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Monday, February 18, 2013

Africa's rising star

[caption id="attachment_289" align="alignright" width="290"]economist.com top GDP growth 2013 The world's 10 fastest growing economies in 2013. Source: economist.com[/caption]

by Ben

Take a quick glimpse at any list of the fastest growing economies in the world and you are sure to see Ghana mentioned. Its growth topped 14% in 2012 and is forecast to return to a modest 8% in 2013, the same level as 2011. Ghana is the model of stability in Africa; this has been the base for its economic growth.

Ghana's economy is powered by a service sector that accounts more than 50% of it's GDP. It also has strong exports in gold, cocoa and oil. Like so many other countries, it was the start of oil production in 2010 that transformed Ghana into one of Africa's fastest-growing-economies. The Jubilee field, which is 60km off the coast of Accra, has oil reserves of up to 600 million barrels and produces around 20,000 barrels a day. If targets are met (they haven't consistently been so far), then the Ghanaian government estimates that oil revenue of more than $650 million will be added to the treasury.

Ghana's continued growth and political stability have led to an increase in the number of expatriates who are returning home to capitalise on the opportunities now available. Ghana's economic growth will fuel the growth of its own middle class - young professionals with families and desires for the latest technology and mod-cons. This new class causes the creation of a whole range of businesses to provide the services and products needed to support it - and so the cycle continues. Ghana's position as the flag bearer for West African growth was seemingly cemented when in 2009 Barack Obama choose Ghana as the first country to visit on his first Presidential visit to Africa. The visit was acclaimed by the current President John Mahama as bringing worldwide attention to Ghana, if just for a moment.

The people we speak to Tamale attest to this change. An increase in the number of cars around the busy city centre, the opening of new bars and nightclubs, the rise of more and more telephone masts all seem to indicate it is happening. But outside of the city, in the rural communities we visit, we are presented with a very different scene. These are farming communities, reliant on a successful harvest, who are yet to reap the rewards of an 8% growth or the discovery of oil hundreds of kilometres away in the south. It is a stark reminder of the low baseline that even a stable like country like Ghana is coming from and the extent of the work still to be achieved.

It is worth noting though despite the scarcity of water, regular droughts in the Northern region and water shortages lasting days, water bills for Ghanaians are roughly £60 per year for access to the resource (15cd a month flat rate regardless of use). In the UK, where we face no such problems and our average rainfall far eclipses that of Ghana, it is expected that water bills will rise to nearly £400 per year for families. If the extra £340 is for knowledge that the water is drinkable (which it is here but it’s the pipes you can't trust) then I'd rather the Ghanaian system where you can purchase 14litres of drinking water for about 50p, or the cost of one bottle of Volvic. That's 11900 litres of exclusive drinking water (32 every day for a year) that you can afford on top of all other water costs i.e. baths, showers, toilet etc. Lets be honest I'm probably not going to drink as much as 32 litres every day, so could probably save myself some money. Guess we don't have it all our own way.