Introduction
Ghana, like many developing nations, grapples with the delicate balance of controlling inflation while promoting sustainable economic growth. The drivers of inflation extend beyond mere monetary issues and are deeply rooted in structural inefficiencies, institutional weaknesses, and unproductive government spending. To address these challenges, the National Democratic Congress (NDC) proposes the 24-Hour Economy (24HE) and Agriculture for Economic Transformation Agenda (AETA). These policies are designed to not only mitigate inflation but also foster long-term economic growth and stability.
Inflation: Beyond Monetary Explanations
Inflation in Ghana is not solely a monetary phenomenon; it is often a consequence of inefficient public spending and structural weaknesses. A large portion of government expenditure is directed towards maintaining recurrent public sector spending that does trigger proportionate returns. This diversion of resources from sectors like infrastructure and industrialisation stalls long-term economic growth and resilience.
The NDC’s 24HE policy seeks to address this issue by modernising public services through technological enhancements and productivity reforms. By aligning public sector wages with actual output, the policy aims to reduce inefficiencies. These reforms, coupled with enhanced private-sector participation, are essential to restructuring Ghana’s economy toward more productive outcomes. Moreover, public sector reforms will minimise waste and increase productivity, enabling the government to invest in growth-oriented sectors like agriculture, manufacturing, and technology.
The Productive Capacity Gap and the 24-Hour Economy
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One of the major limitations to Ghana’s economic growth is its underutilised productive capacity. High unemployment and underused resources hinder the nation’s ability to meet demand efficiently. The NDC’s 24-Hour Economy policy aims to tackle this issue by encouraging businesses to operate round the clock, which increases productivity, generates employment, and enhances economic output. The sectors identified as central to this transformation include agriculture, manufacturing, and information and communications technology (ICT).
The 24HE policy ensures that infrastructure—particularly energy, transportation, and digital services—are upgraded to support continuous business operations. By improving these essential services, the economy can run efficiently, providing opportunities for businesses to expand while keeping inflationary pressures in check. However, these goals are contingent on consistent power supply and an improved logistical framework, both of which require significant investment.
Agriculture and Agribusiness: Catalysing Growth
Agriculture remains the backbone of Ghana’s economy, providing employment and supporting food security. However, the sector has been marred by low productivity, outdated practices, and inefficient supply chains. The NDC’s Agriculture for Economic Transformation Agenda (AETA) is designed to modernise the agricultural sector, increase productivity, and promote agribusiness. Initiatives under AETA include reintroducing fertiliser subsidies, establishing Farmer Service Centres, and improving access to financing through Farm Banks.
Key projects, such as promoting large-scale farming and boosting agro-processing capabilities, are integral to expanding the agricultural value chain. By adding value to raw agricultural products like cocoa, cotton, and cashew, Ghana can reduce its reliance on raw material exports and improve its foreign exchange earnings. This strategy also aligns with the broader 24-hour economy policy, as it will facilitate continuous agro-processing and distribution activities.
Revisiting Structural Adjustment Programmes (SAPs)
The history of Structural Adjustment Programmes (SAPs) in Ghana provides valuable lessons in economic management. In the 1980s, these programmes sought to reduce inflation through austerity measures, often at the cost of growth. By focusing narrowly on inflation control, they overlooked the importance of sustained investment in productive sectors like agriculture and manufacturing.
The NDC’s 24-Hour Economy policy presents a more balanced approach, recognising inflation as a structural issue. The policy promotes investment in critical sectors, such as agriculture and manufacturing, while addressing institutional inefficiencies. AETA complements this by introducing innovative financing models and formalising access to land and water resources, aiming to modernise Ghana’s agricultural economy. These investments will not only reduce food inflation but also provide a foundation for sustained economic growth.
Collaborative Monetary and Fiscal Policy
Inflation management in Ghana requires coordinated efforts between the government and the Bank of Ghana. While the central bank can stabilise prices in the short term through monetary tools such as interest rates, long-term inflation control must be driven by productivity gains. The 24HE policy encourages public-private partnerships (PPPs) to finance critical infrastructure, further enhancing productive capacity. This collaboration is essential to managing inflation, especially as Ghana seeks to expand its industrial and agricultural sectors.
For instance, AETA’s focus on agro-processing and crop development—specifically the establishment of sugar factories and rice mills—will reduce Ghana’s dependency on imports and mitigate inflation caused by exchange rate fluctuations. By stabilising the currency and reducing the need for costly imports, these initiatives can help control inflation while promoting growth.
Balancing Growth and Inflation
Economic growth often comes with inflationary pressures, particularly in sectors like agriculture and manufacturing, which experience increased demand during periods of expansion. Short-term inflation may be unavoidable as the economy grows, but prolonged inflation risks undermining wage growth and reducing purchasing power. The 24HE policy provides a roadmap for managing this balance by fostering sustained growth while keeping inflation under control.
The NDC’s agricultural initiatives, such as revamping the poultry and livestock industries, bolstering fisheries, and developing tree crops like shea and cashew, are designed to increase productivity and ensure stable food prices. These initiatives contribute to long-term growth without destabilising inflation, thus preserving the purchasing power of Ghanaians.
Trade Disparities and Global Integration
Ghana’s position in the global trading system presents another challenge in managing inflation. The country’s reliance on raw material exports exposes it to volatile international markets. Moreover, trade disparities—where countries in the Global South impose high tariffs on processed goods from Ghana—limit the nation’s ability to generate value from its exports.
The NDC’s 24HE policy addresses these disparities by promoting local value addition to raw materials. AETA’s Tree Crop Development Programme, which focuses on crops like oil palm, shea, and cashew, is designed to expand local agro-processing industries and reduce dependency on raw material exports. By improving Ghana’s trade balance, these measures can help stabilise the currency and reduce inflationary pressures caused by external shocks.
Conclusion
Ghana’s economic resilience depends on the strategic management of inflation and long-term growth. The NDC’s 24-Hour Economy and Agriculture for Economic Transformation Agenda provide a comprehensive framework for achieving these goals. By addressing structural inefficiencies, boosting productivity, and investing in key sectors, these policies offer a sustainable path to economic stability. With coordinated fiscal and monetary policies underpinning these efforts, Ghana has the potential to build a prosperous and inflation-resilient economy for future generations.
Source: Harry Ekow Yamson I Spokesperson, Agriculture & Agribusiness, NDC