No abrupt policy changes, please!

AS Ghana prepares for a political transition on January 7, 2025, the nation finds itself at a pivotal economic juncture.

The impressive 7.2% GDP growth in Q3 2024, as reported by the Ghana Statistical Service under Prof. Samuel Kobina Annim, underscores the resilience of Ghana’s economy.

It is a testament to the robust performance of key sectors like Mining, Information and Communication, and Crops. However, challenges in Fishing, Cocoa, and Water Management signal areas requiring urgent attention.

The incoming government inherits not only a growing economy but also the burden of an ongoing IMF bailout programme a critical mechanism aimed at stabilizing public finances amid a restructuring of $13 billion in international debt. The question now is: how can the new administration consolidate these gains while adhering to the constraints of the IMF programme?

Prioritize policy continuity

Economic growth often hinges on policy consistency. While political transitions frequently lead to shifts in priorities, the incoming government must resist the urge to make abrupt policy changes that could derail progress.

Instead, a focus on strengthening the sectors currently driving growth — Industry, Services, and Agriculture — should be central to its strategy.

The Industrial sector, with its remarkable 10.4% growth in Q3 2024, remains a cornerstone of the economy. Policies encouraging mining reforms, environmental sustainability, and local value addition should be prioritized.

Similarly, the burgeoning Information and Communication sector can benefit from incentives to foster digital innovation, bridging Ghana’s technological gaps.

Strengthen agriculture and cocoa production

While Agriculture grew by 3.2%, the cocoa sub-sector’s continued contraction—-26.2% in Q2 2024—is alarming. As the second-largest cocoa producer in the world, Ghana cannot afford further decline in this vital industry.

The new government should implement a comprehensive strategy to combat crop diseases, improve farming techniques, and mitigate the impact of climate change on yields. Investments in irrigation and modern farming technologies can rejuvenate this sector, which is pivotal for rural employment and foreign exchange earnings.

Target lagging sub-sectors

Challenges in the Fishing and Water Management sub-sectors also demand urgent attention. The sharp -21.7% contraction in Fishing highlights the need for interventions to curb overfishing, regulate illegal activities, and improve the livelihoods of coastal communities.

Similarly, investments in sustainable water infrastructure will not only drive growth but also address critical public health and environmental issues.

Adhere to IMF commitments

Navigating the constraints of the IMF bailout program requires careful fiscal management. The new government must prioritize reducing public debt, avoiding wasteful expenditures, and enhancing revenue mobilization. A transparent and inclusive approach to restructuring debt will be key to maintaining investor confidence.

Moreover, the government should leverage the IMF’s program to push for structural reforms in tax policy, public financial management, and expenditure efficiency. These reforms will ensure that economic growth translates into improved livelihoods for Ghanaians.

Foster private sector participation

Economic recovery cannot be sustained without active private sector participation. The government should create an enabling environment for businesses by addressing high borrowing costs, streamlining regulatory processes, and supporting SMEs. Incentives for industries like manufacturing and technology can spur job creation and innovation, further consolidating the country’s economic gains.

Social investments for inclusive growth

While the IMF program emphasizes macroeconomic stability, the government must ensure that social spending is not sacrificed. Investments in health, education, and social protection programs will ensure that growth is inclusive, reducing inequality and fostering social cohesion.

As Ghana transitions to new leadership, the stakes are high. The incoming administration must build on the progress achieved in 2024 while addressing structural weaknesses and adhering to IMF commitments.

With prudent policies, political will, and strategic investments, Ghana can sustain its economic recovery, setting a strong foundation for long-term prosperity. The task ahead is daunting but achievable. It is an opportunity for the new government to prove its mettle by steering the nation towards sustained growth and stability.