Wednesday, July 28, 2010

Ghana’s economic freedom score

Ghana’s economic  freedom 

Score is 60.2, making its economy the 87th freest in the 2010 Index. Its overall score is 2.1 points higher than last year due to improvements in five of the 10 economic freedoms, including freedom from corruption and trade freedom. Ghana is ranked 8th out of 46 countries in the Sub-Saharan Africa region, and its overall score is above the world average.

Prudent macroeconomic policies and structural reforms have enabled Ghana to achieve average growth of over 6 percent during the past five years. Many state-owned or state-controlled enterprises that the government identified for privatization in 2007 have been divested. An expanding private sector, macroeconomic stability, and financial-sector reform have contributed to relatively steady expansion and poverty reduction. As a result, Ghana for the first time has achieved the status of “moderately free.”

Ghana’s overall economic freedom is mainly curtailed by an ineffective judicial system that remains vulnerable to political influence. Corruption and the weak rule of law undermine Ghana’s capacity to attract more foreign investment.
Background Back to the top

In 1957, Ghana was the first Sub-Saharan African nation to achieve independence from a colonial power. It has been a stable democracy since 1992. Long-time opposition party candidate John Atta Mills was elected president in December 2008 by the narrowest margin in African history. Ghana is rich in natural resources, including gold, diamonds, manganese ore, and bauxite. The industrial sector, at about 30 percent of GDP in 2007, is somewhat more developed than those of many other African countries, but agriculture is the key economic pillar and in 2007 accounted for 50 percent of employment, 43 percent of GDP, and 39 percent of exports (predominantly cocoa, cocoa products, and timber). Ghana is the world’s second-largest producer of cocoa. Significant oil reserves, discovered in 2007, have yet to be fully exploited.
Business Freedom56.8 Back to the top

The overall freedom to conduct a business remains relatively constrained. Starting a business takes about the world average of 35 days. Obtaining a business license takes about the same as the world average of 18 procedures and 218 days.
Trade Freedom65.3 Back to the top

Ghana’s weighted average tariff rate was 9.8 percent in 2008. Import bans and restrictions, services market barriers, import fees and taxes, cumbersome and non-transparent standards and regulations, weak enforcement of intellectual property rights, non-transparent government procurement, export promotion schemes, and complex and corruption-prone customs procedures add to the cost of trade. Fifteen points were deducted from Ghana’s trade freedom score to account for non-tariff barriers.
Fiscal Freedom83.5 Back to the top

Ghana has moderate tax rates. The top personal and corporate tax rates are 25 percent. Other taxes include a value-added tax (VAT) and a capital gains tax. Taxes on food products have been reinstated. In the most recent year, overall tax revenue as a percentage of GDP was 20 percent.
Government Spending58.9 Back to the top

Total government expenditures, including consumption and transfer payments, are relatively high. In the most recent year, government spending equaled 37 percent of GDP. A bloated wage bill is largely responsible for high levels of spending, but expenditure management is generally sound.
Monetary Freedom65.9 Back to the top

Inflation has been high, averaging 14.5 percent between 2006 and 2008. The government influences prices through its regulation of state-owned utilities and controls the prices of petroleum products. Ten points were deducted from Ghana’s trade freedom score to adjust for measures that distort domestic prices.
Investment Freedom65.0 Back to the top

The foreign investment code eliminates screening of foreign investment, guarantees capital repatriation, and does not discriminate against foreign investors. Sector-specific laws further regulate banking, non-banking financial institutions, insurance, fishing, securities, telecommunications, energy, and real estate and may limit or deny foreign participation. Non-transparent and burdensome bureaucracy, political influence, and corruption are deterrents. Foreign investors must register with the government and satisfy minimum capital requirements. Residents and non-residents may hold foreign exchange accounts, and payments and current transfers are subject to few restrictions. Foreign investors may lease but not own land.
Financial Freedom60.0 Back to the top

Ghana’s financial system has undergone restructuring and transformation. There are 24 banks, and the government has a majority share in the largest bank and full ownership in two others. Bank credit to the private sector has increased. Since the introduction in 2003 of a Universal Banking Business License intended to create more competition in the banking industry, the financial sector has continued to deepen its operations. The relatively developed insurance sector is dominated by two state-owned companies. In 2008, the Non-Bank Financial Institutions Bill was enacted to strengthen regulation and supervision of non-bank financial institutions, including microcredit institutions. Capital markets are developing, and the stock exchange, with over 30 listed companies, has achieved a 45 percent increase in market capitalization. Foreigners may invest in securities listed on the stock exchange without exchange-control restrictions. In 2008, the financial system’s efficiency was enhanced by institutional changes that include the establishment of a common National Payment System Platform and full automation of the stock exchange.
Property Rights50.0 Back to the top

Ghana’s judicial system suffers from corruption, albeit less than the systems in some other African countries, and political influence. The courts are slow to dispose of cases and face challenges in enforcing decisions, largely because of resource constraints and institutional inefficiencies. The legal system recognizes and enforces secured interest in property, but getting clear title to land is often difficult, complicated, and lengthy. Despite laws to protect intellectual property rights, very few cases have been filed.
Freedom From Corruption39.0 Back to the top

Corruption is perceived as significant. Ghana ranks 67th out of 179 countries in Transparency International’s Corruption Perceptions Index for 2008, a slight improvement for the second consecutive year. Corruption is comparatively less prevalent than in other countries in the region. A poll measuring public trust in the government found that the courts were one of the least trusted institutions, second only to the police.
Labor Freedom57.4 Back to the top

Despite some improvements, labor regulations remain restrictive. The non-salary cost of employing a worker is moderate, but dismissing an employee is costly and difficult.


Tuesday, February 2, 2010

Republic of Ghana

The Republic of Ghana, located in West Africa, borders Côte d'Ivoire (Ivory Coast) to the west, Burkina Faso to the north, Togo to the east, and the Gulf of Guinea to the south. The word Ghana means "Warrior King" and derives from the Ghana Empire.

Ghana was inhabited in pre-colonial times by a number of ancient predominantly Akan Kingdoms, including the Akwamu on the eastern coast, the inland Ashanti Empire and various Fante and non-Akan states, like the Ga and Ewe, along the coast and inland. Trade with European states flourished after contact with the Portuguese in the 15th century, and the British established a Crown colony, Gold Coast, in 1874.

The Gold Coast achieved independence from the United Kingdom in 1957, becoming the second African nation , after Sudan in 1956, to do so and the name Ghana was chosen for the new nation to reflect the ancient Empire of Ghana, which once extended throughout much of west Africa. Ghana is a member of many international organizations including the Commonwealth of Nations, the Economic Community of West African States, the African Union and the United Nations. Ghana is the second largest producer of cocoa in the world and is also home to Lake Volta, the largest artificial lake in the world

Ghana intro, Ghana British colony

Formed from the merger of the British colony of the Gold Coast and the Togoland trust territory, Ghana in 1957 became the first sub-Saharan country in colonial Africa to gain its independence. Ghana endured a long series of coups before Lt. Jerry RAWLINGS took power in 1981 and banned political parties. After approving a new constitution and restoring multiparty politics in 1992, RAWLINGS won presidential elections in 1992 and 1996, but was constitutionally prevented from running for a third term in 2000. John KUFUOR succeeded him and was reelected in 2004. John Atta MILLS took over as head of state in early 2009.

Ghana economy, Ghana per capita

Well endowed with natural resources, Ghana has roughly twice the per capita output of the poorest countries in West Africa. Even so, Ghana remains heavily dependent on international financial and technical assistance. Gold and cocoa production, and individual remittances, are major sources of foreign exchange. Oil roduction is expected to expand in late 2010 or early 2011. The domestic economy continues to revolve around agriculture, which accounts for about 35% of GDP and employs about 55% of the work force, mainly small landholders. Ghana signed a Millennium Challenge Corporation (MCC) Compact in 2006, which aims to assist in transforming Ghana's agricultural sector. Ghana opted for debt relief under the Heavily Indebted Poor Country (HIPC) program in 2002, and is also benefiting from the Multilateral Debt Relief Initiative that took effect in 2006. Thematic priorities under its current Growth and Poverty Reduction Strategy, which also provides the framework for development partner assistance, are: macroeconomic stability; private sector competitiveness; human resource development; and good governance and civic responsibility. Sound macro-economic management along with high prices for gold and cocoa helped sustain GDP growth in 2008 and 2009.