Address youth unemployment in Ghana by supporting the agribusiness and tourism sectors

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As elsewhere in Africa, the issue of growing unemployment in Ghana has become a major concern, especially due to rising youth unemployment. Services have become the engine of growth in Ghana, unlike the experiences of East Asia and other newly industrialized countries where exports of manufactures have driven growth and increased the absorptive capacity of low-income workers. or moderately skilled. In fact, Ghana’s manufacturing sector has performed appallingly, with an average growth rate of 3.2% between 2008 and 2017.

Despite the generally strong performance of the Ghanaian economy over the past two decades (albeit with a slowdown in recent times), there is a lag between GDP growth and employment, a trend that has persisted for many years. , the country having an average employment-growth elasticity of 0.5 over the past two decades. However, recent evidence points to the role of emerging high productivity sectors, such as agribusiness, tourism and horticulture, among others, which share characteristics with manufacturing (particularly in employment of the low to medium skilled workforce), in solving the problem of youth unemployment by creating decent jobs in Ghana.

So, to examine how Ghana could make the most of recent growth trends for job creation, we recently published an article identifying which of these sectors could play this role in Ghana. This research is part of a larger multinational policy project to enable ‘Smoke-Free Industries’ (IWOSS) to grow and absorb low-skilled labor. (For more on this project, see “Exploring New Sources of Large-Scale Job Creation: The Potential Role of Chimney-less Industries.”)

The state of the Ghanaian economy

The strong performance of the Ghanaian economy over the past two decades has not translated into job creation or improved employment conditions, especially for the country’s growing youth population (Figure 1 ). In addition, the country’s traditional dependence on raw materials, including gold, cocoa and, more recently, oil, for exports has exposed it to international fluctuations in commodity prices, making the more urgent need for diversification and structural transformation.

Figure 1. GDP growth and employment in Ghana

Source: Authors’ illustration based on WDI data.

With a national average unemployment rate of around 6 percent, unemployment among young people (those aged 15-35) is much higher, at 12.1 percent, with an additional 28 percent of the labor force in as discouraged workers. With no unemployment benefits in the country, unemployment is simply not an option for most people, especially young people who often turn to the informal sector for income. In fact, 1 in 3 young people in Ghana are self-employed in the non-agricultural sector as self-employed in vulnerable jobs.

Employment projections show that IWOSS sectors will dominate employment in the future

In our article, we find that the IWOSS sectors, in particular agro-industry and horticulture, transport and storage, hotels and restaurants (tourism) and construction, will contribute just over 50 % of total employment by 2035 (see table 1).

Table 1. Employment in IWOSS and non-IWOSS (2017-2035)

Table 1. Employment in IWOSS and non-IWOSS (2017-2035)

Note: This table is a truncated version of Table 20 in the full article.
Source: Authors’ calculations based on National Income Accounts (published by the Ghana Statistical Service), GLSS V and GLSS VI, National Budget and Economic Policy Statements. See Annex C for the methodology used in the projections to 2035.

The job creation potential of agribusiness and tourism

In our research, we identify agribusiness and tourism as the IWOSS sectors best positioned to meet this challenge in Ghana due to their high potential for job creation and the demand for low to moderate skills – a characteristic which is consistent with the skill mix of the unemployment pool in the country. Indeed, the outlook for the agro-industry and tourism sectors in Ghana is high in terms of growth and other positive spillover effects with job creation opportunities. The agro-food industry is dominated by micro and small enterprises involved in adding value along the agricultural value chain in horticultural products, vegetables, roots and tubers and palm oil for national markets and foreigners. In the field of tourism, Ghana has several natural, cultural and heritage resources (for example, historic forts and castles), national parks, a beautiful coastline and unique artistic and cultural traditions which can be a source of great attraction. for the international community. .

1 in 3 young people in Ghana are self-employed in the non-agricultural sector as self-employed in vulnerable jobs.

In addition, these IWOSS sectors have been strategically targeted under the government’s flagship industrial transformation program to address the challenges of job creation, promote import substitution, increase export earnings and boost rural income generation. .

What skills are needed to develop the IWOSS sectors?

Despite this promise, a number of obstacles stand in the way of the growth of these sectors and their capacity to absorb jobs. Among these challenges, the persistent youth skills gap is prominent: our projections generally suggest that low-skilled jobs (i.e. those requiring less high school education) will continue to dominate and that their importance might only decrease slightly. Thus, we find that a deliberate public effort is needed to ensure that young people can be absorbed into IWOSS sectors, which requires skills upgrading.

To better understand the nuances of these gaps, we conducted a survey of a sample of agribusiness and tourism companies in which we inquired about the skills required for potential employees. The results of the survey show that most employees have basic and social skills, which meet the needs of employers. Conversely, systemic skills (developed skills used to understand, monitor and improve socio-technical systems and also essential for employers) have been shown to be insufficient among employees of tourism and agribusiness enterprises. Figure 2 reveals the differences between the current skill level of workers and the expectations of employers.

Figure 2. Skills gap in tourism and agribusiness companies

Figure 2. Skills gap in tourism and agribusiness companies

Source: Authors’ calculations based on survey data.

Importantly, given that the companies surveyed widely reported that digital skills such as data management and analytics, production management, mobile transactions and social selling (in agribusiness), as well as Online communication and mobile transactions (in tourism) will be vital for future employees, policymakers should strive to better integrate this capacity building into programs.

Unlock IWOSS Growth Potential and Close Skills Gaps

In order to uncover the job creation capacity of IWOSS sectors, the main constraints that hinder the growth of these sectors must be addressed. In the case of tourism businesses, these constraints include tax rates, policies and administration; access to credit; and the supply of electricity. For companies in the agribusiness sector, these constraints include electricity supply, access to credit, unfair practices of informal competitors, and customs and trade regulations.

First, we recommend an overhaul of the overall policy environment towards training young people in the skills required to be productive in all sectors of the economy. Specifically, the government should prioritize and increase the enrollment in Technical and Vocational Education and Training (TVET) for employable life skills in order to support growth and provide a sustainable employment path for young people. youth.

Second, the establishment of industrial parks, which relies on the positive spillover effects and backward and forward linkages associated with clustering and agglomeration, is often recognized as essential for industrial development. Support to the private sector by the Ghana Free Zones Authority and the Ghana Investment Promotion Center for the establishment of industrial park and special economic zone infrastructure is anchored on these potential benefits.

Third, we recommend the strategic development of infrastructure as an essential stimulus to the dynamic of diversification and industrialization of the country. Fourth, the government should intensify its efforts to provide long-term financing to support the value chains of these sectors and upgrade them to solve the problem of IWOSS companies that are not well advanced, with a relatively high degree of added value. low by all companies at different stages. .

Ultimately, we find that the agribusiness and tourism sectors can be critical in addressing the challenges of the country’s jobless growth, if interventions such as improved infrastructure, better access to long-term finance term and improved digitization, among others, can be implemented. These efforts need to be complemented by various incentives for local businesses as well as institutional arrangements to increase local demand. (See the document for a full list of policy recommendations.) Finally, given the growing importance of technologies in agribusiness and tourism, the country needs to invest in complementary digitization for actors to adapt and be competitive in the changing nature of work globally. .

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