Ghana’s diversification score declines to 26.8, lags behind African average of 38.6

The African Transformation Index (ATI) 2023 report, released by the African Center for Economic Transformation (ACET), reveals a notable decline in Ghana’s diversification score for the year 2020.

The diversification score, a pivotal metric, stood at 26.8, reflecting a substantial reduction of 17.2 points from its 2000 score of 44.

This decline places Ghana’s diversification score below the continental average, which stands at 38.3 for African economies.

Diversification, as gauged by the ATI, gauges an economy’s capacity to produce and export a broad spectrum of goods and services. The ability to diversify is considered a fundamental facet of economic transformation.

In stark contrast, many African economies remain confined to a limited range of commodity production, failing to harness the potential of diversification. This limited scope is particularly evident in their over-reliance on the export of a small number of primary products.

The Diversification dimension within the ATI report assesses diversity in production and exports through four critical indicators: manufacturing, services, export concentration, and export sector diversification.

The report advocates for strategies aimed at enhancing diversification, including the shift from commodity dependence to value addition.

Successful models have been observed in economies that have realigned production and export structures, fortified technological and industrial capabilities, and transitioned toward higher value-added products.

These pathways to economic diversification have been particularly effective for early transformers in Asia, Latin America, and select African countries.

The decline in Ghana’s diversification score underscores the importance of implementing strategies that foster a more diversified and resilient economic landscape, reducing the country’s vulnerability to external shocks and enhancing its long-term economic stability.