Cake is bigger, but the slices are smaller: good cocoa exports have boosted Ghana's economic growth rates over the past two years, but new policies are needed if the benefits are to reach the common citizen. Neil Ford examines the issue.

Author:Ford, Neil
Position:GHANA
 
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After several years of disappointment, the Ghanaian economy has gradually been turned round and must now feature on any list of recent African success stories. Growth rates of 4.5%, 5.2% and 5.8% over the past three years have partly been fuelled by success in the cocoa industry and other parts of the agricultural sector.

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Despite such growth, there is no room for complacency and the government faces a number of challenges if it is to translate raw economic growth into improved living standards and the development of a more broadly based economy.

The cocoa harvest of 735,000t last year set a new national record and was a big jump on production of 497,739 in 2003. It must be conceded that a proportion of Ghanaian exports comprise cocoa smuggled over the border from troubled Cote d'Ivoire.

However, fruit and horticultural output has risen markedly over the past four years, so it does seem as if the government's much vaunted agricultural reforms are paying real dividends. The sector recorded growth of 7.5% last year and is expected to remain a major engine of growth over the next few years.

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There is, however, certainly room for improvement in other sectors that are apparently faring well. Despite the mining sector's overall contribution to GDP, the industry has attracted increasing criticism for its lack of interaction with the rest of the economy.

President John Kufuor has called on mining companies to take a more proactive stance in helping to nurture small and medium sized enterprises (SMEs). He has told them that the government expects to see the emergence of new areas of collaboration, such as the creation of jewellery companies.

Kufuor has also called on mining companies to "use the banking facilities within the country for both their domestic and foreign transactions because this can bring potentially a large and positive impact on Ghana's balance of payments".

At the end of September, research from Ghana's National Coalition on Mining (NCOM) unveiled a balance sheet of the mining industry's impact on Ghana. On the positive side, it listed economic growth and job creation, while on the other hand it also factored in the social and environmental problems created by the sector, as well as the level of financial incentives that the government had to offer in order to attract investment. It concluded that the impact was roughly neutral.

While such calculations could have been used to reach any desired...

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