World Bank urges government to diversify the Ghanaian economy

The World Bank has urged the Government to strengthen efforts at diversifying the country’s economy and broaden the tax base to ensure that larger numbers of tax payers contribute to the domestic revenue mobilisation.

The World Bank Group believes that there should be a redirection of focus on revenue generated from the extractives sector to other critical areas of enormous opportunities of economic potentials such as agriculture.

Mr Henry Kerali, the World Bank Country Director for Ghana, Liberia and Sierra Leone, who was speaking in an interaction with the media on Monday as part of his end of mission activities, said although the country had experienced significant growth, it had been only on the back of extractives.

He said there were a number of positives that he had noticed in the country, including a well-established peaceful democratic system, having personally witnessed a peaceful and smooth transition, which many African countries aspired to have.

He said the country had seen significant growth in the past two to three years, registering one of the highest growth rates among countries in the world, adding that there had also been a significant reduction in poverty levels by more than 50 per cent.

Mr Kerali said over the years, Ghana had been a shining light and positively positioned among the best prospects in the African region for future growth and for attracting inward investments to create jobs for the citizenry.

Touching on the challenges the country was faced with during his stay in the country since 2015, he said there had been increase in the country’s debt, which had hovered around 60 per cent and below, adding that there were also challenges in the energy sector as well.

There were also problems with the very narrow economic base, mostly led by the extractives and by cocoa, which really needed diversification.

Mr Kerali said over the past few years, there had been too much attention on oil and gas to the detriment of other sectors, which calls for a look at other prospective sectors such as directing investment towards agribusiness, information communication technology, among other viable sectors.

In order for the government to increase its revenue, the World Bank Country Director, said it was important that the government considered an efficient broadening of the tax base to capture the wider tax payers.

He said more should be done in the area of taking property taxes, which served as a major source of revenue for many economies across the world.

Mr Kerali said government ought to ensure that the informal sector was captured in the tax net by taxing the players at a very low rate a strategy he noted had been adopted by Brazil and was working effectively.

He urged the government to also improve the business environment towards assisting the growth of private sector, which had the potential to employ about 90 per cent of the workforce and thereby reduce unemployment significantly.

Mr Errol C. Graham, a Programme Leader at the World Bank, said the non-oil sector was a very critical component for the growth of the country’s economy.

He said the situation was not peculiar to Ghana as other countries had experienced similar growth structure, where there would be high economic growth but low levels of employment.

He said such type of economic growth started from 2011 but since 2018 the non-oil sector was picking up slowly, a trend the World Bank hoped would continue into the future.