Population and Development in Ghana

The challenge of harnessing the demographic dividend

byJean-Pierre Guengant, Ph.D.

Director of Research IRD

Accra–September 23-27, 2013

-1,8 -1,6 -1,4 -1,2 -1,0 -0,8 -0,6 -0,4 -0,2 0,0 0,0 0,2 0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8

Men Potentially

Active

Women Potentially

Active

< 20 years

-2,5 -2,0 -1,5 -1,0 -0,5 0,0 0 0,5 1 1,5 2 2,5

Men Potentially

Active

Women Potentially

Active

< 20 years

Demographic dividend has to do with demographic transition

and changing age structureYoung country Old country

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

There are two demographic dividends

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 1. Accelerating fertility transition2. Improving human capital (Health & Education) 3. Saving & investing in value added activities4. Having a legal, institutional and political reliable

environment (good governance) 5. Creating many jobs with high productivity

But benefitting from the demographic dividend is not automatic

4 phases in the demographic and fertility transition

TFR: 6-8 childrenL-E: 25-30 years

TFR: 1.5/2.5 childrenL-E: 80+ yearsNatural Increase per year

0.5 / + 0.5 +1% + 3% - 0.5 / + 0.5

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

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

0

5

10

15

20

25

30

35

40

45

50

Crude birth rate

Crude death rate

Rate of natural increase

Population growth rate

Ra

tes

(p

er

1,0

00

po

pu

lati

on

2.2%

3.0%

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2.0

3.0

4.0

5.0

6.0

7.0

25

30

35

40

45

50

55

60

65

70

TFR: UN estimates 2013 DHS 1988,1993,1998, 2003, 2008

Census 2010, MICS 2011 E0: UN estimates 2013

To

tal

fert

ilit

y (

ch

ild

ren

pe

r w

om

an

)

Lif

e e

xp

ec

tan

cy

at

bir

th

A result of still high fertility and decreasing in mortality

2010 Census

MICS 2011

-1,8 -1,6 -1,4 -1,2 -1,0 -0,8 -0,6 -0,4 -0,2 0,0

10-14

20-24

70-74

50-54

60-64

40-44

30-34

0,0 0,2 0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8

0-4

80 +

Men Potentially

Active

Women Potentially

Active

Population by five-year age group (million)

Ghana : 6.6 million Ghana 2010: 24 million

Result: a rapidly growing population and many dependants (114 per 100 20-64Yrs & 50%<20yrs

< 20 years

65 years +

-2,5 -2,0 -1,5 -1,0 -0,5 0,0

10-14

20-24

70-74

50-54

60-64

40-44

30-34

0 0,5 1 1,5 2 2,5

0-4

80 +

In 1960 Korea had also a young population (50% <20 yrs) & high dependency ratio (118/100)

Korea 1960: 25 million

10-14

20-24

70-74

50-54

60-64

40-44

30-34

Women Potentially

Active

< 20 years

Men Potentially

Active

65 years +

Population by five-year age group (million)

-2,5 -2,0 -1,5 -1,0 -0,5 0,0

10-14

20-24

70-74

50-54

60-64

40-44

30-34

0 0,5 1 1,5 2 2,5

0-4

80 +

Korea 2010: 48 million (2 times more people)

But by 2010, Korea has only 23% youthand a favorable dependency ratio (50/100)

10-14

20-24

50-54

60-64

40-44

30-34

< 20 years

Men Potentially

Active

Women Potentially

Active

65 years +

Population by five-year age group (million)

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

1960

1964

1968

1972

1976

1980

1984

1988

1992

1996

2000

2004

2008

2012

0

500

1000

1500

2000

2500

3000

3500

GDP (cst 2005 US) Korea

GDP per capita (cst 2005 US) Korea

GDP (cst 2005 US) Ghana

19

60

=1

00

Since 1960 Korea had a sustained economic growth and a large GDP per/capita increase

1961-1969

1970-1979

1980-1989

1990-1999

2000-2012-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Ghana Korea

GD

P g

row

th (

an

nu

al

%)

1961-1969

1970-1979

1980-1989

1990-1999

2000-2012-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0Ghana Korea

GD

P p

er

ca

pit

a g

row

th (

an

nu

al

%)

GDP per capita growth %GDP total growth

Result of “the Generational Economy”: the economic flows across generations

0 10 20 30 40 50 60 70 80AGE

Consumption

Labourincome

Transferts to the State

Parents spending to private institutions.Public health and education service

Care, transfers from children Pensions, benefit from personal savings & assets

Revenues from natural resources and exports

IDA,FDI Remittances

Population growth between >1%-<3% per year, declining except in Africa

Western Europe

E. Europe & f. USSR

Western offshoots

Japan Asia (exclud-

ing Japan)

Latin America

Africa 0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1820-1870 1870-1913 1913-1950 1950-1973 1973-2001

Po

pu

lati

on

gro

wth

(a

nn

ua

l (%

)

Industrialized Regions Developing Regions

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

0

200

400

600

800

1,000

1,200

1,400

East Asia & Pacific

European Union

Latin America & Car-ibbean

North America

South Asia

Sub-Saha-ran Africa

19

60

=1

00

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

0

100

200

300

400

500

600

700

East Asia & Pacific

European Union

Latin America & Caribbean

North America

South Asia

Sub-Sa-haran Africa

19

60

=1

00

In 2012, SS-Africa GDP per capita was only 54% higher than in 1960

GDP total (base 100=1960)

GDP per capita (base 100=1960)

1980-1994 1995-2004 2005-2012-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0East Asia & Pacific European UnionLatin America & Caribbean North AmericaSouth Asia Sub-Saharan Africa

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

1980-1994 1995-2004 2005-2012-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0East Asia & Pacific European Union

Latin America & Caribbean North America

South Asia Sub-Saharan Africa

4,0

-1,2

1,2

3,0

5,7

2,21,7

0,50,7

2,2

1,7

2,2

3,6

2,3

3,2

2,4

1,10,4

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

Can Ghana harness the demographic dividend ?

1. Accelerating fertility transition2. Improving human capital3. Saving & investing4. Good governance5. Creating jobs

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

2010

2016

2022

2028

2034

2040

2046

2052

2058

2064

2070

2076

0

20

40

60

80

100

120

140

Low fertility 2.0 by 2050 1.5 by 2080

Medium fer-tility 2.5 by 2050 2.0 by 2080

High fertility 3.0 by 2050 2.5 by 2080

Constant fertility 4.1 by 2050 & 2080

Mil

lio

n

Assumptions

Population growth will remain positive up to the 2070s (but ≠in urban & rural areas)

2010-

2015

2015-

2020

2020-

2025

2025-

2030

2030-

2035

2035-

2040

2040-

2045

2045-

2050

2050-

2055

0

5

10

15

20

25

30

35

40

CBR low 2.0 by 2050

CBR medium 2.5 by 2050

CBR high 3.0 by 2050

CBR constant 4.1 by 2050

CDR low 2.0 by 2050

CDR medium 2.5 by 2050

CDR high 3.0 by 2050

CDR constant 4.1 by 2050

Ra

tes

(p

er

1,0

00

po

pu

lati

on

)

Assumptions

Growth

2,3

1,91,6

1,2

2,2

1,4

1,0

0,5

-3,0 -2,5 -2,0 -1,5 -1,0 -0,5 0,0

10-14

20-24

70-74

60-64

30-34

0 0,5 1 1,5 2 2,5 3

0-4

80 +

Ghana 2010: 24 million

10-14

20-24

70-74

50-54

60-64

40-44

30-34

80 +

Men Potentially

Active

Women Potentially

Active

< 20 years

65 years +

Population by five-year age group (million)

In 2010, the 15-24 = 5mn, entries in the LF 350,000, Dep. ratio 114/100 20-64yrs

-3,0 -2,5 -2,0 -1,5 -1,0 -0,5 0,0

10-14

20-24

70-74

60-64

30-34

0 0,5 1 1,5 2 2,5 3

0-4

80 +

Ghana 2050: 40 millions

10-14

20-24

70-74

50-54

60-64

40-44

30-34

80 +

Men Potentially

Active

Women Potentially

Active

< 20 years

65 years +

Population by five-year age group (million)

By 2050, with a TFR of 2.0 15-24= 6.5mn & entries in the LF 450,000, Dep.ratio 65/100 20-64

-3,0 -2,5 -2,0 -1,5 -1,0 -0,5 0,0

10-14

20-24

70-74

60-64

30-34

0 0,5 1 1,5 2 2,5 3

0-4

80 +

Ghana 2050: 52 millions

10-14

20-24

70-74

50-54

60-64

40-44

30-34

80 +

Men Potentially

Active

Women Potentially

Active

< 20 years

65 years +

Population by five-year age group (million)

But with a TFR of 3.0, 15-24 = 9.2mn, entries in the LF 650,000, Dep. ratio 86/100 20-64

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

But by 2050, 70% to 75% of Ghanaians will live in urban areas

A window of opportunity may open soon (in the 2020s) in Ghana & close in Korea

0

20

40

60

80

100

120

Dependency ratio 65 yrs+Dependency ratio <20 yrs

1970

1980

1990

2000

2010

2020

2030

2040

0

20

40

60

80

100

120

Dependency ratio 65 yrs+Dependency ratio <20 yrs

KoreaGhana, 2.0 children by 2050

The window of opportunity may open much later if fertility does not decline rapidly

0

20

40

60

80

100

120

Dependency ratio 65 yrs+Dependency ratio <20 yrs

KoreaGhana, 2.0 children by 2050 Ghana, 2.0 children by 2050

0

20

40

60

80

100

120

Dependency ratio 65 yrs+Dependency ratio <20 yrs

Ghana, 3.0 children by 2050

0

10

20

30

40

50

60

70

80 D CongoLinear (D Congo)Linear (D Congo)EthiopiaExponential (Ethiopia)Exponential (Ethiopia)JamaicaKenyaNigeriaPolynomial (Nigeria)Linear (Nigeria)Polynomial (Nigeria)KoreaPolynomial (Korea)ThailandPolynomial (Thailand)Ghana

CP

R m

od

ern

met

ho

ds

%

wo

men

in

un

ion

Ghana missed its contraceptive revolution Can fertility transition be accelerated ?

25.4%

GHANA: Pct pt increase: 1980-2011:+0,65pt/yr - 1999.2011=1,06pt/yr

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

Can Ghana harness the demographic dividend ?

1. Accelerating fertility transition2. Improving human capital3. Saving & investing4. Good governance5. Creating jobs

“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”

Not in any risk category

One factor of high-risk

Multiple factors of high-risk

0

10

20

30

40

50

Pe

rce

nta

ge

of

bir

ths

Birth interval < 24

Birth order 4+

First birth

Mother's age <18

Age 35+ & birth order 4+

Half of children are the results of pregnancies with a high level of mortality risk

Not in any risk category

One factor of high-risk

Multiple factors of high-risk

0

5

10

15

20

25

30

35

40

45

50

% m

arr

ied

wo

me

n a

t ri

sk

Age 35+ & birth order 4+

Age 35+, birth interval < 24 and birth order 4+

Mother's age 35+

Birth interval < 24 & birth order 4+

Birth interval < 24

Birth order 4+

First birth

Half married women are exposed to multiple factor high-risk pregnancies

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

Sector Policy Priorities Health Expand/improve

reproductive health & FP outreach to reduce fertility

Meet contraceptive demand

Promote later marriage Invest in child health

NOW Phase 2

of the

Demographic transition

Education also has a cost The performance of the system is not

satisfactory at all levels Education = 24% of government

expenditure and 8% of GDPSchool 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

Sector Policy priorities Education 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

NOW

Phase 2

of the transition

Can Ghana harness the demographic dividend ?

1. Accelerating fertility transition2. Improving human capital3. Saving & investing4. Good governance5. Creating jobs

Few countries maintained high economic growth for more than a generation, and even fewer continue with high growth rates once they reach middle-income statusCountries (mainly East Asia) that avoided the middle-income trap have in common :

1. Openness to the global economy 2. Macroeconomic stability3. A future-oriented mindset with high rates of saving

and investment 4. A reliance on markets and market-based prices to

allocate resources5. Leadership committed to growth and inclusion with

a reasonable capacity for administration  

Avoid the middle-income trap GDP per capita (constant 2011 US$)

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

0

5000

10000

15000

20000

25000

Korea

Brazil

Mexico

South Africa

Algeria

Egypt

Source: IMF World Economic Outlook, October 2012

Reduce inequalities: Gini Coefficients for Selected African Countries, 2010

Ethio

pia

Egypt

Mal

i

Sudan

Tanza

nia

Liber

ia

Seneg

al

Mau

ritan

ia

Moro

cco

Cote d

'Ivoire

Ghan

a

Mad

agas

carDRC

Moza

mbiq

ue

Congo

Kenya

Niger

ia

Rwan

da

Swaz

iland

South A

frica

0

10

20

30

40

50

60

70

Gin

i c

oe

ffic

ien

t

Sector Policy Priorities Economy Promoting free trade Promoting household

savings Diversifying trade: goods and

destination Investing in infrastructures Attracting investors Building an inclusive

economy and society

NOW Phase 2

of the demographic transition

Can Ghana harness the demographic dividend ?

1. Accelerating fertility transition2. Improving human capital3. Saving & investing4. Good governance5. Creating jobs

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

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

NGO'S

Religio

us b

odies

Milit

ary

Med

ical H

ealth

Busine

ss

Med

ia

Parlia

men

t

Public

offi

cials,

civi

l ser

vant

s

Educa

tiona

l sys

tem

Judic

iary

syst

em

Politic

al pa

rties

Police

0%

20%

40%

60%

80%

100%

19% 21%29%

37% 38%47%

57% 59%66% 71% 76%

92%

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

Can Ghana harness the demographic dividend ?

1. Accelerating fertility transition2. Improving human capital3. Saving & investing4. Good governance5. Creating jobs

100%

75%

50%

25%

0%

100%

75%

50%

25%

0%

15 18 20 25 30

15 18 20 25 30

Men Women

In education

Vulnerable employed

Wage employed

Unemployed, discouraged

not in the labor force

The major challenge of the coming years will be promoting youth employment (ADB 2012)

Unemployed, discouraged

not in the labor force

Vulnerable employed

Wage employed

In education

AGE AGE

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.

Sector Policy priorities Employment 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

NOW Phase 2

of the

Demographic transition

Conclusions: the future is unknown, but it can be explored, and prepared for

1.Global Drivers—Need to be Leverage multipolar global economy, tightening competition for resources, aging societies, technological development and climate change

2.African Drivers-Get good Outcomes Demographics: dividend or social time bomb? Urbanization: agglomeration benefits/ explosive slums Oil and minerals—blessing or curse?

3. Major Risks—Needing Active Management Growing Security or Contagious Conflict? Disparities—Inclusive Growth or Growing Inequality? Middle-income Stage-Road to Prosperity or Trap?

Possible scenarios ?

1. Convergence scenario associated with a vision

2. “Business as usual” (assume recent favorable trends will continue unabated)

3. Downside (Term of Trade deteriorates conflicts etc.)

But overall “GOOD JOBS CREATIONS” will be the

major issue

Tackling the issue requires simultaneously

1. An overall population in good health2. A well educated population 3. Important domestic savings 4. Major investments in competitive activities

(manufacturing and services) geared towards international, regional and national markets

5. High standards of governance and credibility6. A demographic window of opportunityIn fact, most of what must be done is known, but in

many fields, effective implementation is either lacking, lagging behind or not sustained. There is

clear need to break with the past, and this requires a cultural change

-3,0 -2,5 -2,0 -1,5 -1,0 -0,5 0,0

10-14

20-24

70-74

60-64

30-34

0 0,5 1 1,5 2 2,5 3

0-4

80 +Ghana 2050 : 40 millions

10-14

20-24

70-74

50-54

60-64

40-44

30-34

80 +

Men Potentially

Active

Women Potentially

Active

< 20 years

65 years +

Population by five-year age group (million)

Benefits of action with TFR of 2.0 or less are:stabilized numbers of children & entries in the

LF, & favorable dependency ratio (65/100)

-3,0 -2,5 -2,0 -1,5 -1,0 -0,5 0,0

10-14

20-24

70-74

60-64

30-34

0 0,5 1 1,5 2 2,5 3

0-4

80 +

Ghana 2050: 52 millions

10-14

20-24

70-74

50-54

60-64

40-44

30-34

80 +

Men Potentially

Active

Women Potentially

Active

< 20 years

65 years +

Population by five-year age group (million)

Costs of inaction with of TFR of 3.0 or more:doubling numbers of children & entries in the LF, & unfavorable dependency ratio (86/100)

-3,0 -2,5 -2,0 -1,5 -1,0 -0,5 0,0

10-14

20-24

70-74

60-64

30-34

0 0,5 1 1,5 2 2,5 3

0-4

80 +

Ghana 2050: 40 or 52 millions

10-14

20-24

70-74

50-54

60-64

40-44

30-34

80 +

Men Potentially

Active

Women Potentially

Active

< 20 years

65 years +

Population by five-year age group (million)

YOUR CHOICE

THANK YOU

MEDAWOASE

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