Business News of 2014-04-02

Economy fails to transform – ACET Report

The African Center for Economic Transformation (ACET) has presented its 2014 African Transformation Report on Ghana’s economy, which indicates that the economy achieved record-breaking growth in recent years.

However, ACET noted that in spite of the record-breaking growth, the economy was not ‘transforming.’ At the launch of the report on Monday at the Alisa Hotel in Accra, leading economists, policymakers and business leaders discussed the problems before coming out with a new framework for Ghana’s economic transformation.

In attendance were gurus like Dr. Kwesi Botchwey, Chairman of Ghana National Gas Company, Ken Ofori-Atta, Chief Executive Officer (CEO) of Databank, Ishmael Yamson, former Chair of the Economic Advisory Council and Nana Owusu Afari, former president of the Association of Ghana Industries (AGI).

Others were P.V. Obeng, Chairman of the National Development Planning Commission (NDPC), Kwame Pianim, former Chairman of United Bank for Africa, K.Y. Amoako, former Executive Secretary of the UN’s Economic Commission for Africa and founder of ACET, Prof. Ernest Aryeetey, Vice-Chancellor of the University of Ghana, Dr. Yaw Ansu, ACET’s Chief Economist, Abena D. Oduro, Senior Lecturer at the Department of Economics, University of Ghana, Prof. Joe Amoako-Tuffour, Senior Adviser at ACET and Tony Oteng-Gyasi, CEO of Tropical Cables and Conductors.

The report introduced the African Transformation Index, which ranks 21 Sub-Saharan countries on their economic transformation. Ghana came in 16th place overall, a drop of seven places since 2000 partly because the country’s exports are becoming less sophisticated: foodstuffs and gold dominate (82%) while the share of manufactured products is dropping (around 15% in 2008).

In countries that successfully transformed earlier, such as Brazil, Indonesia, Malaysia, and South Korea, the opposite trend has occurred since the 1980s. In ACET’s view, while transformation has become a ‘buzzword’ recently, the report had clarified its meaning and provided a framework for measuring it to guide country strategies.

The report said that Africa’s current growth patterns are not sustainable and will not drive development or equality and said Africa needed growth with DEPTH—namely Diversification, Export competitiveness, increased Productivity, and Technological innovation—all leading to Human wellbeing.

On foreign direct investment (FDI), the report looked beyond the headline numbers to investigate how much is going to manufacturing. It revealed that Ghana had four manufacturing plants financed by FDI, compared with Kenya’s 11 and South Africa’s 61.

Mr. Pianim suggested that the report can be used as a guide to help move Ghana up the ranking, saying “what we have here in this excellent report… is an organizing framework for economic transformation.”

Ms. Oduro, on her part, said there was the need for a consistent national vision that transcends party lines, saying “what is missing in this country is continuity of policy. Everyone wants to come in and show they are doing something different.”

P.V. Obeng said “we have become devotees of the principles of transformation, and we have to find the political system that will transform our economy,” before underscoring the need for the NDPC to be depoliticized.

K.Y. Amoako, ACET’s president and founder, explained that his outfit is a “think-and-do” tank that has supported several African governments in policy formulation as well as implementation. He said the “transformation must be a national project.