Bridging the north south divide. Getting economic growth moving in northern Ghana ODI/CEPA Workshop, Accra, 20 July 2005

Transcription

1 Bridging the north south divide Getting economic growth moving in northern Ghana ODI/CEPA Workshop, Accra, 20 July 2005

2 Objectives In view of the continued high levels of poverty in the north: To analyse the challenges and potential sources of economic growth in the 3 northern regions To provide the results to relevant policy makers To contribute to moving the development discourse about regional underdevelopment from distribution and redistribution to growth

3 Figure 2: Average consumption per adult by location, Ghana, 1991/92 and 1998/99 (thousands of cedis per year) Accra Urban Coastal Urban Forest Urban Savannah Rural Coastal Rural Forest Rural Savannah GHANA 91/92 98/99

4 Why is this important? In the 1990s northern Ghana grew at a low rate If income had grown at the average rate for Ghana (around 5%) this would have added 0.7% annually to Ghana s per capita economic growth rate. Over the 7 years between household surveys this would have added 5% to national average per capita income.

5 Northern Ghana will increasingly contribute to exports/forex Sheanuts increasingly replaced by higher value shea butter Mangoes will come on stream from next year Other horticultural produce will take longer Cotton if the industry gets back on its feet Food crops into the sub-region Tourism

6 The link between regional underdevelopment and national stability stability Civil conflict frequently maps on to poor/remote regions Under-development provides time and motivations for civil conflict There is the example of neighbouring Cote d Ivoire Conflict is importable, if there is already localised conflict

7 Reversing the outflow of capital This is a major symptom of regional underdevelopment The difficulty of retaining capital within the region This applies to human capital, both high and low skill Leaving behind under-capitalised farms, firms, and households

8 The key: becoming a centre (1) Remoteness is a key determinant of the extent to which households benefit from liberalisation and reform. Transmission of benefits of reform to non-export producers much harder than for export producers. In addition, locality affects welfare over and above household level attributes. In the savannah it is the remote areas where there has been low or negative economic growth in the 1990s

9 Figure 15: Growth incidence curves for rural savannah zone, Ghana, Annual growth rate 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% Percentile more remote less remote

10 Becoming a centre (2) New centres of economic activity are the result of a process of cumulative causation. Successive firms entering a location make it more attractive to subsequent ones.

11 Development focus But the focus has been on projects, not firms Some have helped to lay an infrastructure foundations But large sums of money have also been spent sometimes with little effect Perhaps it is time for a change of focus

12 4 Key questions A There is growth potential in northern Ghana. A1 Geographic capital of the north: financial, physical (including infrastructure, natural endowments), human (including labour). A2 Perceptions of the north as a place to invest: investors, traders, migrants, FDI. The underlying idea here is that growth would require a considerable step up in investment.

13 4 Key questions A There is growth potential in northern Ghana. A3 The agricultural story : agriculture is the leading sector capable of generating growth, but what is the evidence? Constraints and barriers to agricultural trade. Functioning of markets. Institutional development: the role of the state and other actors in economic co-ordination and redistribution, especially in agri-business.

14 4 Key questions A There is growth potential in northern Ghana. A5 The Non-farm economy: is diversification the route out of poverty? A6 The trade story: where do (could) northern Ghana s products go? Constraints, barriers; can value be added? A7 Risks and risk management. Major risks: political (conflict); climate (drought, in the absence of irrigation)

15 B. The best hope for northern Ghana is better out-migration, and growth through remittances B1 Invest in human capital: are current investments enough to permit migrants enhanced life chances? B2 What can be done to reduce stigmatisation of migrants, which may be growing? B3 Practical measures to increase the returns and reduce the costs of migration. B4 Social protection policies for those staying put.

16 Givens/assumptions Widespread subsidies will not be available (eg on fertiliser). Banking system will remain unable to support medium term or more risky investment. Political and governance framework remains as it is. Any strategy will be largely private sector led. Government s role?

17 Key informants Financial institutions (banks and NBFI) National firms Northern diaspora Regional firms FDI Peasant households Regional traders International traders State agencies Researchers and NGOs