Ghana’s economy shows growth, as its Gross Domestic Product (GDP) expands by 6.9% in the second quarter of 2024, the fastest pace the country has seen in five years.
This strong performance is a surprise to many, considering the global economic challenges, including inflation, fluctuating commodity prices, etc.
The agriculture, industry, and services sectors, key pillars of Ghana’s economy, contributed to this growth.
The industrial sector, in particular, is recovering thanks to higher output in the manufacturing, construction, and mining industries.
Financial services and information and communication technology (ICT) are two examples of the services sector that also contributed.
The government’s emphasis on boosting trade, rehabilitating infrastructure, and helping small and medium-sized businesses (SMEs) has all contributed significantly to the acceleration of growth.
Nigeria: Lagging with 3.19% Growth Rate
Nigeria, the biggest economy in West Africa, is lagging while Ghana keeps producing impressive economic statistics.
Nigeria’s GDP increased by just 3.19% in the second quarter of 2024, according to the most recent figures provided by Trading Economics. This is a slight improvement over the 2.98% growth rate recorded in the previous quarter. Even with its abundant natural resources, especially oil, Nigeria’s economic performance is still quite poor, compared to its neighbours.
Due to its excessive reliance on crude oil, which supplies a large amount of its government revenue and foreign exchange earnings, Nigeria’s economy is exposed to changes in the price of oil globally.
Nigeria found it difficult to sufficiently diversify its economy while oil prices remained unstable. The non-oil industries, which include manufacturing, services, and agriculture, have not expanded quickly enough to counterbalance the oil sector’s slowdown.
However, the nation still faces many difficulties that hinder economic stability and agricultural productivity, such as high inflation and mounting debt.
Though not enough to significantly raise growth rates, the government’s initiatives to increase domestic production and decrease reliance on imports through various policies, such as the Central Bank’s interventions, have had some positive effects.
Other West African Nations Outpacing Nigeria
Nigeria’s slow growth becomes even more apparent compared to other West African countries. Togo and Benin Republic, though smaller economies, are experiencing higher growth rates, driven by more diversified economies and effective fiscal policies.
According to data from Trading Economics, Togo’s GDP grew by 6.0% in the second quarter of 2024, just shy of Ghana’s impressive growth. Togo has made significant strides in enhancing its business environment, attracting foreign direct investments (FDI), and modernizing its port and logistics infrastructure, which has boosted its trade volumes.
Benin Republic, with a GDP growth rate of 5.5% is in the same course.
Benin’s economy is growing through its agriculture sector, especially cotton production, and its strategic location as a trade hub for goods moving to and from neighbouring Nigeria and other landlocked countries like Niger and Burkina Faso.
Nigeria’s Need for Economic Reforms
Complete economic reforms are desperately needed, as shown in Nigeria’s inability to keep up with its smaller neighbours in West Africa. Diversification remains a key priority, but actual progress has been slow. Even though the government has started several programs to assist non-oil sectors like manufacturing and agriculture, inefficient administration, corruption, and inadequate infrastructure have hindered potential growth.
To defy the trend, Nigeria must intensify its efforts to diversify its economy. The main areas of focus should be on boosting digital transformation, supporting the manufacturing sector, improving infrastructure, and increasing agricultural productivity. Investing in human capital—especially in health and education—is also essential for boosting output and promoting long-term, sustainable growth.
Furthermore, as demonstrated in Ghana and Togo, the government must give top priority to improving the ease of doing business to draw in more Foreign direct investment (FDI).
