This blog-post highlights the opportunities and challenges associated with the proposed introduction of a 24-hour economy in Ghana.
Ghana is considering the introduction of a ‘24-hour economy’ policy in 2025. The initiative aims to revitalise the country’s economic landscape by fostering round-the-clock operations in key sectors. The announcement of the policy by the country’s main opposition political party has generated vigorous debate across the social, economic and political spheres in the vibrant West African Democracy.
Notably however, there has been a conspicuous absence of an empirical analysis of the policy to evaluate its potential economic impact. Such an analysis is essential to inform and guide public discourse.
In a recent working paper, Dr. Yakubu Abdul-Salam, associate professor of economics at the University of Aberdeen, used a dynamic recursive Computable General Equilibrium(CGE) model framework, underpinned by the 2015 Ghana Social Accounting Matrix (SAM) and the 2021 Ghana Population and Housing Census (PHC) data, to evaluate the potential impact of the policy on Ghana’s economy.
The concept of a ‘24-hour economy’ is in itself not novel. Numerous advanced countries, including the United States, United Kingdom, Germany, France and Australia have successfully implemented the policy in various forms. In the African context, Kenya is contemplating the adoption of the policy.
With respect to economic growth, Dr. Abdul-Salam’s paper shows that under the proposed ‘24-hour economy’ policy, Ghana’s real GDP growth (not to be confused with GDP growth rate) in ten years would be 31.71% higher than it would have been under a ‘business-as-usual’ scenario in the same timeframe. This indicates substantial augmentations in economic output within the Ghanaian economy under the ‘24-hour economy’ setting. Main sectors to experience considerable increase in output growth include manufacturing, electricity (energy), agriculture, services, ICT, education, real estates and construction and waste management and remediation services.
With regards to jobs and employment, Dr. Abdul-Salam’s paper shows a significant and sustained increase in demand for labour under the ‘24-hour economy’ scenario, reaching more than 3 million jobs within 5 years of the implementation of the policy. This finding reflects the potential of extended operational hours under a ’24-hour economy’ setting to create new employment opportunities and boost economic activity in Ghana.
Dr. Abdul-Salam notes that whilst the ‘24-hour economy’ scenario inherently engenders considerable job opportunities within the Ghanaian economy, proactive employment strategies are necessary to ensure that these prospects are fully and promptly embraced by the Ghanaian workforce. There are examples of economies (e.g. the UK and the US) where the number of available jobs is either comparable to or exceeds the number of job seekers. This situation is often attributed in part to a discrepancy between the skills required for the available jobs and the skill sets possessed by those seeking employment.
The jobs created by the ‘24-hour economy’ policy in Ghana are diverse, covering a range of sectors, geographical regions, and localities (including both urban and rural areas). These jobs vary in terms of skill level, from highly skilled to unskilled positions, and span across both the private and public sectors, as well as formal and informal employment segments. Without targeted employment policies to enhance skill sets, retrain the labour force, and incentivise workers towards appropriate employment opportunities created nationwide, the potential of these opportunities may not be fully harnessed.
As of Q2 2022, over 6.73 million Ghanaians were classified as being ‘outside the labour force’, with 1.73 million classified as ‘unemployed. This shows that the ‘24-hour economy’ policy holds considerable potential to markedly reduce unemployment levels in Ghana if implemented properly.
Dr. Abdul-Salam finds that in terms of the total number of jobs generated, the agricultural sector will emerge as the most important beneficiary of the ‘24-hour economy’ policy, creating close to 1.40 million jobs within ten years of the implementation of the policy. This is to be expected given the pivotal role of the sector in the value chain underpinning an extended economy. The agricultural sector for example is connected to the manufacturing sector by way of its provision of feedstock to that sector, supporting its production activities. It is also intricately linked to the transportation and storage sector, facilitating an extensive value chain that thrives on efficient logistics and storage solutions which are amplified under a ‘24-hour economy’ setting.
It is important to note here that the observed increase in labour demand within the agricultural sector does not directly suggest the adoption of round-the-clock activities such as farming, fishing or logging in that sector. Instead, it reflects the need for expansion in that sector to bolster other sectors that are more inherently suited to a 24-hour operational framework but rely on the outputs from agriculture to operate. Essentially, the rise in labour demand in agriculture is more attributable to a heightened demand for this sector's products, rather than an expectation for the workforce in agriculture to operate continuously, 24/7.
In the Coastal Belt and Greater Accra region, the results in the paper show an observed increase in demand for unskilled labour that marginally surpasses the demand for skilled labour in the context of a ‘24-hour economy’ setting. The Greater Accra region, serving as both the capital and the economic hub of the nation, hosts the largest population of workers and a high concentration of skilled jobs. However, it also faces a burgeoning challenge due to the influx of unskilled workers from other geographical belts. The rising demand for unskilled workers in the Greater Accra Belt highlights the potential amplification of the existing rural-to-urban migration challenge in Ghana, further straining the urban infrastructure and exacerbating disparities between rural and urban localities.
Conversely, the paper finds that the Middle Belt would exhibit a higher increase in demand for skilled labour, hinting at a possible transition towards a more knowledge-intensive economy. This Belt, known for having the highest population of agricultural workers, may experience diversification in its labour market with more knowledge-based job opportunities arising.
The results in the paper further show that urban areas would see the higher uptick in skilled labour demand under the ‘24-hour economy’ scenario. This reflects the urban centre’s role as hubs for industry and services that require skilled personnel and are likely to expand their operations due to the extended hours of economic activity. The Greater Accra region, with its high concentration of skilled workers is poised to benefit significantly from this trend.
Dr. Abdul-Salam’s findings underscore the critical need for a balanced regional development strategy as part of the ‘24-hour economy’ policy.
With regards household incomes and welfare, Dr. Abdul-Salam’s findings show that in urban localities in the Greater Accra region and the Middle Belt, households would witness substantial gains in disposable income, a reflection of the agglomeration of economic activities in these areas. These areas, particularly the Greater Accra region with its economic clout, benefit from a concentration of sectors that would thrive under extended operating hours.
Rural households in the Coastal and Northern Belts would see notable increases in disposable incomes too. This could be indicative of the spread of economic benefits brought about by the ‘24-hour economy’, particularly through enhanced agricultural productivity and related downstream activities that stimulate rural economies.
In urban localities, there are important disparities in the growth of disposable incomes, with high-income groups experiencing greater increases across all belts. This suggests that the ‘24-hour economy’ potentially widens the income gap in urban areas, favouring those already in higher-income brackets who are positioned to capitalise on the new economic activities.
For rural areas, the picture is more heterogeneous, suggesting that the impact of the ‘24-hour economy’ varies significantly based on local economic structures and the presence of industries that can operate effectively around the clock.
The Northern Belt, predominantly rural and the source of a significant migrant workforce to urbanised regions like Greater Accra, would see the least growth in disposable income for low-income urban households. This outcome points to the necessity of targeted economic policies to address income disparities and to provide opportunities for low-income groups, preventing further socioeconomic stratification.
The most pronounced increase in disposable income is found among high-income urban households in the Greater Accra region, emphasising the region’s capacity to maximise the ‘24-hour economy’s benefits. As the political and economic heart of the nation, Greater Accra is well-positioned to harness the policy’s full potential, translating extended business hours into considerable income growth for its affluent urban residents.
In conclusion, Dr. Abdul-Salam finds that the transition to a ’24-hour economy’ in Ghana presents transformative opportunities for the country, albeit with potential challenges. The differential growth impacts across sectors, regions and households highlight the complexity of the transition.
Dr. Abdul-Salam’s advocates for a holistic approach in policy formulation and implementation to address these complexities. Policies should aim to support sectoral growth while addressing potential disparities and ensuring equitable distribution of economic gains.
To fully harness the benefits of a ‘24-hour economy’, Ghana requires a multifaceted approach encompassing investments in human capital (i.e. education and skill training), infrastructural development, digital transformation and environmental sustainability.
The government’s role in managing this transition is pivotal, particularly in ensuring that the fiscal benefits are effectively utilised to support long-term economic development and social welfare.
A number of stragtegies would need to be formulated to accompany the transition to the ‘24-hour economy’. These may include, but not limited to, the following;
- Workforce development (and protection) strategy
- Energy security strategy
- Circular economy strategy
- Balanced regional development strategy
- Equality and inclusivity strategy
- Economic diversification strategy
In essence, the ‘24-hour economy’ policy has the potential to be a catalyst for accelerated development and job creation in Ghana. Its success will however depend on careful planning, inclusive strategies and adaptive policy measures. With the right implementation approach, as guided by the principles of good governance and economic management, Ghana can leverage this opportunity to achieve sustainable growth, enhanced productivity and long-term prosperity for all segments of its populace.