The Services Sector

1. The Services Sector The service sector is the main channel through which the primary and secondary sectors of the economy operate. Before the rebasing of the economy the sector was categorised into six different sub-sectors: Transport, storage and communications Wholesale, retail trade, restaurants and hotels Finance, insurance, real estates and business services Govt services Community, social and personal services Private non-profit services

2. After the rebasing the sector was divided into ten main sub-sectors namely: • Trade, Repair of Vehicles and Household Goods • Restaurants and Hotels • Transport and Storage • Information and Communications • Financial Intermediation • Real Estate Services • Business and Other Services Activities • Public Administration and Defence, Social Security • Education • Health and Social Work; and Other Community, Social and Personal Services Activities

3. Role of the service sector • It contributes to GDP. E.g., in 2007 the contribution of the sector to GDP was estimated at 50.2%. • It contributes to employment. • The sector is importance source of foreign exchange earnings. Tourism is the fourth largest contributor to Ghana’s foreign exchange earnings.

4. Role of the Service Sector Cont. • Acquisition of technology via exports and imports of services. • Finance, insurance, real estate and business services are important for mobilizing domestic savings for investment in physical and human capital. • Communication services such as telephone network, postal services, fax, telex, email as well as radio and television transmission help improve the operation of the products and factor mkts by facilitating contracts b/w buyers and sellers.

5. Constraints • Poor infrastructure. E.g bad road network, poor data banks, computer systems, airports etc • Low participation in international trade in services due to low capacity of prodn of services. This arises out of difficulties in acquiring visas and work permits. • Employment in the sector is characterized by low level of skills and inadequate qualified personal.

6. Constraints Cont. • Massive imports of services come in the form technical assistance (i.e. foreign consultants and experts). • Lack of comparative advantages in the services industry. Factor-related comparative advantages in services which are basically lacking in Ghana include: • Endowment in know-how and skill • The amount of existing physical infrastructure • The effective ability to apply technological innovationsetc.

7. Some Key Interventions Under the SAP, some major services sub-sector namely finance and insurance, transportation, telecommunications and tourism benefitted from sectoral reforms.

8. Key Interventions Finance • The setting up of a non-performing asset recovery trust to deal with problems of recoveries and also, to clean up individual bank’s sheet to enable them restart their lending operations. • A new banking law and an elaborate bank prudential supervisory framework to ensure that the banking institutions comply with measures and standards.

9. Key Interventions Cont. Finance Cont. • Restructuring of rural banks to make them more responsive to savings mobilisation. (abt. 22 rural banks have been closed down due to financial misappropriation, mismanagement and misadministration) • Privatization of state-owned banks-SSB in 1995 • Liquidation of 3 banks- Bank for Housing and Construction, Co-operative Bank and the Bank for Credit and Commerce.

10. Key Interventions Cont. Transportation • Rehabilitation of the triangular railway network connecting Accra, Kumasi and Takoradi • Delivery of new locomotives in 1993 • In 1999, re-gravelling of 796km of road was completed, 403km of roads were resealed while the re-surfacing of 139km was completed

11. Key Interventions Cont. TransportationCont. • Sankarainter-charge project and remaining works under the urban transport project is completed • Accra city roads project • Phase 1 of Jasikan-Yendi road, Rehabilitation of Lower Volta Bridge at Sogakope and rehabilitation work at Kotoka International Airport etc.

12. Key Interventions Cont. Telecommunications • Privatization of Ghana Telecommunications • Liberalisation of the operation of value-added services including mobile cellular telephone service, data transmission and pay phone services. • Est. of a regulatory body, the National Communication Authority (NCA) to regulate the provision of services of the sector.

13. Key Interventions Cont. Tourism • Celebration of Emancipation Day • African-American summit • Est. of three new 5-star hotels • Implementation of the 15-Year National Tourism Devt Plan in collaboration with identified stakeholders comprising public and private sector institutions, donor agencies, communities and non-governmental orgns.

14. The Way Forward • Infrastructure and superstructure investments should be embarked upon with emphasis on historical heritage, cultural, ecological, and recreational and conference tourism. • Sustained and planned strategic marketing of Ghana as a competitive destination via participation in international tourism fairs and exhibition with more involvement from the private sector.

15. The Way Forward Cont. • Educational reforms which place emphasis on science and technology • Govt should initiate policies to improve on the country’s comparative advantages in the services industry. Comparative positions can be strengthened via mergers. • Consultancy services can be exported within the sub region and in Africa. There is the need to increase the awareness of Ghanaian professionals and experts of the potential to export their services.

16. The Way Forward Cont. • The need to increase the range of financial instruments available in the mkt, also extending banking services to the larger section of the population • Govt. should ensure that the regulatory mechanism reflect in the prodn of standard services. • Est. of efficient storage, transportation, and distribution systems