have above average levels of poverty. Extra funding is required. Subject specific need is also identified for the advice of MDA²¹. The need to reduce under-five mortality in Central and Brong Ahafo Regions is illustrated. Deficiencies in physical infrastructure are revealed in Brong Ahafo, Central and Volta Regions. A realistic locational pattern of resource expenditure must be devised to eradicate these inequitable variations.

The cost effectiveness of expenditure must be improved. Expenditure by MDA on goods and services in relation to spending on production, productivity and direct social protection is excessive. A better balance must be achieved. Guidance is given in Appendix A of this report²². In addition to the foregoing, future improvements to the composition of expenditure in support of poverty reduction and growth will depend upon two main factors: the ability of government to reduce spending on general administration, and the cooperation of donors in the interpretation of the GPRS.

There are rigidities that limit adjustments to the sectoral composition of expenditure in favour of poverty reduction and growth in the medium term. Public sector salaries represent a large part of administrative or overhead costs. The relative proportion cannot be reduced over a short period. On-going programmes and projects, particularly those that are donor funded, must run their course, in most cases. These constraints limit the changes which can be made to sectoral and sub sectoral allocations. In the course of implementation, the outcome of the monitoring process will determine the ability to improve composition in support of poverty reduction and growth.

4.6.2 Framework for Poverty Reduction and Growth

The policies implicit in the foregoing section will inform short, medium and long term action by MDA to achieve the main goal of the GPRS to ensure sustainable equitable growth, accelerated poverty reduction and the protection of the vulnerable and excluded within a decentralized democratic environment.

Policies and areas for intervention in response to medium-term growth and poverty reduction are elaborated in the next five chapters under the thematic areas of

• - Macro Economy Stability

• - Production and Gainful Employment

• - Human Resource Development and provision of basic services

• - Special Programmes for the Vulnerability and Exclusion

• - Governance

The immediate actions required in each of the thematic areas are identified below.

4.6.3 Cross Cutting Issues

Implementation of the programme objectives and project outputs will in many cases be at a sectoral level. However a number of priority cross cutting issues have been identified in the process of preparing the GPRS. These will require an integrated, inter disciplinary and cross-sectoral approach. It is anticipated that the main thrust for achieving growth and poverty reduction will depend upon the provision of a dynamic multi sectoral approach. Comprehensive programmes and projects are required.

The following cross cutting issues will require an integrated, interdisciplinary and cross-sectoral approach by MDA, The lead Ministry or Agency is indicated against each.²³

-	Macro Economic Stability	Ministry of Finance
-	Transformation of the Rural Economy	Ministry of Food and Agriculture
-	Production for Export	Ministry for Private Sector Development
-	Youth Employment	Ministry for Manpower Development & Employment
-	Gender Equity	Ministry of Women & Children’s Affairs
-	HIV/AIDS.	Ministry of Health
-	Slum Abatement.	Ministry of Local Government & Rural Development
-	Public Sector Development	Office of the President
-	Environment	Ministry of Environment & Science

View Table

-	Macro Economic Stability	Ministry of Finance
-	Transformation of the Rural Economy	Ministry of Food and Agriculture
-	Production for Export	Ministry for Private Sector Development
-	Youth Employment	Ministry for Manpower Development & Employment
-	Gender Equity	Ministry of Women & Children’s Affairs
-	HIV/AIDS.	Ministry of Health
-	Slum Abatement.	Ministry of Local Government & Rural Development
-	Public Sector Development	Office of the President
-	Environment	Ministry of Environment & Science

Time will not permit MDAs to put in place the necessary organization required to prepare cross-sectoral programmes for inclusion in the 2002 budget. However, functional and sectoral MDAs are required to commence preparing the above cross-sectoral programmes to find expression in the budget for 2003 and succeeding years. For this purpose the NDPC will re-establish Cross Sectoral Planning Groups, which includes membership of civil society, to support the preparation of cross-sectoral programmes for the above cross cutting issues.

The need for an inter sectoral approach to cross-cutting issues is self evident. An inter sectoral approach is also necessary geographically. In the past the tendency has been for expenditure on development to be widely dispersed which results in a limited impact. It is important that investment and services in support of poverty reduction and growth are concentrated in specific locations of identified need and opportunity in an integrated and comprehensive manner to create a critical mass of mutually supportive activities and services. To this end, NDPC and MEPRC will in collaboration with MDAs identify locations for this purpose including locational priorities for Accelerated Agri Business Zones (AABZ). It is emphasised that the MTDP and its poverty reduction and growth component are open-ended rolling plans, which are subject to monitoring, evaluation and revision as a continuous process. The same principle applies to sectoral and District Plans.

The subject of cross cutting issues and planning for integrated development will require further elaboration for which the MTDP is the appropriate vehicle. Policies within the GPRS will form the central feature of the second Medium Term Plan.

4.6.4 Poverty and Growth Targets

The implementation of the three-year rolling programme for poverty reduction and growth is framed to result in realistic but significant improvements in terms of poverty reduction and growth.

Table 4.4.

Poverty Reduction Targets

^*Or latest year.

Table 4.4.

Poverty Reduction Targets

	2000*	2005
Core Poverty Indicators
Incidence of poverty	39%	32%
Incidence of extreme poverty	27%	21%
Real GDP growth rate	3.7%	5%
Real GDP per capita growth	1.4%	2.4%
Gross primary school enrolment rate Total Girls	77.6% 71%	82% 80%
Under-five mortality rate	110/1000	95/1000
Maternal mortality rate	200/100,000	160/100,000
Children under-five underweight	25%	20%
Total Fertility Rate	4.6	4.2
Supplementary Indicators
Incidence of poverty among food producers	59%	46%
Incidence of poverty in: Northern Upper East Upper West	69% 88% 84%	60% 75% 70%
Consumer price index (end year)	40%	5%
Agricultural growth rate	3.8%	5%
Infant Mortality Rate	56/1000	50/1000
Criterion Reference Test (mastery level) for public primary schools English Math	8.7% 4.0%	11% 6.4%
Gross junior secondary school enrolment rate	60%	65%
Households with access to safe water Urban Rural	70% 40%	78% 54%
HIV/AIDS behaviour indicator - condom use Female Male	6% 14%	20% 30%

^*Or latest year.

View Table

Table 4.4.

Poverty Reduction Targets

	2000*	2005
Core Poverty Indicators
Incidence of poverty	39%	32%
Incidence of extreme poverty	27%	21%
Real GDP growth rate	3.7%	5%
Real GDP per capita growth	1.4%	2.4%
Gross primary school enrolment rate Total Girls	77.6% 71%	82% 80%
Under-five mortality rate	110/1000	95/1000
Maternal mortality rate	200/100,000	160/100,000
Children under-five underweight	25%	20%
Total Fertility Rate	4.6	4.2
Supplementary Indicators
Incidence of poverty among food producers	59%	46%
Incidence of poverty in: Northern Upper East Upper West	69% 88% 84%	60% 75% 70%
Consumer price index (end year)	40%	5%
Agricultural growth rate	3.8%	5%
Infant Mortality Rate	56/1000	50/1000
Criterion Reference Test (mastery level) for public primary schools English Math	8.7% 4.0%	11% 6.4%
Gross junior secondary school enrolment rate	60%	65%
Households with access to safe water Urban Rural	70% 40%	78% 54%
HIV/AIDS behaviour indicator - condom use Female Male	6% 14%	20% 30%

^*Or latest year.

4.6.5 Expenditure

Volume 2 comprises:

• - An analysis of expenditure for poverty reduction and growth within the budget ceilings for 2002-2004

• - Costed programmes within the budget ceilings for 2002-2004

• - Costed programmes to achieve the GPRS unconstrained by the budget ceilings.

5.1.1 MACROECONOMIC STABILITY AND POVERTY

The poverty reduction strategies and programmes outlined in this document will not succeed in an environment of macro-instability. However, this is not to suggest that macro-stability is a sufficient condition for poverty reduction; it fosters a positive environment for growth. To the extent that the strategy for growth is pro-poor, growth will lead to significant reductions in poverty.

While the causes of poverty in Ghana are multifaceted, macro-instability has played a significant role in exacerbating poverty. Macro-instability in Ghana has been fuelled to a large extent by government policies that have resulted in a persistent overshooting of the budget deficit and also by the measures employed to finance the growing deficit. Prominent among such measures are debt monetization and the sale of Treasury Bills.

Key factors that have accounted for government’s tendency to overshoot the deficit include weak revenue mobilization mechanisms, anticipatory spending (i.e. spending in anticipation of donor inflows), continued expenditures to support a large and inefficient public sector (including debt guarantees of subvented agencies), expenditures to finance election year campaigns, social investment expenditures and expenditures to service the debt created by the fiscal deficit. In effect, government expenditure control and monitoring systems have been weak.

In particular, domestic financing of the deficit through the sale of Treasury Bills and through the printing of money (i.e. debt monetization) by the Bank of Ghana, has contributed immensely to high interest rates and inflation²⁴. High interest rates have raised the cost of credit to the private sector, stifled investment and consequently, the growth of employment opportunities in the private sector. On the other hand, the relative attractiveness of Treasury Bills together with the minimal risk associated with such investments have subverted the intermediation role of financial institutions and undermined competition for savings mobilization within the banking sector. This in part explains the large spread between the lending and savings rate²⁵.

By continually depreciating the value of the domestic currency relative to other currencies, the growth in inflation, resulting from the central Bank’s accommodation of the deficit (i.e., the printing of money), has not only contributed to the volatility in the exchange rate but has fuelled secondary rounds of inflation by raising the domestic currency price of imports.

In effect, macro-instability in Ghana has been characterized by investment stifling real interest rates (i.e., the nominal rate adjusted for inflation), double digit inflation, an exchange rate that is both overvalued and volatile, a low level of savings and balance of payments deficits stemming from excess domestic demand for imports.

Macro-instability has also exacerbated poverty through at least four channels. First, inflation and inflationary expectations have eroded the real wages particularly of workers on fixed incomes. Furthermore, inflation has increased the risk and uncertainty associated with long term investments in sectors such as agriculture and industry. Indeed, food producers have been particularly disadvantaged because of poor distribution and marketing channels while limited storage facilities have undermined their leverage over farm gate prices. On the other hand, service activities such as wholesale and retail trading have thrived in part because of the relatively quick turn-around of such investments. In addition, the financial sector has benefited immensely from their virtually risk-free investments in high yielding Treasury Bills. To the extent that the service sector activities are concentrated in the urban metropolis, and to the extent that the bulk of the poor are engaged in rural agriculture, the poverty reducing potential of service sector growth is significantly lower than the corresponding impact of the agricultural sector.

Secondly, high interest rates have crowded out the private sector investments and reduced the rate of employment growth. Employment options for lowly paid public sector workers have consequently been reduced. Indeed, this may have contributed to the slow pace of public sector reform and increased the attractiveness of graft as an option for income generation within the public sector.

Thirdly, currency volatility has negatively impacted on foreign direct investment (FDIs) by introducing greater risk in the returns on such investments. Indeed, it is conceivable that the concentration of FDIs in relatively low risk areas such as the extractive and service industries is in part a result of currency volatility. Foreign direct investment is linked with poverty because of the potential economic opportunities (e.g., technology and skill transfer and employment) it can provide to the domestic economy.

Fourthly, inflation has eroded the real value of government revenues and hence, the ability to provide adequate social services to the poor. Indeed, as real wages have declined with inflation, government’s development expenditures have been crowded out by pressure on government to pay a “living wage”. Expenditures on social services have also been compromised by the fact that debt servicing has taken up a growing share of the budget, leaving few resources for poverty-related investments.

5.1.2 THE MACRO ECONOMIC FRAMEWORK

The broad objectives of the medium term macro-framework are to promote private sector-led growth including small-scale business development, in a manner consistent with poverty reduction and to adjust government’s budget for increased expenditures on education, health and other priority social sectors. Achieving this goal will require the achievement of macroeconomic stability in the first instance and reforms in the area of fiscal, monetary and trade policy to ensure sustained growth.

In the short to medium term (i.e., 2003-2005), changes in the key macro indicators are expected to be modest. The real GDP is expected to rise from 4.7 percent in 2003 to about 5 percent in 2005. Agriculture is expected to play a progressive role in achieving this objective. Agricultural growth is expected to rise from 4.1 percent per annum in 2002 to 4.8 percent per annum by 2005. The service sector, which has consistently enjoyed the fastest growth, is expected to experience a slower growth rate of 5.1 percent in 2005 relative to the 4.7 percent growth rate in 2002. Industry on the other hand, is projected to experience accelerated growth with the implementation of agro-processing initiatives proposed in Chapter 6 of this document. The overall targets for the period 2003-2005 are provided in Table 5.1.

Table 5.1.

Key Macro-Economic and Financial Targets: 2002-2005*

^aProjected values;

^bRevised Projections

^*Projected unless otherwise stated.

^1/Increase in credit to government as a percent of broad money at the beginning of the period.

^2/Including capital outlays

^3/After domestic arrears clearance

^4/Functional shares for 2003-2005 exclude debt relief savings financed through external project aid and transfers to the local authorities.

^5/Reflects large cedi depreciation relative to dollar in 2000

Table 5.1.

Key Macro-Economic and Financial Targets: 2002-2005*

	2002a	2003b	2004	2005
National Income	(Annual % change unless otherwise stated)
Real GDP Growth	4.5	4.7	5.0	5.0
Nominal GDP Growth	28.2	24.3	18.4	12.1
Real per capita growth	1.9	2.1	2.4	2.4
Sectors
Agriculture	4.1	4.5	4.8	4.8
Industry	4.7	5.1	5.2	5.2
Services	4.7	4.9	5.1	5.1
Money and Credit
Annual avg. CPI	14.8	15.1	8.0	6.0
End of Period CPI	15.2	9.0	7.0	5.0
Reserve money (excluding foreign currency deposits)	42.6	20.7	18.3	12.1
Credit to government1/	32.5	0.0	-7.5	-7.7
Broad money (excluding foreign currency deposits)	50.0	21.2	18.4	12.1
Government Budget	(In % GDP, unless otherwise stated)
Total revenue (excl. grants)	18.0	22.3	22.5	22.3
Total expenditure 2/	26.1	29.7	28.2	26.8
Overall Balance (including grants)3/	-6.8	-3.6	-16	-0.6
Domestic primary balance	2.0	3.0	26	2.5
Domestic Debt stock	28.9	23.6	17.8	14.8
Divestiture Receipts	0.0	0.7	0.6	0.0
Net Domestic Financing	4.8	0.0	-2.4	-2.0
Functional Distribution4/
Administration	19.79	14.2	13.3	13.3
Economic Services	18.00	9.7	10.3	10.3
Infrastructure	17.19	17.2	19.1	19.1
Social Services	34.71	38.1	34.3	34.3
Public Safety	96.6	11.1	9.0	9.0
Utilities	-	2.7	3.2	3.2
Contingency	0.62	6.9	10.9	10.9
External Sector5/
Current account balance	0.6	-1.7	-1.5	-1.2
External debt outstanding	112.4	94.3	82.1	74.3
External debt service incl. Fund	7.8	6.6	5.5	5.2
(In % of exports)	18.4	15.6	13.4	13.1
(In % of government revenue)	37.1	24.3	20.5	19.6
Gross International Reserves (in months of imports)	1.9	2.3	2.7	3.1
Cocoa Exports
Volume (1000 tons)	367	395	403	419
Price (in US$/ton)	1266	1500	1900	1800
Investment and Saving
Gross investment	19.7	23.0	23.7	23.8
Private	13.6	13.6	13.8	14.1
Public	6.1	9.4	9.9	9.7
Gross national saving	20.3	21.2	22.2	22.6
Private	19.2	17.3	17.0	16.5
Public	1.2	3.9	5.2	6.1

^aProjected values;

^bRevised Projections

^*Projected unless otherwise stated.

^1/Increase in credit to government as a percent of broad money at the beginning of the period.

^2/Including capital outlays

^3/After domestic arrears clearance

^4/Functional shares for 2003-2005 exclude debt relief savings financed through external project aid and transfers to the local authorities.

^5/Reflects large cedi depreciation relative to dollar in 2000

View Table

Table 5.1.

Key Macro-Economic and Financial Targets: 2002-2005*

	2002a	2003b	2004	2005
National Income	(Annual % change unless otherwise stated)
Real GDP Growth	4.5	4.7	5.0	5.0
Nominal GDP Growth	28.2	24.3	18.4	12.1
Real per capita growth	1.9	2.1	2.4	2.4
Sectors
Agriculture	4.1	4.5	4.8	4.8
Industry	4.7	5.1	5.2	5.2
Services	4.7	4.9	5.1	5.1
Money and Credit
Annual avg. CPI	14.8	15.1	8.0	6.0
End of Period CPI	15.2	9.0	7.0	5.0
Reserve money (excluding foreign currency deposits)	42.6	20.7	18.3	12.1
Credit to government1/	32.5	0.0	-7.5	-7.7
Broad money (excluding foreign currency deposits)	50.0	21.2	18.4	12.1
Government Budget	(In % GDP, unless otherwise stated)
Total revenue (excl. grants)	18.0	22.3	22.5	22.3
Total expenditure 2/	26.1	29.7	28.2	26.8
Overall Balance (including grants)3/	-6.8	-3.6	-16	-0.6
Domestic primary balance	2.0	3.0	26	2.5
Domestic Debt stock	28.9	23.6	17.8	14.8
Divestiture Receipts	0.0	0.7	0.6	0.0
Net Domestic Financing	4.8	0.0	-2.4	-2.0
Functional Distribution4/
Administration	19.79	14.2	13.3	13.3
Economic Services	18.00	9.7	10.3	10.3
Infrastructure	17.19	17.2	19.1	19.1
Social Services	34.71	38.1	34.3	34.3
Public Safety	96.6	11.1	9.0	9.0
Utilities	-	2.7	3.2	3.2
Contingency	0.62	6.9	10.9	10.9
External Sector5/
Current account balance	0.6	-1.7	-1.5	-1.2
External debt outstanding	112.4	94.3	82.1	74.3
External debt service incl. Fund	7.8	6.6	5.5	5.2
(In % of exports)	18.4	15.6	13.4	13.1
(In % of government revenue)	37.1	24.3	20.5	19.6
Gross International Reserves (in months of imports)	1.9	2.3	2.7	3.1
Cocoa Exports
Volume (1000 tons)	367	395	403	419
Price (in US$/ton)	1266	1500	1900	1800
Investment and Saving
Gross investment	19.7	23.0	23.7	23.8
Private	13.6	13.6	13.8	14.1
Public	6.1	9.4	9.9	9.7
Gross national saving	20.3	21.2	22.2	22.6
Private	19.2	17.3	17.0	16.5
Public	1.2	3.9	5.2	6.1

^aProjected values;

^bRevised Projections

^*Projected unless otherwise stated.

^1/Increase in credit to government as a percent of broad money at the beginning of the period.

^2/Including capital outlays

^3/After domestic arrears clearance

^4/Functional shares for 2003-2005 exclude debt relief savings financed through external project aid and transfers to the local authorities.

^5/Reflects large cedi depreciation relative to dollar in 2000