The trade balance is the difference between the value of the goods that a country exports and the value of the goods that it imports.A country’s trade balance can also influence the value of its currency in the global markets, as it allows a country to have control of the majority of its currency through trade.
If a country exports a greater value than it imports, it has a trade surplus or positive trade balance, and conversely, if a country imports a greater value than it exports, it has a trade deficit or negative trade balance.A trade surplus can create employment and economic growth, but may also lead to higher prices and interest rates within an economy.
The current NPP administration took over from the National Democratic Congress (NDC) in 2017, inheriting a trade deficit of $-3.08 bn. With good policies, by the end of 2017 our trade deficit went down to $-1.69bn and by the end of 2020, Ghana recorded a trade surplus of $2.05bn. Due to the global economic crunch the nation recorded a much lower trade surplus of $1.07bn in 2021 which was the second highest between 2009 and 2021.
The lowest trade deficit recorded in the Fourth Republic was $-6.21bn in 2013 and the highest trade surplus was, 2.05 bn in 2020. 2022 had adverse effects on trade worldwide and Ghana ended the year with a much lower surplus of $450.45 million.
In such difficult times, our trade balance in the January and February 2023 still recorded surpluses, with $399.4 million and $353.4 million respectively.
Statistics for the Fourth Republic show that for the Rawlings’ era of NDC I and II, the average trade deficit was-$917,500,000.00. The Kufuor’s era of NPP I and II, the average trade deficit was-$2,552,000,000.00.
During the Mills/Mahama era of NDC III and IV, the trade deficit was-$4,552,000,000.00. In this current administration of NPP III and IV under President Nana Akufo-Addo, Ghana trade balance is recording an annual average surplus of $25 million.
It clearly indicates that Ghana’s economy is still strong, despite the harsh economic challenges under this long global economic crunch. And the reason for this is thatour exports are increasing while our imports have reducing. This could be from the fruits of two policies, which are, One District One Factory (1D1F) and Planting for Food and Jobs (PFJ).
With a strong belief that industrialization is the key to development, Hon Alan John Kwadwo Kyerematen, came out with the proposal of the setting up industries across the country, which will produce for the local and export markets.
The One District One Factory (1D1F)Initiative is meant to change the nature of Ghana’s economy from production of raw materials to full industrialization.
It iscreating massive employment particularly for the youth in rural and peri-urban communities, thereby improving income levels and standard of living, as well as reducing rural-urban migration.
Today, Ghana is exporting beverages, canned foods and other locally manufactured products to earn this country enough revenue to tilt our trade balance in our favour. This brilliant idea of coming up with a policy where factories are built near their raw materials base will certainly lead this nation into full industrialization.
And one very important thing is that these industries are solely under private ownership. Unlike before, major factories were state-owned and when reckless management set in, they collapse at a cost to the state.
Alan’s initiative has made this country stand strong and firm against the external forces that make us record trade deficits, year-in, year-out. Also, with top global giants in vehicle manufacturing, setting up assembly plants here would increase of trade surplus when neighbouring countries start buying these vehicles in bulk.
Our current trade surplus even though it is weaker today than the previous year, gives Ghana a lot of hope that soon, the country will be out of the woods.
Another fine gentleman who served in the position of Agric minister and enhanced food production with his Planting for Food and Jobs (PFJ) is Hon. Dr. Afriyie Akoto. Statistics confirm the great works Hon. Akoto did in the Food Production sector. Agriculture’s contribution to GDP was 31% in 2008, by 2016 after eight years of NDC, it dropped to 4.3%. The Nana Addo’s government in 2017, inherited an agriculture growth rate of 3% (2016) from the NDC’s Mills/Mahama government. By the end of 2022, our agriculture growth rate went up to 7.2%.
Meanwhile, the opposition NDC is all about demonizing the PFJ programme, saying nothing has been produced in Ghana, even though Ghana is up from sixth to third place in Africa and eighty-sixth in the world on the Global Food Security Index.
Currently our youth unemployment data records4.6% which is a great improvement over the 14.7% inherited from the NDC government in 2017.
What will be the case if this has been in an NDC era? Your guess is as good as mine.
The Akufo-Addo led government has fared better than the previous administration as statistics show. Despite global economic crunch Ghana is returning trade surpluses. And great thanks, go to these two fine gentlemen who made this happen. Alan Kyerematen, who wants Ghana to be an industrialised nation, and Afriyie Akoto, who wants Ghana to be a top agrarian economy, and who, during his time, Ghana is self-sufficient in rice production, for the first time.
Kudos to this gallant duo!
Hon Daniel Dugan
The views expressed in this article are the author’s own and do not necessarily reflect The Chronicle’s stance.
