POVERTY, LIVELIHOODS, AND ACCESS TO BASIC SERVICES …

1 1. GHANA CEM: MEETING THE CHALLENGE OF. ACCELERATED AND SHARED GROWTH. Partial and preliminary draft for review Updated: June 11, 2007. poverty , livelihoods , AND ACCESS TO BASIC SERVICES IN GHANA. By Harold Coulombe and Quentin Wodon This draft study was prepared as part of the Ghana CEM growth aiming to provide analytical contribution and assist the government of Ghana in operationalizing its accelerated and shared growth agenda. The study was discussed at the Ghana CEM technical review growth workshop in Accra, May 2-3, 2007. The authors are grateful to the authorities of Ghana for the extensive data and discussions on dimensions of Ghana's growth and poverty reduction without which the study would not be possible. We are particularly grateful, without implication, to Dr.

2 Akoto Osei, Prof. George Gyan-Baffour, the Minister of Trade, Industries, Private Sector and Special Presidential Initiatives, Honorable Alan Kyerematen, Chairman of the National Development Planning Commission Dr. Mensah, and Director-General of the NDPC, Dr. Regina Adutwum, and their staff, and all government ministries and agencies involved. The estimates of poverty presented in this study are based on joint work with the Ghana Statistical Service. In particular, Grace Bediako, the Government Statistician, and Nicholas Nsowah-Nuamah, the Deputy Government Statistician, have been very generous in providing support. Some of the estimates of other dimensions of well- being presented in this study and based on the GLSS 5 survey for 2005/2006 should be considered as preliminary given the fact that the survey has not yet been officially released.

3 The authors acknowledge support from the Belgian poverty Reduction Partnership and the Norwegian Trust Fund for Private Sector and Infrastructure. Parts of this study are based on joint work conducted over the last few years or in progress with (by alphabetical order) Mathieu Audet, Prosp re Backiny-Yetna, Amadou Bassirou Diallo, Andrew McKay, Estelle Sommeiller, and Clarence Tsimpo. The authors are grateful to Zeljko Bogetic, Carlos Cavalcanti, and staff from GTZ for many useful comments, as well as to the feedback and suggestions provided by the peer reviewers for this study (Kathleen Beegle, Cletus Dordonou, Michael Lokshin, and Rose Kakari-Annang). Apart from the May 2007 CEM workshop, results from this work were presented at seminars in the World Bank resident mission in Accra in September 2006 through an informal seminar.

4 The views expressed here are those of the authors and need not necessarily reflect those of the World Bank, its Executive Directors or the countries they represent. 2. poverty , livelihoods , AND ACCESS TO BASIC SERVICES IN GHANA. Harold Coulombe and Quentin Wodon Abstract Ghana has achieved substantial poverty reduction over the last 15 years and is on track to reduce its poverty rate by half versus the level of 1990 well before the target date of 2015. for the Millennium development Goals. The objective of this study is to summarize key results obtained from an analysis of household surveys in Ghana. The study consists of four parts. The first part provides estimates of the trend in poverty using a range of surveys covering various periods of time, as well as a discussion of the characteristics of the poor and the determinants of poverty .

5 This also includes a discussion of the geography of poverty with the construction of a poverty map at the district level based on census data. The second part of the study deals with the income sources of the population, including discussions of labour income, cash crop income, remittances, and income inequality. The third part of the study discusses the level of ACCESS to BASIC infrastructure SERVICES , as well as the targeting performance of public subsidies. 3. 1. INTRODUCTION. Ghana has achieved substantial poverty reduction over the last 15 years and is on track to reduce its poverty rate by half versus the level of 1990 well before the target date of 2015 for the Millennium development Goals1. The objective of this study is to document this remarkable achievement, and more broadly to review the evidence on a range of issues related to poverty reduction using the most recent household survey data available.

6 The structure of the study is as follows. After a brief introduction, we discuss a) the trend in poverty and inequality in Ghana (Chapter 2); b) the profile of the poor, including the geography of poverty , as well as the determinants or correlates of poverty (Chapter 3); c) employment and wage trends, including the issues of youth unemployment, time use and child labour (Chapter 4); d) the income sources of the poor, including sections on income inequality, cash crop income (cocoa) and remittances (Chapter 5); d) the ACCESS of the poor to BASIC SERVICES in the areas of education, health, and BASIC infrastructure as well as the benefit incidence analysis of public spending in a few areas including electricity subsidies (Chapter 6).

7 Ghana has long been considered a star performer in Sub-Saharan Africa. Beginning with the presidency of Rawlings and aided by external support, Ghana embarked on a series of economic reforms in 1983. The focus of the reform package was initially on macroeconomic stabilization through fiscal, monetary and foreign exchange liberalization in the initial phase of reforms (see among others Roe, 1992; Kraus, 1991; IMF, 1990; Ahiakpor, 1991). Following a successful macroeconomic stabilization, the focus of reforms shifted towards structural adjustment measures to accelerate growth with sustained poverty reduction. Ghana during much of the 1990s had one of the strongest growth rates amongst Sub-Saharan countries. While GDP growth rates receded slightly in the late 1990s, they rebounded after 2002, and have reached about 6.

8 Percent in recent years (see Bogetic et al., 2007, for an analysis of Ghana growth performance). Given these high rates of economic growth, one could expect poverty to have decreased in Ghana since the late 1980s. There is indeed some evidence that substantial poverty reduction took place at the national level in Ghana over the 1988-92 period. This evidence is based on the analysis of the first three rounds of the GLSS Surveys (Ghana Statistical Service, 1995;. Coulombe and McKay, 1995; Appiah et al, 2000). However, these studies had to contend with some comparability difficulties due to substantial changes in the survey questionnaire between the second and third rounds of the surveys. Furthermore, results of a participatory poverty assessment conducted in poor communities in 1993 and 1994 (Norton et al.)

9 , 1995) gave a less than enthusiastic message about the evolution of poverty in the early 1990s. Urban communities considered that the initially beneficial effects of economic reform in the 1980s had not been 1. This statement is based on the poverty trend in Ghana as computed by the authors in collabouration with the Ghana Statistical SERVICES . The first target under the MDGs is to reduce by half by 2015 the proportion of the population living with less than one US dollar per day. However, while the poverty line of US$1 per day is appropriate for measuring global trends in poverty , it is not appropriate for measuring poverty trends in any given country, because the US$1 poverty line does not properly take into account the specificity of different countries in terms of cost of living and data issues.

10 At the country level it is better to measure the achievement of the poverty target under the MDGs using the country-specific poverty line which tend to reflect better costs of living in any specific country. 4. sustained, and in rural communities vulnerability of livelihoods was widely identified as a key issue, with widespread concern expressed that vulnerability was increasing. More faith has been placed on the results based on the comparison of the third and four rounds of the GLLSS surveys, for respectively the years 1991/92 and 1998/99. Coulombe and McKay (2007) found that the share of the population in poverty had dropped between the two surveys from percent to percent. This achievement was however not as widespread as one might have hoped.