Population and Development in Ghana The challenge of harnessing the demographic dividend by Jean-Pierre Guengant , Ph

1. Population and Development in Ghana The challenge of harnessing the demographic dividend by Jean-Pierre Guengant, Ph.D. Director of Research IRD Accra–September 23-27, 2013

2. Demographic dividend has to do with demographic transition and changing age structure Young country Old country Men Potentially Active Women Potentially Active Women Potentially Active Men Potentially Active < 20 years < 20 years

3. There are two demographic dividends • During demographic transition, the age structure changes and the dependency ratio decreases • The entry of many youth in the workforce can increase output & savings per capita & foster sustainable growth • These are the benefits of the 1st demographic dividend • Later on, as the working-age population matures, the prospects of retirement can provide greater motivation to save for financial security. • These additional savings can either be consumed or used to prolong economic growth • This later stage of economic growth has been termed the second demographic dividend

4. Harnessing the demographic dividend requires • creating a window of opportunity (which lasts 40-50 years) through rapid fertility decline and • capitalizing on the dividend economically This implies • Accelerating fertility transition • Improving human capital (Health & Education) • Saving & investing in value added activities • Having a legal, institutional and political reliable environment (good governance) • Creating many jobs with high productivity But benefitting from the demographic dividend is not automatic

5. 4 phases in the demographic and fertility transition TFR: 6-8 children L-E: 25-30 years TFR: 1.5/2.5 children L-E: 80+ years Natural Increase per year 0.5 / + 0.5 +1% + 3% - 0.5 / + 0.5

6. Where is Ghana? Not far (phase 2) with a natural increase of still 2.2% p/yr 3.0% 2.2%

7. A result of still high fertility and decreasing in mortality MICS 2011 2010 Census

8. Result: a rapidly growing population and many dependants(114 per 100 20-64Yrs & 50%<20yrs Ghana : 6.6 million Ghana 2010: 24 million 80 + 70-74 65 years + 60-64 50-54 Men Potentially Active Women Potentially Active 40-44 30-34 20-24 < 20 years 10-14 0-4 Population by five-year age group (million)

9. In 1960 Koreahadalso a young population (50% <20 yrs) & high dependency ratio (118/100) Korea1960: 25 million 80 + 70-74 70-74 65 years + 60-64 60-64 50-54 50-54 Men Potentially Active Women Potentially Active 40-44 40-44 30-34 30-34 20-24 20-24 < 20 years 10-14 10-14 0-4 Population by five-year age group (million)

10. But by 2010, Korea has only 23% youthand a favorable dependency ratio (50/100) Korea2010: 48 million (2 times more people) 80 + 70-74 65 years + 60-64 60-64 50-54 50-54 Men Potentially Active Women Potentially Active 40-44 40-44 30-34 30-34 20-24 20-24 < 20 years 10-14 10-14 0-4 Population by five-year age group (million)

11. GDP per capita increased 15 folds against 1,5 in Ghana

12. Since 1960 Korea had a sustained economic growth and a large GDP per/capita increase GDPtotal growth GDP per capita growth %

13. Revenues from natural resources and exports IDA, FDI Remittances Parents spending to private institutions. Public health and education service Care, transfers from children Pensions,benefit from personal savings & assets Result of “the Generational Economy”: the economic flows across generations Transferts to the State Labour income Consumption 0 10 20 30 40 50 60 70 80 AGE

14. Population growth between >1%-<3% per year, declining except in Africa Industrialized Regions Developing Regions

15. In 2012, SS-Africa GDP per capita was only 54% higher than in 1960 GDPtotal (base 100=1960) GDP per capita (base 100=1960)

16. But since the mid 1990s SS-Africa GDP growth resumed

17. However recent Africa GDP per capita growth is 2.2% per year

18. Can Ghana harness the demographic dividend ? • Accelerating fertility transition • Improving human capital • Saving & investing • Good governance • Creating jobs

19. Future population of Ghana? Between 26 million (2013) to ? 40 - 60 million by 2050 Assumptions

20. Population growth will remain positive up to the 2070s (but ≠in urban & rural areas) Growth 2,3 1,9 1,6 1,2 2,2 1,4 1,0 0,5

21. In 2010, the 15-24 = 5mn, entries in the LF 350,000, Dep. ratio 114/100 20-64yrs Ghana 2010: 24 million 80 + 80 + 70-74 70-74 65 years + 60-64 60-64 50-54 Men Potentially Active Women Potentially Active 40-44 30-34 30-34 20-24 20-24 < 20 years 10-14 10-14 0-4 Population by five-year age group (million)

22. By 2050, with a TFR of 2.0 15-24= 6.5mn & entries in the LF 450,000, Dep.ratio 65/100 20-64 Ghana 2050: 40 millions 80 + 80 + 70-74 70-74 65 years + 60-64 60-64 50-54 Men Potentially Active Women Potentially Active 40-44 30-34 30-34 20-24 20-24 < 20 years 10-14 10-14 0-4 Population by five-year age group (million)

23. But with a TFR of 3.0, 15-24 = 9.2mn, entries in the LF 650,000, Dep. ratio 86/100 20-64 Ghana 2050: 52 millions 80 + 80 + 70-74 70-74 65 years + 60-64 60-64 50-54 Men Potentially Active Women Potentially Active 40-44 30-34 30-34 20-24 20-24 < 20 years 10-14 10-14 0-4 Population by five-year age group (million)

24. But by 2050, 70% to 75% of Ghanaians will live in urban areas • Urban pop. will triple from # 13 mn to 35 mn: Accra from nearly 3 to 7 million and Kumasi from 2 to 6 million -# 40% of urban pop Engine of growth? Explosive slums? • Need to review existing local governance, legal structures in order to permit cities to deliver selected local services without competing with parallel central gov. structures • Have predictable transfer system to allow them for effective planning (5 yrs? horizon) with performance incentives built into them, • Increase transfers as cities demonstrate their capability to create the dynamic activities of the future

25. A window of opportunity may open soon (in the 2020s) in Ghana & close in Korea Korea Ghana, 2.0 children by 2050

26. The window of opportunity may open much later if fertility does not decline rapidly Ghana, 2.0 children by 2050 Ghana, 2.0 children by 2050 Ghana, 3.0 children by 2050 Korea

27. Ghana missed its contraceptive revolution Can fertility transition be accelerated ? GHANA: Pct pt increase: 1980-2011:+0,65pt/yr - 1999.2011=1,06pt/yr 25.4%

28. Fertility, contraceptive use and family planning in Ghana? What to conclude • The slow pace of fertility decline can be attributed to an overall slow/stalling in CPR. • The current/recent levels of TFR (#4) are largely the result of still high (but decreasing Post Partum Insusceptibility ) higher proportions of non-married women, and to a lesser extend the result of contraceptive use and abortion • CPR is low, ideal number of children still high & not changing quickly enough to lead to the fertility decline that would be needed to allow Ghana to be in a position to harness DD in the near future • These are two of the most obvious matters for policy makers and planners to address

29. Can Ghana harness the demographic dividend ? • Accelerating fertility transition • Improving human capital • Saving & investing • Good governance • Creating jobs

30. “Health is pricelessbut still has a cost” • Half (53)% of the deaths are caused by communicable diseases, maternal, prenatal and nutrition conditions (2008) • Health expenditure per capita = 75US$ (2011), 60% paid by public sector, this represents 12% of government expenditure and 5 % of the GDP • 14% of the expenditure for health come from external resources Still too many “too early, too close, too often, too late pregnancies”

31. Half of children are the results of pregnancies with a high level of mortality risk First birth Birth order 4+ Age 35+ & birth order 4+ Birth interval < 24 Mother's age <18

32. Half married women are exposed to multiple factor high-risk pregnancies First birth Birth order 4+ Birth interval < 24 & birth order 4+ Birth interval < 24

33. The costs of persisting high level of fertility are very high • High levels of maternal mortality • High levels of mortality < 5 years AND • High % of stunted children (low height for age) among the children who survive These children are less resistant and have more difficulties to learn at school. These outcomes affect more the poorest households and jeopardize the chances of the country to achieve a more inclusive growth and fulfill its objectives

34. Sector Policy Priorities Health • NOW • Phase 2 • of the • Demographic transition • Expand/improve reproductive health & FP outreach to reduce fertility • Meet contraceptive demand • Promote later marriage • Invest in child health

35. Education also has a cost • The performance of the system is not satisfactory at all levels • Education = 24% of government expenditure and 8% of GDP • School enrollment: Primary 82% (net) secondary (59%), Tertiary (12%) , • Expenditure per student: • primary: 180 U$ • secondary: 420 U$ (<2 times ) • tertiary: 2400 U$ (6times and 13 times more) • Improving Ghana’s human capital will require much more resources

36. Sector Policy priorities Education • NOW • Phase 2 • of the transition • Expansion of school enrolment & attainment • Improve quality of education , ensure match between skills taught and skills in demand • Lower spending in primary (because of fertility decline ) will allow to invert more in higher education • Start to focus on high-value tech driven economic growth

37. Can Ghana harness the demographic dividend ? • Accelerating fertility transition • Improving human capital • Saving & investing • Good governance • Creating jobs

38. Few countries maintained high economic growth for more than a generation, and even fewer continue with high growth rates once they reach middle-income status Countries (mainly East Asia) that avoided the middle-income trap have in common : • Openness to the global economy • Macroeconomic stability • A future-oriented mindset with high rates of saving and investment • A reliance on markets and market-based prices to allocate resources • Leadership committed to growth and inclusion with a reasonable capacity for administration

39. Avoid the middle-income trap GDP per capita (constant 2011 US$) Source: IMF World Economic Outlook, October 2012

40. Reduce inequalities: Gini Coefficients for Selected African Countries, 2010

41. Sector Policy Priorities Economy • NOW • Phase 2 • of the demographic transition • Promoting free trade • Promoting household savings • Diversifying trade: goods and destination • Investing in infrastructures • Attracting investors • Building an inclusive economy and society

42. Can Ghana harness the demographic dividend ? • Accelerating fertility transition • Improving human capital • Saving & investing • Good governance • Creating jobs

43. Doing business index and corruption in Ghana • The 2013 Doing Business Report ranks Ghana 64 out to 185 countries • But the “ease of doing business” varies according to the topics, i.e. : registering is not too difficult, but trading across borders and starting a business is a bit more difficult • The Global Corruption Barometer 2013, ranks Ghana 54 out of 95 countries but the score varies according to the topics

44. % of respondents who think that the following are corrupted or extremely corrupted

45. Better governance to deliver results • Individual & property rights to all citizens • Successful entrepreneurs, whether domestic or foreign, should be able to reap the fruits of their efforts • Physical infrastructures providing transport, communications, electric power, and water needs for a dynamic economy • A business environment that fosters competition and supports innovation

46. Can Ghana harness the demographic dividend ? • Accelerating fertility transition • Improving human capital • Saving & investing • Good governance • Creating jobs

47. 100% 100% 75% 75% 50% 50% 25% 25% 0% 0% 15 18 20 25 30 15 18 20 25 30 The major challenge of the coming years will be promoting youth employment (ADB 2012) Men Women Wage employed Wage employed Vulnerable employed Vulnerable employed Unemployed, discouraged not in the labor force Unemployed, discouraged not in the labor force In education In education AGE AGE

48. How many jobs, and what kind of jobs? • Need about 350,000 new jobs every year (1,5 million over the next 4 years) just to absorb the youth entering the working age population. • the question is whether these youth will be: • unemployed (but is that an option?) • or employed in low-productivity traditional agriculture and household enterprises (survival jobs) • or employed in higher-productivity agriculture, manufacturing, and services jobs that are transformational. • The answer depends on whether workers have the needed skills and private investors have the confidence to invest.

49. Sector Policy priorities Employment • NOW • Phase 2 • of the • Demographic transition • Measures to improve worker productivity and prospects of better paying jobs in both the formal and informal sectors • Improve the informal sector’s access to inputs, finance, markets, and opportunities to link up with formal sector • vocational training, on-the-job training, apprenticeships to help the youth adapt better to the work environment

50. Conclusions: the future is unknown, but it can be explored, and prepared for • Global Drivers—Need to be Leverage multipolar global economy, tightening competition for resources, aging societies, technological development and climate change • African Drivers-Get good Outcomes Demographics: dividend or social time bomb? Urbanization: agglomeration benefits/ explosive slums Oil and minerals—blessing or curse? • Major Risks—Needing Active Management Growing Security or Contagious Conflict? Disparities—Inclusive Growth or Growing Inequality? Middle-income Stage-Road to Prosperity or Trap?