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22.04.2004 Feature Article

Can Ghana achieve Middle-income status in 2020?

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Looking back in time and what the future holds. December 2004 will the defining moment in Ghana's history since 6th March 1957. This historic moment would not be lost on Ghanaians both in the country and the Diaspora about the difficult years ahead. If Ghana is to achieve her cherish goal of becoming the first African country to achieve middle-income status by raising her Gross Domestic Product (GDP) to $5,000 or more in 2020, then this is the beginning. This is a huge task that would demand an annual growth rate of over 5% to achieve that. Current GDP is $300. Can Ghana make it? Not forgetting the human developmental issues such as poverty, gender and primary health care.

Since the country returned to democratic rule some 12 years ago, Ghanaians still cling to the hope of achieving middle-income status in 2020. Ex-President Rawlings set the task of achieving this status in the 1990s but the policy was blown off course by allegations of ministerial corruptions during the second term of the NDC administration. NPP government of John Kufuor adopted some of the NDC's economic policies which (to some degree were influence by the Bretton Wood institutions policies) when the party was voted into office in 2000 elections. Although majority of Ghanaians are relatively poor, with over half of the population live on less than $1 a day, yet their enthusiasm of embracing this noble concept (putting country before self) has favourably been compared with the 1980s success stories of Newly Industrialised Countries of Asia. All stakeholders have shown a great sense of urgency in attaining this goal with religious zeal. This can be seen in the frequency of interactions and global dialogue between government officials, traditional rulers, politicians, policy makers and their compatriots in diaspora.

In 2000 the newly elected NPP government declared “Zero Tolerance on Corruption” and put in place measures to eliminate corrupt practices that were undermining conducting business in Ghana. Corruption was, and still is endemic in Ghanaian society, that some people demand bribe before providing you with a service. Writing in the Ghanaian Herald (December 2003) Stephen Nyarko observed that 3 years after being elected, the NPP government has not been able to fully realise it's policies of stamping out corruption or cutting unemployment.

The problems inherited by the NPP government were a result of several years of neglect, bad policies and corruption by past governments. Military juntas aided by corrupt politicians that rule from 1966 to 1983 plundered the country to a point where Ghanaians lost their dignity. The high incidence of hopelessness among Ghanaians led to the 1979 junior officers uprising that overthrew the military junta( Rawlings, then a young officer in the Air force who led the uprising, embodied that hopelessness and became an instant hero among the youth and the students in the sub region). The second Rawlings coup of 1983 prevented Ghana from descending into total anarchy, thus saving the country from the lawlessness and disorder that we are seeing in the sub region. Chairman Rawlings' 1983 revolution relieved the people of Ghana from their pains and the cheers that greeted him was telling. Rawlings packed his team with bright young ex-student leaders. Ex-student leaders like Chris Atim and Steve Akuffu among others came to the fore. The team was later strengthen by other youthful and bright technocrats, academics and lawyers with impeccable record, including Dr Kwesi Botchway, Dr Obed Asamoah, P.V.Obeng, Ambassador Koomson, Ambassador Isaac Osei, Owuraku Amofa, Oheneba Kane, Nana Akuaku Sarpong of Agogo, Dr Tony Aidoo, Dr Ibn Chambas, Professor Ata Mills, the Ahoiws ,Tsikatas and Fiadjo brothers and others. Rawlings had no option but to adopt the Structural Adjustment Programmes of the Bretton Wood institutions in its totality. The team gave his government credibility and set in motion the reforms that followed. They should be credited for laying the foundation for growth and giving the Ghanaian community in diaspora the self-dignity.

Since 1983 when Ghana embarked on economic recovery by embracing the Bretton Wood Institutions' Structural Policies in it's entirely, the country has made tremendous progress by stabilising its economic decline somewhat. The economic liberalisation during the first phase of the structural programs brought hardship to many citizens with resultant high unemployment and the introduction of user fees into tertiary education and primary health care. This was exacerbated by the expulsions of over a million Ghanaians from neighbouring countries. By personally taking charge to welcome and integrate the “returnees” into their communities and in effect into the economy turned ex-president Rawlings into a hero and a “God Like figure” among the Ghanaians. Rawlings economic “Miracle” aided by the large inflows from the International Financial Institutions enable the economy to grow by an average of 5% per annum. Rawlings was able to tape into the huge savings and earnings of Ghanaians in diaspora and cumulated into the large remittances that began to pour into the country from 1991 on wards.

What the Rawlings' government failed to do was to admit to the international community the level of these inflows and to include them in his development plan, thus missing the opportunity to embark on those social developments necessary for a successful take off, and resulted in massive corruption in every fabric of the Ghanaian society that his successor inherited. Like Dr Nkrumah, Rawlings hostility to Small and Medium Industries and in effect the private sector was wrong. This is where the “Asian Miracle” and Ghana's “economic recovery” diverge. However most commentators do agree that the making of the Korean “Miracle” was not as perfect as the United States neo-classic economists make everyone believe. Having said that, the Korean government used the enabling environment and large inflows to developed its human and physical capital. The Korean government actively selected those SMEs that were promoted to spearhead the country's export drive. This is where some commentators argue that Ghana should have followed Korean's example but Nkrumah chose to follow the socialist part. What those commentators who argue, using the Korean analogy, fail to realised was that, Korean industries developed under heavy state protection and were protected by the United States and Japan from Multi National Corporations' encroachments at the height of the Cold War.

Korea was facing Communist China and thus was a strategic position for the Western Countries. Geo-politics played a crucial role in Korea's development. Hence the notion by the neo-classic economists that the private sector alone foster development without government intervention and injections is a fallacy. As the Asian financial crises of the 1990s has shown, the role played by the Malaysian government to protect its infant industries and major financial institutions is a classic example of states' role in the protection of a country's “Multinationals” be they banks or industries”.

Ghana under Nkrumah could have benefit greatly if it had aligned herself to the West instead of adopting policies that made her an enemy of the West. This was not helped by Dr Nkrumah's stature as the unofficial co-leader (with General Tito) of the Non-Aligned movement and his aim of uniting Africa under one (his)leadership. The West saw him as ideological (he was branded a communist) threat to their economic plundering of Africa's resources and hence must be stopped. As I argue in my earlier essay (Nkrumah's Legacy and Aftermath),Dr Nkrumah's ideological thinking was more advanced even for the Western World during the period in question. His thesis (of African Unity) was well ahead of his time. The West thought Nkrumah wanted to build a united Africa under communism. They misunderstood Dr Nkrumah. Now that most academics have began reluctantly to acknowledge the notion behind his thesis.

In effect politics did played a huge part in Ghana's lost opportunity in forging ahead of its neighbours. Nkrumah, like Nyerere of Tanzania, embarked on grand projects and a strategy of industrialisation (Import Substitution Growth) that was partially successful. Despite his economic failure, what cannot be denied was Dr Nkrumah's success in holding the country together. The methodology that Dr Nkrumah use to unified the country was criticise at the time by his opponents (who were advocating for federation) as autocratic yet Nkrumah stood his ground. Nkrumah brought education to the deprived regions of Ghana and established scholarship funds for the cocoa farmers to encourage them to send their children to school. His young Pioneer movement became a unifying force. Membership requires every child to be enrolled in school and pledge total loyalty to Ghana. Again his opponents deemed this as an indoctrination of school children of hero-worshipping Dr Nkrumah. Like General Tito, Nkrumah encouraged intermarriages between different tribal groups and encouraging peaceful co-existence. As “Ayebwe” towns and “Zongos” up and down the country typifies, interlacing his policies with patriotism has stood the test of time and has benefited Ghana greatly. Nkrumah also promoted or encouraged minor and major Traditional rulers to play prominent role in their traditional areas. Thus eminent nananom like late Nana Agyeman Badu of Dormaa Ahenkro, late Nana Kwamina Anaysi I of Sekondi, late Ashantihene Nana Sir Agyeman Prempeh II and others became a source of inspiration and embodiment of the country. What Dr Nkrumah should have done, nut fail to do was agricultural land reform. This thorny issue of land reform would have to be tackled at some point in time. Late industrialised countries all embarked on Agricultural Land reforms, making sure they were self- sufficient in food production before initiating industrial reforms. Most third world countries, including Ghana that aspire to achieving middle-income status should also move away from Aid related reforms (majority with aid forming part of their GDP) and maintaining fiscal discipline. Aid gives donor countries the opportunity to dictate the sort of policies that countries should pursue, thus taking over the total control of their objectives and defeating their goals. NGOs do not necessary serve the interests of the recipient countries but rather the donor countries as countless projects and NGOs activities in various African countries typify how they can hinder development. A lot of them tend to frustrate a country's developmental goals. In 1999, I wrote a thesis on the role of “Aid” in Development in which I strongly argue that the inflows that Ghana was receiving from her nationals abroad should be built into her development plan. I question the uses of the inflow by the government and called on the Rawlings NDC government to state what the money was being used for. I argue that the remittances should be use to develop social infrastructure and give help to SMEs to create employment. This should compensate for the donor related Aid. The inflows from citizens abroad now represent the third foreign earner for the country, behind cocoa and gold, and is averaging £1billion a year. So what are the uses of these large remittances? Although the current Kufuor government did acknowledge the inflows last year, yet they have not explicitly spelt out its uses. The essence of good government is by telling the people what inward investment is being used for… not going into the foreign accounts of ministers. This NPP government should be given credit for taking some tough decisions (decisions urged on the government by the World Bank/IMF) to steer the economy on course, such as limiting government subsidy on fuel and trimming down the huge public sector bill. The honesty of the President Kufuor and his commitment for reforming the economy cannot be questioned, just as the honesty and commitment of ex-president Rawlings(despite the excesses of some of his ministers). This same excesses has roar its head in the current administration. Thus the defining moment for the voters as I stated at the beginning of this essay. Making an informed opinion on issues and which party would best serve their interests sadly does not hold sway on a continent where hunger, poverty and opportunistic diseases that are treatable in the West, but ( in the case of HIV/AIDS, drugs prolong life of those who are HIV positive) are rampant and deadly in Africa, vote on party line. Arresting the free fall of the cedi is another issue that would be facing the incoming administration. Many commentators have use this forum to state out what policies the government need to pursue and reforms of various sectors of the economy, including encouraging savings that would form the backbone of development. However what all fail to realise is that by only creating employment that all these novelty ideas including vigorous tax collection and savings by the people can be achieved. Underemployment and unemployment is the main issue confronting any incoming administration. Unemployment is running well over 60% of the working population. This is very worrying and need urgent attention if the vision 2020 project is not to be blown off course.

The current crop of leaders (of Danquah-Busia NPP group and Nkrumahists of NDC/CPP group) and all stakeholders share the same ambition. That is to create enabling environment to attract inward investment and see a prosperous country. This was the same goal of late Dr Nkrumah, late Dr Busia, ex-President Rawlings and it is of President Kufuor and candidate Professor Ata Mills.

Email author: peter jeffrey [[email protected]]

Peter Nee Jeffrey
Peter Nee Jeffrey, © 2004

The author has 54 publications published on Modern Ghana. Column Page: PeterNeeJeffrey

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