Wed 28 Sep 2011
Ah, that familiar refrain – a mix of love and derision provoked by the vagaries of life in my favorite West African country: the power cuts out randomly in the midst of a big soccer match, “Oh, Ghana!” The new road washes out because of inadequate culverts? “Oh, Ghana!” And now, the country’s economy grows 34% in the second quarter of 2011 – expanding the GDP by 3.4 percent in that quarter alone (h/t to Andy Sumner for pointing this out to me)?
Wait, isn’t that good news?
Well, on its face, yes – this surge in growth suggests there is a lot more money at play in Ghana, and that will hopefully result in new and better jobs, greater revenues for the state, and eventually better services for the population. But there are two big caveats that really, really worry me here.
- The growth was driven mostly by growth in the mining and quarrying sector – of which oil has about a 2/3 share. So the economy has grown, but it is still commodity-dependent. Admittedly, they now have oil on top of cocoa and gold, but these don’t exactly track independently of one another. Building your whole economy on three commodities is not a path to a stable, sustainable future.
- Ghana does not seem to have a plan to spend all of this new revenue in a manner that will trigger the virtuous process I was describing above. Without a plan, the possibility of misuse and redirection of funds into private accounts rises dramatically (h/t to Mark Weston).
Even the oddly good news – agricultural (economic) growth seems to be matching the growth of mining and quarrying – isn’t really that good. At first glance, this news seems to suggest that ag production is increasing, or that more of that production is getting to market before spoiling, trends that would benefit much of the Ghanaian population. Maybe not, though – Ghana’s light-crop cocoa crop doubled over the same period last year, suggesting this increase is largely pegged to cocoa. Worse, a big chunk of this improvement is tied to good weather, which is difficult to gamble on year-to-year.