July – September 2013

Vol 11.2 July – September 2013 ISSN 0855-9163

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Articles in this Issue

Foreign Aid, Domestic Revenue and Economic Growth in Ghana

Joseph Kwadwo Tuffuor (PhD)


Various funding sources are available to any government in a developing country. In spite of their availability, each source has its unique way of contributing to economic growth. The objective of this study is to determine the relationship between foreign aid and domestic revenue on one hand and their effect on economic growth in Ghana. Using macroeconomic time series data (for 1970 – 2011) and error correction methodology, together with Granger causality tests, the results show that domestic revenue and foreign aid complement each other for development financing in Ghana. Moreover, foreign aid cannot be a substitute for domestic revenue generation as domestic revenue is the most important of the two factors. Domestic revenue is the most effective irrespective of the existence of other forms of capital. In addition, the threshold effect of aid becomes non-existent when there is no capital accumulation. There is a positive causal link from both domestic revenue and foreign aid to economic growth. It is recommended that more attention should be given to the generation of domestic revenue.

Farmer Training and Household Labour Use

R. D. Osei, I. Osei Akoto, R. Kyere-Boateng


The question has always been asked as to whether training leads to a change in farmer behaviour in terms of labour for farm production. This question forms the main thesis of this paper. The paper investigates this question, among others, using panel data obtained from about 3,000 farmers and collected over the period February 2010 to January 2011. The paper employs a difference-in-difference estimator to test whether training provided to beneficiary farmers under the Millennium Challenge Account (MCA) Ghana programme did change labour use on the farms of these farmers. The main findings of the study are that the training seems to have impacted positively on households’ decision to allocate labour hours to harvesting related activities for both the major and minor seasons. The study concludes by noting that there are significant differential impacts with respect to the type of labour, and/or zone for which the estimates were generated. In general, the impact is positive for all the cases where evidence of impact is found. It is therefore suggested that farmers increased their labour use because of their expectations of positive returns due to the Millennium Development Authority (MiDA) intervention.

A Critical Assesment of Information Technology Disaster Recovery Strategies in Ghanaian Banks

Paul Danquah, Steve Aryeetey, Charles Buabeng Andoh


Banks were among the earliest adopters of information technology in the business world. In any business organisation, customer data and other corporate information form a critical and valuable asset of the organisation. Disaster recovery planning protects data against loss. The focus of the research was to investigate the disaster recovery strategies and plans being used by the banking industry in Ghana and the preparedness of the banks’ staff for recovery from information technology disaster. Using a combination of quantitative and qualitative research approaches with the simple random sampling technique, the results showed that banks in Ghana are basically ill-prepared for Information technology (IT) disasters, a premise on which a number of recommendations are made to improve the situation. It needs to be emphasized that the results may not be suitable for generalization since only seven out of thirty banks were researched.

The Influence of Ownership Structure on Performance of Ghanaian Insurance and Banking Firms

Charles Bannor and Theodora A. Odonkor


As at 2005, Ghana diversified 351 state-owned enterprises (either fully or partially owned), which attracted a substantial foreign direct investment into the country. This was to introduce efficiency into the management of these public enterprises, hence, the belief that ownership and, in particular, specific type of composition of corporate ownership structure has an impact on a firm’s performance. This paper examines the influence of ownership structure on firm performance in Ghana as one of the buoyant and emerging economies in Sub-Saharan Africa. Using data from a period of 2000-2010, panel regression was employed to analyze the impact of three major types of ownership structure and the determinants of performance. The ownership structures that are employed in this study are: (1) foreign ownership, (2) Government ownership, and (3) Close corporations. Using two accounting-based measures of financial performance (i.e. return on equity (ROE) and return on asset (ROA), and based on the sample of banks and insurance firms the result showed that both closed corporations and government-owned firms did not perform better than the foreign owned firms. The study also found that inflation and exchange rate are the two main macroeconomic variables that influence firm performance.

Reducing Poverty Through a Social Grants Programme: The Case of Ghana

Dr. Robert Darko Osei


Social security and pensions have an important role to play in sustaining poverty reduction efforts. Ghana is one of the countries in SSA that is implementing a social grants policy under it’sNational Social Protection Strategy (NSPS, 2007). This study investigates the extent to which Ghana’s social grant policies can impact on poverty, inequality and government fiscals in Ghana. The main findings of this study are that a universal social grants programme will reduce the incidence and depth of poverty as well as inequality in Ghana. It however argues that for Ghana, affordability remains the biggest challenge.