Ghana has leap-frogged manufacturing sector growth – Dr Domfe

Dr George Domfe, a Research Fellow, Centre for Policy Studies, University of Ghana, says Ghana’s development has leap-frogged the manufacturing sector growth to the services sector.

He said however, there was the need to pay attention more to the manufacturing sector in order to create more jobs in the country.

He said the industrial sector had being stagnating because of the way the Ghanaian economy was developing; stating that “most of the developed economies, especially those in the western part of the globe, developed first from the agriculture sector, and from thence, they moved to the industrial sector and later services.”

“In our situation, the agriculture sector was growing and I wouldn’t say that we exhausted the growth there; that was the led contributor to gross domestic products (GDP) until 2006, when services had taken the lead.

“What is happening to our economy is that we have moved all the way from the primary school (agriculture sector) to the university (services); we didn’t go to secondary school (industrial sector).”

He explained that “because we have ignored the industrial sector, we have missed the opportunities to create more jobs for the young ones”.

“Ghanaian economy has been transforming, we have actually moved away from agriculture led to services led, the only unfortunate thing is that in doing so, the economy could not create jobs. We needed jobs.” Dr Domfe remarked at a public lecture in Accra.

The lecture, dubbed “Public Dialogue on Jobs in Ghana: International Good Practices, National Solutions” was organised by the Centre for Policy Studies, University of Ghana in partnership with the World Bank and the Ministry of Employment and Labour Relations.

The lecture, seeks to contribute to the debate on jobs challenge by providing an opportunity for youth and key stakeholders to hear from decision makers in government, at the World Bank and academia.

On job creation potential of the economy from 1960 to date, Dr Domfe said our agriculture’s contribution to GDP decreased, our employment share declined and led to decreased productivity.

Industry however, witnessed no change in contribution to GDP and employment, which was equal to no change in productivity.

The services sector on the other increased its contribution to GDP plus some change in employment share, which was the same as increased productivity.

With regards to the types of job in Ghana, Dr Domfe mentioned that household based job accounted for 68.70 per cent, whereas non-house based job also accounted for 31.30 per cent.

The Ghana Statistical Service (GSS), in 2014 estimated that Ghana’s unemployment rate at 5.2 per cent.

Dr Domfe said more than one-third of the working population in Ghana were underemployed (that is individuals work less than 35 hours a week).

He said the proportion of persons engaged in agriculture activities who were underemployed (61.50 per cent) was higher than those in non-agriculture activities (38.50 per cent).

“Indeed, agriculture continues to play a key role in employment creation with 44.30 per cent (including few farmers outside the household) of the currently employed population working as skilled agriculture and/fisheries workers,” he said.

According to the GSS (2015), a total of 207,492 jobs were created in the year 2014 (this excluded other jobs by household agriculture and other household activities).

The breakdown include – agriculture sector: 1,756, industrial sector: 24,095 (19,113 coming from the manufacturing sector) and that of services sector: 181,641.

Dr Domfe said nearly nine out of 10 new jobs created took place in the services sector of the economy.

He said the “One District, One Factory” was a very good policy which could help strengthen the industrial base of the economy to create more jobs for the people.

He said the high cost of credit from the banks was a factor hindering the growth of start-up businesses in the country; adding that for businesses to thrive, Ghana needs reliable supply of affordable energy.

He said foreign direct investment flows was important but depends on a number of factors such as security.

He urged government to create the enabling environment for businesses to grow.