ACET: Ghana's Manufacturing Technology Lags Behind Other African Peers

ACET Highlights Ghana’s Struggles in Adopting Advanced Manufacturing Technologies Compared to African Peers

Ghana’s manufacturing sector faces significant challenges in utilizing advanced technology for production and exports, with a noticeable gap when compared to other African nations such as Senegal and Tunisia. According to the Africa Center for Economic Transformation (ACET), the country’s industrial sector continues to lag in the application of high-intensity technology, which is crucial for increasing efficiency, productivity, and competitiveness on the global market. The report argues that Ghana’s underperformance in this area is a reflection of broader limitations in the country’s industrial policies and the difficulties faced by the manufacturing sector, which is small and experiencing decline. One of the major hurdles is the inability to attract and retain skilled workers who are capable of implementing cutting-edge production technologies.

The ACET report indicates that the relatively low technology content in Ghana’s manufactured goods and mechanized exports is a key factor limiting the sector’s ability to compete with more advanced manufacturing economies on the continent. As a result, Ghana’s growth in the industrial sector remains constrained by insufficient technological upgrading. A closer examination of the technological intensity in Ghana’s manufactured exports reveals a significant disparity when compared to top-performing countries in Africa. This gap highlights the need for urgent action to enhance the country’s technological infrastructure and workforce capacity to increase the technological competitiveness of its manufacturing sector.

In the report, ACET underscores the growing concerns about the industrial sector’s limited use of technology, which is hindering growth and productivity. Ghana, the report notes, has made some progress over the years, but it still lags significantly behind other African nations that have managed to better incorporate technology into their production and export processes. This is particularly evident when comparing Ghana’s technology upgrading scores to those of other African countries. For instance, Ghana’s score, which measures the intensity of technology use in production and exports, increased from a low of 4 in 2002 to 18.6 in 2020, though it peaked at 28.7 in 2014. Despite this improvement, Ghana continues to score far below the African average, reflecting the ongoing challenges the country faces in this area.

Improvements in Human Wellbeing Despite Economic Inequality

While Ghana’s technological advancements in manufacturing remain limited, the ACET report highlights a positive trend in human wellbeing, which has shown significant and consistent improvement over time. This aspect of transformation is largely attributed to favorable market outcomes and the country’s overall economic growth.

The report notes that Ghana’s GDP per capita nearly doubled by 2014, and real incomes increased substantially from $852.4 in 1990 to $2,040 in 2022. This growth has contributed to a marked reduction in poverty levels, which fell from 64.2% in 1991 to 25.2% in 2016. Such improvements are significant, as they reflect the positive impact of economic growth on the standard of living for many Ghanaians. However, the report also emphasizes that income inequality in Ghana remains a persistent issue. Despite the progress made in reducing poverty, income disparity has continued to rise, with the country’s Gini coefficient (a measure of income inequality) increasing from 38.4 in 1991 to 43.5 in 2016.

While the wealth of the country has increased, the benefits have not been evenly distributed across society. The income share held by the top 10% of the population saw a slight decrease, from 32.7% in 2005 to 32.2% in 2016, but this marginal decline is insufficient to significantly address the broader issue of income inequality. ACET’s report suggests that, while economic growth has helped to improve the overall quality of life for many Ghanaians, addressing the challenges of inequality and ensuring that the benefits of growth reach all segments of society remains a key challenge for the country.

In conclusion, the ACET report highlights both the successes and challenges that Ghana faces in its economic transformation. While there have been notable improvements in human wellbeing and poverty reduction, the country must overcome significant barriers in adopting advanced manufacturing technologies to fully capitalize on its growth potential and enhance its competitiveness within Africa. The report calls for greater focus on technological innovation and skill development in the manufacturing sector, as well as more inclusive economic policies that address the ongoing issue of income inequality.