Ghana targets $1,200 per capita income in 2015

… Veep Mahama believes private sector will be the driver

By Stephen Odoi-Larbi

Vice President John Dramani Mahama

Ghana, on Wednesday, took a giant a step towards strengthening and enhancing her private sector by introducing the ‘Second National Medium Term Private Sector Development Strategy (PSDS II)’.

The PSDS II is a five-year policy document that aims at achieving a per capita income of US$1,200, and creating a “minimum of 5,000 formal jobs” with a budget of US$650 million by 2015.

Ghana’s per capita income in 2005 stood at US$600, up from US$450 in 2003 and US$270 in 2000. The country aims at reaching US$1,000 by the end of 2010. About 900,000, representing 13% of its estimated population of 22 million have formal jobs, and the government intends increasing the figure to at least 1,400,000, representing 20% with the introduction of the PSDS II.

“We believe that the private sector is the driver of growth in our economy. Ghana has had its fair share of the global economic downturn from 2006-2008. In spite of these challenges, the country is still focused on implementing new ideas and initiatives to drive the economy on sustainable basis,” noted Vice President John Dramani Mahama at the launch of the policy document in Accra yesterday.

The policy document is a national cross-cutting and multi-sectoral strategy framework aimed at overcoming institutional barriers that have bedeviled the Ghanaian private sector since the country gained her independence from her colonial masters, Britainm in 1957.

There has not been a consistent stable and predictable macro environment for the private sector to operate. Infrastructure that supports the private sector has either not been adequate or existent, as well as lack of credit facility to support and enhance its activities.

“These issues need a strategic and global response, hence, the PSDS II to support our economy and make it more diverse, in order to foster development,” said Mr. Mahama.
According to him, the government “will not be reckless in her decisions towards the PSDS II,” and called for a change of attitude from stakeholders in the private sector.

“This strategy will only succeed with the total commitment of all its stakeholders. We have a brighter outlook if we all give it the needed support. It is so, because the private sector will survive the changing of governments, and will be able to compete both locally and globally,” noted Mr. Mahama.

Commenting on the policy document, the President of the Association of Ghana Industries (AGI), Nana Owusu-Afari, said, “It is the first time a government is actively promoting the activities of the private sector. Before independence, it was the private cocoa farmer whose toil made our country the biggest producer of cocoa in the world. The private transport operators, the market queens and traders broke the bulk, and helped in the distribution chain.”

“After independence, the state gradually took on the major role of industrial development with the establishment of various industries all owned by the state, and GIHOC came into being. The distribution business was also taken over with the establishment of GNTC. The private sector took the backstage in our economic development efforts, and the few that were left, kept struggling on.”

In 2003, the previous government, led by Mr. Kufuor, announced the “Golden Age of Business,” by introducing the PSDS I to revive the private the sector.  It was highly focused on building strong government institutions, whose activities impact on private sector development.

Some of its biggest achievements include improving institutions such as the Registrar-General’s Department and the Commercial Courts.

The PSDS II, however, aims at creating jobs and enhancing the livelihoods of Ghanaians, whilst widening the economic opportunity in the country at the end of the five-year period, by focusing on private sector companies and organisations.

The initiative has five key areas to address; improve the investment climate by reducing the cost and risk of doing business in Ghana, whilst accelerating the rate of infrastructure development, support the transformation of the economy with support from industries that are transforming growth, and also support to the private sector to increase the efficiency of key goods and service markets.

It would also help increase productivity by supporting greater outsourcing and stronger supply and distribution chains, whilst also increasing incentive to create formal jobs by making tertiary and technical vocational education and training systems more responsive to the needs of the private sector.

Furthermore, the policy document aims at increasing opportunity for the poor, by increasing the productivity of agriculture and the efficiency of agricultural value chains by supporting public and private initiatives.

The outlook of this ambitious project, according to the Minister of Trade and Industry, Hannah Tetteh, is bright, since it would be a more competitive and efficient market for goods and services that offer greater choice, and deepen to become more accessible to the poor.

According to her, the income of the rural people in general, and the in the poorer Northern and Central regions, would increase by 20% in real terms, through more productive agriculture, and greater opportunities for non-farm employment.

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