Oil-fuelled GDP growth set to decelerate as other sectors take the lead

Nestled in the Gulf of Guinea on Africa’s Atlantic Coast, Ghana has developed a reputation as a robust and stable democracy, and with a storied legacy of pan-African initiatives it has long punched above its weight diplomatically. Due to its vast natural resources, Ghana has a strong export profile, although it is somewhat dependent on commodities. It is the world’s second-largest exporter of cocoa, behind Côte d’Ivoire, and one of the continent’s largest gold producers, while new reserves of oil and gas have helped further expand its resource wealth. The reliance on raw material exports has left it subject to exogenous pressures, but nonetheless has helped provide the country with crucial revenues in past booms (see Economy chapter).


Ghana was named after the medieval West African Empire of Ghana, which was situated approximately 800 km north and west of the modern state of Ghana. The empire controlled territory around the Senegal River and the Niger River, in what is today Senegal, Mali and Mauritania. Modern Ghanaian territory was once the locus of the Ashanti Empire, historically one of the most advanced states in sub-Saharan Africa in the 18th and 19th centuries, prior to the onset of colonial rule.

The Portuguese were the first European explorers to make contact with the Gold Coast in 1470 and built the Elmina Castle – one of Africa’s largest slave forts – in 1480. Soon after, a slave and mineral trade route to Europe was established, bringing in traders from England, Germany and Denmark. The British gradually took control of the trading forts and signed an agreement with the local chiefs eventually declaring the Gold Coast a colony in 1874.

By 1901 much of the territory in what became modern-day Ghana was conquered and brought under British rule. The economy grew significantly under colonial rule, particularly in terms of agricultural output. At the time, the country was responsible for up to half of the world’s cocoa production. The push for independence began in earnest following the establishment of the Convention People’s Party, led by Kwame Nkrumah. The party won the 1951 election by an overwhelming majority and Nkrumah took office as the prime minister of the Gold Coast in 1952. He then became prime minister of Ghana in 1957, when complete independence was gained from the UK. The Gold Coast and British Togoland were merged in 1957 to create what is today Ghana, the first independent former colonial nation in sub-Saharan Africa. A proponent of pan-Africanism and a hero with continent-wide popularity, Nkrumah aimed to rapidly industrialise the country but was later deposed by a military coup in 1966.

Several more coups occurred before 1981, when Flt. Lt. Jerry Rawlings took power and outlawed political parties, which were restored in 1992 under a new constitution. Heading the centre-left National Democratic Congress party, President Rawlings stepped down after serving two four-year terms, the most permitted by the Ghanaian constitution.

In 2000 Rawlings’ vice-president, John Atta Mills, was defeated in the presidential election by John Kufuor, the candidate from the opposing New Patriotic Party. Under his eight-year rule Ghana’s GDP quadrupled from $4bn to almost $16bn. After unsuccessfully contesting the 2004 election Mills recaptured the presidency in 2008.

Geography & Climate

With a total surface area of 239,460 sq km, Ghana is approximately the size of the UK. Located near the equator, it has a warm and tropical climate, with a relatively stable temperature throughout the year. Ghana’s geography is roughly divided into three distinct regions: coastal, forest and northern savannah.

The mainland of Ghana consists of lowland plains, rivers and low rivers, whereas the western areas include small mountain ranges. Occupying about one-third of the total area, the tropical terrain of the west contains much of the country’s natural resources such as gold, minerals, timber, and oil and gas reservoirs. It is usually hot and dry in the country’s north, hot and humid in the southwest and comparatively dry and warm in the eastern coastal region. February and March are generally considered the hottest months, while January and August are regarded as relatively cool.

Seasonal variation swings between the only two categories, wet and dry. In the north there is a dry season from November to March, and a wet season from August to September. On the other hand, the forest-dominated south has two rainy seasons – from April to July and again from September to November – and two dry seasons, from December to February and then again in August. The country has no shortage of water, with roughly 787 mm of rain per year and extensive inland waterways, including the sizable Lake Volta. One of the largest man-made lakes in the world, Lake Volta was the result of the construction of the Akosombo Dam, a 1000-MW hydroelectric facility built in 1965 to power what was once Africa’s largest aluminium smelter.


Ghana’s population is estimated at roughly 25m people, composed of various linguistic and ethnic groups. The country has over 100 indigenous languages, of which Asante, Ewe and Dangme are prominent, but Akan is the most widely spoken language. While there have been incidents of ethnic tension since independence, especially in the northern part of the country, Ghana has managed to avoid major ethnic conflicts.

Christians are the religious majority at 71.2%, with roughly 18% identifying as Muslims and about 5% composed of traditional indigenous religions. Geographically, the southern region is predominantly Christian, while the larger urban areas and northern regions have a strong Muslim population.

Due to rural migration and a growth in secondary and tertiary economic activity, the urban population of Ghana has increased dramatically from about one-third to half of the total population over the last three decades. Due to an above average annual growth rate, approximately 39% of the population was under the age of 15 in 2012. Life expectancy has increased from 49.3 in 1970 to 61 in 2012, which is by far the highest level in West Africa. The country also has a 71.5% literacy rate.

According to the UN Development Programme, in 2006 Ghana became the first country in the region to meet one of the Millennium Development Goals when the percentage of people living under the poverty line dropped to 30%. Moreover, in 2011 Ghana became the ninth African nation to achieve the status of a middle-income country.

Ghana also sees a certain level of regional disparities in terms of headline development indicators and economic activity. The northern, more rural areas of the country, which also tend to be more arid, have seen less of the capital spending than the southern, more urbanised regions. Efforts have been made, however, to create equal work opportunities, provide better education and improve output to help boost growth in a more equitable fashion.


Ghana is West Africa’s second-largest economy, after Nigeria, although its GDP is less than one-tenth the size. While the recent oil boom following the discovery of the offshore Jubilee field in 2007 has helped to fuel GDP growth as much as 14% over recent years, it is now projected to slow to a more modest 4.5% in 2014 (see Energy chapter). There was an expansion of 7.1% in the economy in 2013, while inflation reached 14.5% in March 2014. Although inflation and balance of payments remain the biggest economic challenges the country faces, measures have been taken to strengthen the national currency, the cedi, and curb inflation.

The country finalised a rebasing process for its GDP calculations in 2010, which led to estimates of the economy’s size that were nearly two-thirds larger than previously thought, and propelled the country into lower-middle-income status. According to revised GDP estimates for 2013, there was growth of 7.1% over the 8.8% final estimate of 2012. The services sector, the largest in the economy, contributed 49.5% to GDP in 2013 as compared to 48.4% in 2012, and saw the highest growth rate of 8.9%. On the other hand, the agricultural sector’s contribution to GDP dropped from 23% in 2012 to 22% in 2013. It recorded the lowest growth rate of 5.2%, but showed an improvement over the 2.3% growth rate in 2012.


Exposure to a slide in commodity prices – including a roughly $400 drop in the price of gold per oz – has constrained revenues for the country, which has led to fiscal challenges, including a new tranche of eurobonds worth $1.5bn and a potential IMF assistance package (see Economy chapter).

The economy has a history of strong government involvement, a legacy of socialist policies in the 1960s and 1970s, with statist companies involved in both energy and agriculture; yet, the country’s market is now among the more liberalised in the region.

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