Poverty Profile The poverty profile in the poverty assessment is drawn from the 1987/88 Ghana Living Standards Survey (GLSS1). If defines two poverty lines; households are considered to be poor if their expenditures fall below two thirds of mean per capita expenditures and extremely poor if their expenditures fall below one third of mean per capita expenditures. According to this approach, 35.9 percent of the Ghanaian population fell below the first poverty line and 7.4 percent of the population was in extreme poverty. When disaggregated between urban and rural, however, poverty was overwhelming a rural phenomenon; over 43 percent of rural inhabitants were poor, and the incidence of poverty in rural areas was more than 13 times the incidence in Accra. In addition, poverty incidence varied considerably by region with most of the poor concentrated in the savannah, Volta, and mid-coast regions. Poverty is primarily a problem of low productivity among the self-employed (mostly smallholder families) rather than one of open unemployment.
Incentives and Regulatory Framework The report pinpoints several issues that need to be addressed to accelerate growth and reduce poverty. These include: (i) the need to deregulate financial markets further; (ii) the need to correct distorting taxation policies; (iii) the importance of reducing the high transaction costs -- such as indiscriminate application of laws and regulations and delays in processing applications, -- associated with doing business, whether in the formal or informal sector; and (iv) the vital importance of disseminating much more information so that entrepreneurs, lenders, and investors at all levels can make more accurate judgements about the viability of investments and business opportunities.
Public Expenditures The assessment notes that existing public expenditure data make it difficult to ascertain how pro-poor public spending actually is. What little is known -- derived from budgeted expenditures and some meager figures on actual spending -- suggests that there is a strong urban bias and that, in the social sectors, there is an additional bias towards university education and tertiary health care. In health, for example, only 25 percent of the budget is earmarked for primary health and preventive care. Despite this, Ghana has significantly increased the total share of public expenditures for health and education to a level that surpasses that of many neighboring countries. For example, the government has increased its budgetary allocation for education from 1.4 percent GDP in 1983 to 3.8 percent in 1993. This means that the share of the national recurrent budget being spent on education grew from 27 percent in 1984 to 40 percent in 1993. By the same token, the share of total education spending that was spent on basic education went up from 44 percent in 1984 to 62 percent by 1989.
Safety Nets The poverty assessment indicates that traditional community- and household-based mechanisms continue to represent the principal safety net for the majority of Ghanaians, especially the rural poor. Such assistance usually takes the form of transfers of labor or, very often, food. For example, assistance in the form of labor is commonly sought by farming households suffering temporary crises at key points in the agricultural cycle, due to the sickness of family members. The report also notes that Ghana established the first social action program in Sub-Saharan Africa in 1988, the Programme of Actions to Mitigate the Social Costs of Adjustment (PAMSCAD). This $84 million program emphasized community initiatives, employment generation through public works and food-for work projects, training and placement services for public sector redeployees, and basic-needs provision such as wells, low-cost sanitation, essential drugs, and supplemental feeding. Various reviews of PAMSCAD revealed that it suffered from too wide a spectrum of program activities and from time-consuming and multiple reporting requirements stipulated by the various participating donor agencies, and thus the program proved to be much slower to implement than originally expected.
Poverty Strategy The overall objective of the assessment was to contribute to the ongoing national debate about how Ghana can become a middle-income country by the year 2007, the 50th anniversary of Ghanaian independence, and about what will be needed to ensure that the average poor Ghanaian can move above the poverty line by that time. It is estimated that, at the present rate of growth, extreme poverty will not be alleviated for more than half a century, although an accelerated growth of 7 percent per annum would reduce this to 25 years. There is clearly a need to ensure that the pattern of growth is such that the poor benefit disproportionately. As part of an outward-oriented, labor-intensive growth strategy, the report highlights the importance of well- functioning factor markets, especially labor markets, as crucial in allowing incomes to rise throughout the economy and especially among the poor. Diminishing the distortions and rigidities in factor and product markets is the most efficient means for increasing the poor's productive assets and for raising the returns on these assets through changes in relative prices. The report also calls for the government to make more equitable public expenditures on basic health and education and other social and economic infrastructure that directly benefits the poor.
Statistical System The report does not provide any assessment of Ghana's statistical system. Nevertheless, Ghana potentially has one of the best statistical systems in Sub-Saharan Africa, based on a combination of survey and data sources provided by the Ghana Statistical Service and various line ministries. Once data are available from all three rounds of the Ghana Living Standards Survey (expected in the first quarter of 1994), then it will be possible to analyze changes in poverty over time and in access to and utilization of social services between 1987/88 and 1991/92. In addition, work is currently underway to improve the accuracy of the national accounts estimates by analyzing in detail the role played by the informal sector in the overall economy.
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