Ghana is an African nation located on the continent's western edge, and it spans an area of roughly 92,497 square miles. Currently, the Ghanaian economy is among the top 100 globally, and in 2017 its gross domestic product was the 84th highest in the world standing at $47.33 billion. The success of the Ghanaian economy can be attributed to various factors with the major one being the country's proper utilization of its natural resources such as arable land and minerals.
One of Ghana's most vital natural resources is arable land which covered approximately 20.66% of the country's total land area as of 2014. Since 2004, according to data from the World Bank, the size of arable land in Ghana has fluctuated significantly which is mainly attributed to the fluctuating weather patterns around the globe. However, agriculture is still one of the country's most important economic activities. The Ghanaian labor department estimated that in 2013, more than 53% of the nation's labor force was employed in the agriculture sector. Ghanaian farmers grow a wide variety of crops such as yams and sweet potatoes that are mainly grown for subsistence while cocoa, rubber, and sugarcane are primarily grown for the export market. Due to the importance of agriculture to the Ghanaian economy, the government has invested heavily in improving the sector mainly through providing training to farmers on modern agricultural techniques. Despite the efforts of the Ghanaian government, the country's agricultural sector faces numerous challenges such as the fluctuating prices of farm products in the global market and the country's poorly developed transport infrastructure.
Ghana is well-known for the production of cocoa as the country is often considered one of the top cocoa producers globally. Most of the Ghanaian cocoa farmers grow the crop in forested regions such as the Volta and Eastern regions due to the high rainfall received in those areas. The Ghanaian cocoa industry has been growing at a fast rate with the government estimating that from 2000 to 2003 the sector grew by 16% on average. In spite of the cocoa sector's rapid growth, it faces several significant challenges such as smuggling and the long period that cocoa takes to mature.
In 2015, approximately 41% of Ghana's territory was covered with forests according to estimates compiled by the World Bank. As of 2004, Ghana's forest cover was roughly 39.6%, the area under forests had increased dramatically which is partially due to the Ghanaian government emphasizing the importance of forest conservation. Forests in the southern part of Ghana are considered more economically viable than forests in the rest of the country. The forestry sector is vital to the Ghanaian economy, and in 1990 it contributed 4.22% of the country's GDP. The Ghanaian government invested more than $100 million in the forestry sector to modernize it and make it more productive.
Ghana has vast fish resources made up of both marine fish and freshwater fish. Ghanaian fishers mainly get their freshwater fish from lakes such as the Volta and the Bosumtwi. In Ghana, marine fishing is limited to the Atlantic Ocean that is located on the country's southern edge. Apart from natural fishing grounds, Ghanaian fishers also obtain fish from fish farms. Fishing is vital to the Ghanaian economy, and the government estimated that on average the fishing industry contributed 3% of the country's total gross domestic product. The Ghanaian labor department estimated that roughly 10% of the country's population was reliant on the fishing sector. The government of Ghana has invested huge sums of money in trying to solve the challenges facing the country's fishing sector.
Ghana has a vast quantity of minerals within its borders ranging from gold to diamonds which are essential natural resources. The Ghanaian government estimated that on average, the mining industry contributed 5% of the nation's GDP. Minerals in Ghana are mainly extracted for the export market with the government estimating that minerals made up roughly 40% of the country's total exports. The Ghanaian government has encouraged investors from other nations such as South Africa and Canada to invest in the country's mining industry. Despite the numerous benefits the mining sector brings to the Ghanaian economy, it has a significant impact on the country's environment as it reduces the country's natural beauty. The government has embarked on land reclamation projects to reduce the environmental impact of mining.
An essential mineral in Ghana is gold which is primarily obtained through underground and alluvial mining. According to the Ghanaian government, gold made up close to 90% of the minerals exported from the country every year. Ghana's gold deposits have attracted companies from Canada such as the Red Back Mining Company, and companies from South Africa such as the Anglo Gold Ashanti Company. For most of the early 1990s, approximately 20% of the gold mined in Ghana was extracted from underground mines particularly in the Ashanti region.
Ghana also has significant deposits of diamonds which plays a significant role in the country’s economy. Alluvial mining is the primary method through which diamonds are extracted in Ghana. In 2009, Ghana produced 370,000 carats of rough diamonds, and although these are minimal compared to the world top producers, it plays a significant role in the country’s economy.In 2014, the country was ranked among the top rough diamond producers. A 2014 report indicated that the most significant challenge facing the Ghanaian diamond sector was the smuggling of the precious stones into neighboring nations such as the Ivory Coast.
Historical evidence suggests that several organizations were searching for oil in Ghana during the 19th century. Despite the long history of oil exploration in the country, the first commercially viable field was discovered in 2008. Ghana is believed to have between 5 billion and 7 billion barrels of oil reserves, which makes the country as Africa’s 6th largest and the world’s 25th largest with proven oil reserves.
Challenges Facing The Ghanaian Economy
The Ghanaian economy faces numerous challenges such as the poorly developed infrastructure as well as the high poverty rates in most of the country. The government of Ghana has partnered with international financial institutions to tackle the challenges affecting its economy. According to the World Bank report, Ghanaian agriculture has a huge potential to be one of the leading sectors in the economy and could easily be transformed into an engine of job creation and economic growth. According to the report, agriculture has a significantly larger multiplier effect particularly on employment, with the possibility of creating more than 750 jobs for every additional $1 million of output.