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).