2021 Index of Economic Freedom

Ghana

OVERALL SCORE59.2
WORLD RANK101
Rule of Law

Property Rights49.3

Judicial Effectiveness38.2

Government Integrity32.3

Government Size

Tax Burden82.8

Government Spending87.8

Fiscal Health31.7

Regulatory Efficiency

Business Freedom62.9

Labor Freedom60.9

Monetary Freedom71.7

Open Markets

Trade Freedom62.4

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 30.4 million
  • GDP (PPP):
    • $204.8 billion
    • 6.1% growth
    • 5.2% 5-year compound annual growth
    • $5,637 per capita
  • Unemployment:
    • 4.3%
  • Inflation (CPI):
    • 7.2%
  • FDI Inflow:
    • $2.3 billion

Ghana’s economic freedom score is 59.2, making its economy the 101st freest in the 2021 Index. Its overall score has decreased by 0.2 point, primarily because of a decline in judicial effectiveness. Ghana is ranked 11th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.

The Ghanaian economy remains in the mostly unfree category for the fifth year in a row. For Ghana to return to an upward trajectory toward greater economic freedom, the government would have to strengthen fiscal health and prioritize further improvements in the three rule-of-law indicators: property rights, judicial effectiveness, and government integrity.

IMPACT OF COVID-19: As of December 1, 2020, 323 deaths had been attributed to the pandemic in Ghana, and economic growth was forecast to decline to 0.9 percent for the year.

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Background

Formed from the British colony of Gold Coast and the Togoland trust territory in 1957, Ghana became the first sub-Saharan country to gain its independence. It has been a stable democracy since 1992. In 2016, President John Dramani Mahama of the National Democratic Congress lost his bid for reelection to Nana Akufo-Addo of the New Patriotic Party. The two were scheduled to face each other again in December 2020 elections. The long-running and escalating conflict between farmers and herders in Ghana’s North mirrors a trend in other parts of West Africa. Ghana is Africa’s second-biggest producer of gold and second-largest producer of cocoa in addition to being rich in diamonds and oil.

Rule of LawView Methodology

Property Rights 49.3 Create a Graph using this measurement

Judicial Effectiveness 38.2 Create a Graph using this measurement

Government Integrity 32.3 Create a Graph using this measurement

Property rights are recognized and enforced, but the process for getting clear title to land is often difficult, complicated, and lengthy. Scarce resources compromise and delay the judicial process, and poorly paid judges can be tempted by bribes and are vulnerable to political pressure. Notwithstanding a robust anticorruption legal framework, enforcement remains a major challenge. Corruption is pervasive in government institutions.

Government SizeView Methodology

The top individual income tax rate has been cut to 30 percent, and the top corporate tax rate is 25 percent. Other taxes include value-added and capital gains taxes. The overall tax burden equals 14.1 percent of total domestic income. Government spending has amounted to 20.2 percent of total output (GDP) over the past three years, and budget deficits have averaged 6.1 percent of GDP. Public debt is equivalent to 63.2 percent of GDP.

Regulatory EfficiencyView Methodology

The review process for getting electricity has been streamlined, and equipment needed for new electricity connections is now more readily available. Labor force participation and value added per worker have increased. The state-owned Electricity Company of Ghana (ECG) provides subsidies. The partial privatization of ECG was reversed by the government in late 2019.

Open MarketsView Methodology

Ghana has three preferential trade agreements in force. The trade-weighted average tariff rate is 11.3 percent, and five nontariff measures are in effect. Ghana is more open to foreign investment and ownership than some other sub-Saharan African countries are, but investment in some sectors is restricted. The financial system has undergone restructuring, and the supervisory framework is relatively strong. Bank credit to the private sector has increased.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Mauritius772.1
2Rwanda68.3-2.6
3Botswana67.6-2.0
4Seychelles66.32.0
5Cabo Verde63.80.2
6Namibia62.61.7
7Côte d'Ivoire61.72.0
8Tanzania61.3-0.4
9South Africa59.70.9
10Benin59.64.4
11Ghana59.2-0.2
12The Gambia58.82.5
13Nigeria58.71.5
14Uganda58.6-0.9
15Gabon58.11.4
16Senegal580.0
17Madagascar57.7-2.8
18Togo57.53.4
19Niger57.32.6
20Guinea56.50.0
21Burkina Faso56.5-0.2
22Djibouti56.23.3
23Mauritania56.10.8
24São Tomé and Príncipe55.9-0.3
25Comoros55.72.0
26Mali55.6-0.3
27Eswatini55.1-0.2
28Kenya54.9-0.4
29Guinea-Bissau54.91.6
30Angola54.22.0
31Lesotho53.5-1.0
32Cameroon53.4-0.2
33Malawi530.2
34Sierra Leone51.73.7
35Ethiopia51.7-1.9
36Mozambique51.61.1
37Republic of Congo50.78.9
38Chad50.40.2
39Zambia50.4-3.1
40Burundi49.90.9
41Equatorial Guinea49.20.9
42Liberia49.20.2
43Democratic Republic of Congo49-0.5
44Central African Republic48.8-1.9
45Eritrea42.33.8
46Zimbabwe39.5-3.6
47Sudan39.1-5.9
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