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10.01.2006 General News

Urban unemployment threatens Ghana’s progress

By Statesman

- warns WB Country Director

Lack of jobs is the biggest problem Ghana faces today, the Country Director of World Bank has warned: with pockets of poverty in peri-urban areas posing a serious risk to the stability of the country.

Speaking to The Statesman in an exclusive interview before Christmas, Mats Karlsson, the WB country boss in Ghana, described urban poverty and unemployment as, “the biggest risk picture for the country as a whole.”

The last five years has seen nine percent of Ghana's population uproot from their rural homes to live in cities – with the sprawling Greater Accra recently cited as the fastest growing urban area in the whole of Sub-Saharan Africa.

This is “an enormous shift, an historic shift,” Mr Karlsson pointed out – but one which has not been adequately recognised as such by town planners and service providers, as vital infrastructure has failed to keep pace with the rapid rate of urbanisation in our country.

Lack of jobs is a particular cause for concern, he said. “A large part of the urban population is dissatisfied,” Mr Karlsson believes. He pointed to earlier examples in Nigeria, Nairobi and Latin America where rapid and unplanned urbanisation led to severe social upheaval and unrest, something he fears could be repeated in Ghana.

The population shift in Ghana is one which runs parallel to a general reduction in poverty levels. However, this does not negate the fact there are still pockets of extreme poverty in many peri-urban areas, dominated by recent rural migrants. The areas are not properly serviced – there is often no safe water provision, no healthcare, no schools and education, Mr Karlsson said.

“People are uprooted – they don't have the same social network and ties as they did. Strong traditional communities had kept Ghana stable,” he said – but with large numbers of displaced youths living in communities to which they feel no particular belonging or loyalty, and where they struggle to find work, the precarious nature of this stability could all too easily be revealed.

“This is really important for the country to deal with,” Mr Karlsson urged, “but you will not have jobs just by looking at the formal sector. The informal sector really needs to have space to grow too.”

Mr Karlsson said impediments need to be removed to allow businesses to expand. Urban water should be a top priority, according to the Country Director, as should electricity supplies – both need to be extended into the rapidly developing peripheries of our cities, but in such a way as to allow small and informal enterprises to take advantage of the new infrastructure. For example, pre-paid metres are the most practical and accessible means of energy supply, he said.

Financial sector reforms are also vital to widen the access of small and medium sized enterprises to credit facilities. Banks need to be persuaded to offer loans not simply to big, known companies, but also to smaller and newer ventures. Low-interest long-term loans need to be developed as an alternative to high-interest, short-term borrowings.

Despite Karlsson's concerns about urban poverty and unemployment, however, he remains upbeat about Ghana's progress towards poverty reduction.

“I think that Ghana is still very well placed to meet the [Millennium Development Goal] poverty targets. We will have to wait until the next household survey to find out, but indications are that poverty levels have decreased from over 50 percent in 1990 to less than 40 percent in 2000. By now, we may even have crossed the 35 percent mark.”

The “poverty line” is defined as earning less than US$1 a day.

Asked about Ghana's progress towards the other MDGs, Mr Karlsson said Ghana is one of the best placed countries to meet the targets – praising its progress in education in particular, with the Capitation Grant playing an important role in this.

He also praised the atmosphere of open and constructive dialogue in Ghana, which he thinks is contributing towards its successful progress, and the strong and cooperative relationships the country has built with its development partners. In 2005, $300 million was received in budget support from these partners.

Karlsson was unconvinced, however, about progress towards combating HIV/AIDS in Ghana. Despite the official drop in prevalence rate this year from 3.6 to 3.1 percent, “when you have such small, marginal moves, you should not be making too much of it or drawing too strong conclusions,” he cautioned.

“Because prevalence rates are relatively low in Ghana and HIV/AIDS does not yet have a real grip on the population, I think in Ghana the strategy needs to be very forceful in areas where there is a high prevalence – which means amongst sex workers, in vulnerable urban areas or along transport routes – so that we can get to the core notes of transmitting the disease.”

Zimbabwe, Botswana, Swaziland and eastern South Africa all have infection rates above 30 percent, and Mr Karlsson strongly believes such a situation can be avoided in Ghana if effective and targeted action is taken now.

He emphasised that this action, and Ghana's development, is now more than ever in the hands if its own government and own decision makers. With the freeing up of development funds from both the completion of HIPC in 2004 and the multilateral debt initiative agreed last year, he said: “It makes the budget even more important. If we're going to achieve these goals, Government needs to put effective budgetary provisions in place to enable this to happen.”

Government needs to prioritise if it is to achieve its aims, he said – and its first priority needs to be jobs for the urban unemployed.