Mid‑Year Budget: Stability Won’t Create Jobs — Strategy Will

The noises surrounding the mid‑year budget are understandable. Primarily, no additional budget has been presented for approval, so I assume it remains unchanged, with negligible effects on households.

Cheaper credit clears a blockage. It does not, on its own, build a factory or fill it with workers. Any Ghanaian who lived through the last three years knows the cost of money was never the whole reason firms weren’t hiring — and treating a rate cut as a jobs policy will disappoint us.

Start with the constraint sitting closest to home: power. A tailor in Kumasi or a food processor in Tema does not add a second shift because average commercial lending rates dropped from 30.2% to 15.6%. She adds it if the lights stay on and a kilowatt is affordable. Reliable, cheap electricity moves the hiring needle far more than the policy rate ever will, which is why the gas‑to‑power investments in this budget matter more for employment than the rate cuts everyone is celebrating.

Then there is access, not price. Our banks have spent a decade lending to government rather than to business, because a risk‑free treasury bill beat the trouble of underwriting a small firm. A lower headline rate means little if the credit still never reaches the workshop. And with roughly four in five Ghanaian workers in the informal economy — largely outside the formal banking channel — interest‑rate transmission barely touches the majority of the labour force to begin with.

The composition of growth matters too. Six per cent growth led by gold and oil is capital‑intensive by nature. It fills the reserves handsomely and creates very few jobs. This is the trap Nigeria and Kenya know well: respectable headline growth sitting on top of stubborn unemployment, because the growth lives in enclaves that don’t hire at scale. Jobs come from agro‑processing, light manufacturing, construction and tourism — and those must be deliberately cultivated, not conjured by a stable macro backdrop.

The uncomfortable part is that the same discipline that produced these lovely numbers is, in the near term, part of the problem. Capital expenditure execution contracted by close to 42 per cent. Firms hire when they see orders coming, and austerity quietly thins the order book.

Look at who actually got this right. Vietnam did not create millions of factory jobs by cutting rates; it paired macro stability with export zones, trade agreements and a relentless focus on plugging into global value chains. Rwanda did it with stability plus an unapologetic industrial strategy. In both cases, stability was the floor — not the building.

So the real test of this budget is not the rate cut. It is whether the 24‑Hour Economy and the energy push convert hard‑won stability into productive, labour‑absorbing capacity. Get that right and the discipline finally pays out in jobs. Get it wrong and we will have the finest macro dashboard on the continent — and the same young people standing at the same junctions, still waiting for work.

Dr Sam Ankrah

   Comments0