Ghana has seen its share of Foreign Direct Investment (FDI) shift from natural resources to services. This is according to a World Bank report on ECONOMIC DIVERSIFICATION THROUGH PRODUCTIVITY ENHANCEMENT. Refering to the years between 2003 and 2016, the report said that though extractives made the bulk of Ghana’s new greenfield projects, the largest number of projects were in services.
This period of 13 years has been very significant in the shifting of Ghana’s FDIs from natural resources into services. ‘To date, most of Ghana’s FDI projects have been greenfield investments, particularly in the extractives sector. Yet, over time, Ghana has seen its share of FDI shift from natural resources to services’ report said.
The shift from natural resource to services FDI tells a story of structural transformation through FDI. Services projects have over time increased (from 45 percent in 2003 to 2007 to 64 percent in recent years), while projects in extractives have diminished from a quarter of projects in 2003 to 2007, to only a fifth in recent years.
Facilitating investment, and particularly Foreign Direct Investment in high-productivity services such as ICT would be an important step in advancing economic diversification in the country. The trend is expected to open up the services industry for locals to participate.
SERVICES SECTOR ABSORBS LESS JOBS
Such investments have the benefit of building up capacity for local entrepreneurship. However ability of the services to create jobs is lower than if investments have been in the mineral resources or agricultural sector.