Ghana has experienced steadily increasing growth of over 7% per year on average since
2005. Following the attainment of middle income country status in 2010 and discovery of offshore oil
reserves, per capita growth in the country has remained relatively high. Despite the growth recorded,
inequality has been increasing in the country and poverty remains prevalent in many areas.
Given the importance of inequality in attaining the goal of poverty reduction this paper sets out
to comprehensively investigate the likelihood of inequality affecting the country’s poverty reduction
efforts. The report specifically aims to (1) assess poverty trends in Ghana since the early 1990s, (2)
estimate inequality levels and trends in Ghana over the same period, (3) determine to what extent the
very poorest are benefiting from Ghana’s economic growth, and (4) assess the relationships between
growth, poverty reduction and inequality.
In looking at poverty trends, the paper confirms that between 1992 and 2013 Ghana’s national level of
poverty fell by more than half (from 56.5% to 24.2%), thereby achieving the MDG1 target. However,
the annual rate of reduction of the poverty level slowed substantially from an average of 1.8
percentage points per year in the 1990s to 1.1 percentage point per year reduction since 2006.
Conversely, the rate of reduction of extreme poverty has not slowed since the 1990s and impressive
progress in cutting extreme poverty was achieved even since 2006 (cut from 16.5% to 8.4%). This
means that relatively more progress has been made for the extreme poor in recent years then those
living close to the poverty line.
Households in urban areas continue to have a much lower average rate of poverty than those in rural
areas (10.6% versus 37.9%). However, urban poverty has dropped in recent years much faster than
rural poverty and as a result the gap between urban and rural areas has doubled – rural poverty
is now almost 4 times as high as urban poverty compared to twice as high in the 1990s.
At the regional level, the Northern, Upper East, and Upper West regions continue to have the highest
poverty rates. However, substantial progress has been achieved since 2006 in the Upper East
region as poverty has dropped from 72.9% in 2006 to 44.4% in 2013. Of great concern is the
Northern region which saw its high level of poverty fall only marginally from 55.7% to 50.4%.
Since the 1990s overall, the Northern region has seen the smallest progress in poverty reduction.
This is a major issue for the country given that the Northern region now makes up the largest number
of poor people of any of Ghana’s ten regions (1.3 million).
Regarding the depth with which people live in poverty, i.e. how far below the poverty line, the same
three northern regions continue to have the highest levels of poverty depth, and Upper West and
Upper East also made important progress in reducing poverty depth since 2006 although the levels
remain high. For example, in Upper West, poor people still live on average a third of the way
below the poverty line. Surprisingly, 4 regions (Western, Central, Volta, and Ashanti) saw their
poverty depth rise since 2006, meaning that not enough efforts are being made to improve the lives
of the poor in those regions.
It is also important to note that although the proportion of people living in poverty has declined by
a quarter since 2006, the number of people living in poverty has only declined by 10% (from 7m to
6.4m), meaning that poverty reduction is not keeping pace with population growth.
In considering child poverty, we discovered that although important progress has been made – similar
to poverty levels overall – there are still 3.65 million children living in poverty today. This accounts for
28.3% of all children. We estimate that in Ghana a child is almost 40% more likely to live in poverty
than an adult. This inequity has risen substantially from the 1990s when children were only 15% more
likely to be poor than adults. In addition, one child in ten lives in extreme poverty, meaning 1.2 million
children live in households that are unable to provide even adequate food.