Singapore, who was predicted to be extinct by 1980, has a GDP 2000% higher than that of Ghana's. Singapore's GDP Per Capita currently stands at 85,000 dollars, the third in the world, whereas Ghana;s GDP Per Capita is a paltry $4000. I'm sure this leads to the next logical question of what happened.
We started quite well under Dr. Kwame Nkrumah, investing massively in industrial and infrastructural development - the Akosombo Hydro Electric Dam, the Tema Motoway, State Housing projects, free quality education for basic and tertiary students. Ghana was close to Utopia.
So enormous were the potentials that, in 1960 the World Bank predicted that Ghana would be a first-class economy in two decades, and Singapore who had also been kicked out by Malaysia about the same time, was predicted to go extinct.
Ghana, with all its resources is currently dealing with an unstable economy, an abysmal GDP growth rate of 4%, inflation rate close to 20%, unemployment of unknown proportions as there's no database to even count, a deteriorated energy sector, and a housing deficit of 1.4 million houses a year.
Singapore, who have no natural resources to boast of and was predicted to be extinct by now, has a GDP 2000% higher than that of Ghana's. Singapore's GDP Per Capita currently stands at 85,000 dollars, the third in the world, whereas Ghana's GDP Per Capita is a paltry $4000, 139th in the world.
Here are 5 events that happened in the economic history of Ghana that have ensured that we are exactly where we are now:
1 The 1966 Coup And Invitation Of The IMF
By the time the Supreme Military Council under Lt. General Joseph A. Ankrah, Lt. Gen Akwasi Amankwa Afrifa and Lt-Gen Emmanuel Kwasi Kotoka toppled the government of Dr. Kwame Nkrumah, Ghana's economic honeymoon that began in 1957 was over.
The 200 million pounds compensation paid to the Nkrumah government had ran out, inflation was beginning to break the backs of Ghanaians, massive shortage of basic household necessities like milk and sugar, revenue from cocoa was at an all- time low, and Ghanaians were beginning to cry.
So the Gen. Ankrah-led government surrended to the IMF, the U.S government and foreign debt. The economy did not recover. The crisis leaped from bad to worse until the June 4, 1979 uprising swept away the General Akuffo regime and his IMF cohorts in the Ghanaian bureaucracy. These were the repercussions of this decision:
Privatization of state farms and industries
university student loan scheme
families asked to take more responsibility for education
proliferation of private medical practice
blue print for sewage system for the whole country
devaluation to solve inherited problems
elimination of price controls
emphasis on staples for domestic consumption
foreign debts and servicing
cedi value allowed to fall
good excuse for military
I dare say, Ghanaians have missed the bullish attitude of the General Kutu Acheampong government. His government was assertive enough to cut major ties with the U.S, the IMF and other superpowers who were considered subtle drawbacks to Ghana's economic independence. He took the following stops to build a self- reliant government that concentrated on solving its problems in the most practical ways as possible:
Repudiate foreign debts
Operation feed yourself and industry
university loan scheme
CMB scholarships for education on whom you know basis
increase money supply
At this point, Ghana had been experiencing series of coup d'etaits and very short- lived governments. None really had the chance to repair the difficulties. And the fact that Nkrumah could not build a proper economic structure for the country meant that there was no foundation to stand on.
Dr. Hilla Limann's People's National Party- government was a temporary democratic respite to the coups which took a socio- capitalist approach to stabilizing the economy. The government tried doing the following:
relax price controls
reestablish credibility with donor and donor countries
balance of payment problems persist
Then came the Provisional National Defence Council led by Ft. Lt. Jerry John Rawlings. This would be his second coup d'etait, toppling the Limann-government he had initially handed power to. Under his second reign, which will be the longest any president had gotten in the history of Ghana, Chairman Rawlings had an agenda to clean-up the massive corruption and smuggling in the country at the time. This was rooted on a purely socialist ideology, running on intense military dictatorship. With massive support of the massive, he believed he was here to save the ordinary Ghanaian from economic hardship by taken from the corrupt rich and redistributing to the poor. The following are the decision's of the PNDC government between 1982 and 1984 that stood out:
socialist path to development
PDC's in charge of distribution
WDC's in charge an as part of the IMCC
use of force to control prices, smuggling
confiscate 50 cedi notes
blame the rich
embargo on Ghana
lack of medicine, food, transportation, etc.
Rawlings chain and necklace
Boy did these policies backfire terribly. There was severe drought in 1984 which precipitated a severe food shortage. Again Ghana's exports of cocoa, timber and gold hit record lows due to severe economic downturn in the economies of Ghana's primary export destinations. To make matters worse, Cote d'ivoire, Togo and Burkina Faso closed their borders to Ghanaians. At the same time, over 1 million Ghanaians were sent home from Nigeria. That, pretty much was the hardest time for Ghanaians and the Ghanaian economy.
Economic recovery program
layoffs at civil service
students bear more of cost
patients bear more of cost
more privatization of state industries
float the cedi
VAT, then UNVAT
schools/health care is broken down
interest rate at close to 50%
Goods available but not affordable
The Rawlings administration turned to the place all African countries at the time were going to for help- The IMF.
So it was that at the behest of the pro-IMF neoliberal Ministers, the IMF/World Bank wagon rolled into town in 1983. Rawlings became the chief apostle of the IMF and chief architect if the Economic Recovery Programme (1983-1985) and won international acclaim; while Ghana was praised by western journalists and their consultants as a “success story”. It was the former Nigerian premier, Tafawa Balewa who is quoted as saying that “when the West praises an African leader, he must be doing something wrong to his own people”.
Private sector was inactive after the closure of many businesses in the Kalabule days, but will pick up in the late 90s, when the socialist- democratic government of Rawlings allowed economic institutions to strengthen the economy.
This prepared the way for the J.A Kufuor administration in the year 2000, albeit heavily debt- laiden.
By the mid '90s under President Rawlings and his ministers, the Ghanaian economy got the semblance of some foundation and character. Prices got more stable, supply of goods on the market picked up, and businesses began to gain confidence. But the economy took the bad habit of import- dependency. Industrialisation was minimal, and factories began to see neglect.
As capitalists as the Kufuor administration was, they took steps to open up the economy to the private sector, laying emphasis on the opening of businesses, and a free market economy.
Foreign Direct Investment increased tremendously. But still industrialisation was poor. All attempts to set up factories under the President's Special Initiative failed woefully. The services sector was, however, on the rise with the influx of foreign investors in the financial and telecom industry.
Then comes President Jonn Mahama's politically- induced economic struggles and the attempts being made to solve it. That's a story in progress anyway, that will be told another day.