Author: John Wartemberg
An Economic Approach to Ghana’s Colonial Liberation
Overview
Formerly known as the Gold Coast, Ghana is a country
the size of Oregon located in West Africa. It is surrounded by French speaking
countries: On the north by Burkina Faso, on the east by Togo, and on the west
by Ivory Coast. Its southern border is shared with the Gulf of Guinea. The
country occupies an area of 238,537 sq. km and has a population of 20,244,154
(July 2002 EST.)[i]
.
The local currency in use is the cedi. As a result of continuously changing
political regimes and over-reliance on a few foreign exchange earners, Ghana
has not been able to attain a level of development reflecting the number of
years its has been free of British colonial rule. Ghana is a hotspot tourist
destination. Amongst its numerous attractions are the W.E.B. Dubois Center, Kwame Nkrumah Memorial Center, Kakum
National Park and the Boti Water Falls. An event which garners a lot of
attention and media coverage is the Pan African Historical Theater Festival
(PANAFEST), a bi-annual program which started in 1991 and originated out of a
paper which was written by a Ghanaian dramatist and Pan Africanist by the name
of Dr. Efua Sutherland in 1980[ii]. This festival attracts African Americans who come to
celebrate this occasion in Cape Coast, one of the towns from which the slaves
where put into ships and sent overseas. During the event, most of the
participants visit the dungeons where their ancestors were kept and have
various ceremonies in remembrance of them. Other African Americans use this as
an opportunity to learn more about their history and heritage and explore
business opportunities.
Political
Regimes
On March 6 1957, Ghana obtained its independence from its
colonial master, Britain. Dr. Kwame Nkrumah assumed the position of Prime
Minister upon attaining independence until 1960, when the country voted to
become a republic and chose him to be its president. Nkrumah declared the
country to be a socialist state in 1961 and implemented measures that permitted
the existence of only one political party[iii].
Nkrumah stayed in power until a military regime overthrew his government on
February 24 1966, in a bloodless CIA engineered coup-d’etat, while he was
visiting China. “FYI, we may have a pro-Western coup in Ghana soon. Certain key military
and police figures have been planning one for some time, and Ghana's
deteriorating economic condition may provide the spark. The plotters are
keeping us briefed, and State thinks we're more on the inside than the British.”
This proof of the role of the US in the coup –d’etat was written in memorandum
253 by Robert Komer in documents that were declassified in 1999[iv]. This
CIA-engineered overthrow was most likely influenced by Nkrumah’s socialist
declarations in addition to his accusations of the CIA being behind many crises
in the Third World in his famous published work: Neo-Colonialism: The Last
Stage of Imperialism[v].
A transitional government called the National
Liberation Council (NLC) headed by Lt. General Joseph Arthur Ankrah was formed
to take over the operation of the country after the coup. Lt. General Akwasi
Amankwa Afrifa took over as Chairman of the NLC in April 1966. A general election held in October 1969
elected Dr. Kofi Abrefa Busia as the country’s president. His tenure was cut
short, however, when the Ghana armed forces led by Lt. Col. Ignatius Acheampong
seized power in January 1972. Acheampong then became the chairman of the
National Redemption Council (NRC), which later became the Supreme Military Council
(SMC). In an uprising on June 4 1979, junior military officers removed the SMC
from power and Flt.-Lt. Jerry John Rawlings became the chairman of the Armed
Forces Revolutionary Council (AFRC).
This council was in power for three months during which it tried to rid
both the army and the general society of alleged wrong doers. On September 24
1979, power was officially transferred from the AFRC to a democratic civilian
government which was headed by Dr. Hilla Limann. His administration was
overthrown on December 31 1981 and Flt.-Lt. Jerry John Rawlings became the
Chairman of the Provisional National Defense Ruling Council, (PNDC)[vi] .
Upon assuming office, Rawlings banned political
parties, suspended the constitution and dissolved the parliament system already
in place. Another military coup led by American mercenaries and Ghanaian exiles
was unsuccessful in March 1986. In 1990 the government became informed that the
people wanted a multi party system of government and agreed to fulfill their
wishes[vii]. The public opinion for a multi party system of
government became known through forums which were held by the National
Commission for Democracy (NCD). Rawlings proposed that Ghana return to civilian
rule on March 6 1992. The ban on political parties was lifted on May 17, 1992
and Rawlings made known his intention to run for President in August of the
same year as the presidential candidate for the party he formed known as the
National Democratic Congress (NDC). He
won the election which took place in November 1992. Rawlings remained in power
until 2000, after serving the maximum two 4-year terms, when an opposition
party known as the New Patriotic Party which was led by John Agyekum Kuffor
took office. This party is still in power today. Having been through 16 years
of multiparty systems, 21 years of the military system and 6 years of a one
party system, it becomes evident that the ever changing government has been a
main cause of the developmental stagnation in the country. Each regime that
came into power had its own new agenda to satisfy instead of pursuing the
programs which were being carried out before they came into power. This
constant political instability greatly diminished any hopes of sustained
development.
Political
Structures
The governance set up in the country consists of the Executive,
Legislature and Judiciary arms. The Executive
is comprised of the President, Ministers, Council of State and other essential
government institutions such as the Ministries and the Free Zones Board. The
Legislature consists of the Parliament, District Assemblies and the various
political parties. The Judiciary is made up of the law courts and the Supreme
Court.
The Executive branch controls the administration of
the country. The Ministers are appointed by the President to handle the day to
day administration of the essential governmental institutions. Such
institutions include the Ministry of Finance and Economic Planning, the Defense
Ministry and the Ministry of Education, Youth and Sports. The Council of State
is a small group of noteworthy citizens who advise the president on national
issues. The Council of State is akin to the Council of Elders found in the
traditional Ghanaian political structure.
The Legislature is responsible for
instituting the laws to be used in administering the country. Parliament
consists of a group of people representing the 200 different constituencies in
Ghana as well as the different political parties. Parliament draws the
guidelines for projects to be undertaken and also has to approve any
substantial project to be undertaken and also has to approve any substantial
projects. The District Assembly is the basic unit of the government, which was
created for essential decision-making as well as administrative purposes. The
District Assembly is within itself a single entity, which has all the different
governmental functions such as political or developmental power at the grass
root level. The purpose of the District Assembly is to achieve a more equitable
allocation of power and to geographically disperse development in the country.
The District Assembly System consists of a Regional Coordinating Council, a
four-tier Metropolitan and a three-tier Municipal/District Assemblies
Structure. The District Assemblies consists of either Metropolitan, Municipal
or District. The Metropolitan consists of populations over 250,000, Municipal
of populations over 95000 and District of populations over 75000. There are
currently 3 Metropolitan, 4 Municipal and 103 District Assemblies[viii].
The Judiciary consists of the Supreme Court, the
Court of Appeal that has two divisions – the ordinary and full bench, the High
Court that has both appellate and original jurisdiction and the inferior and
traditional courts. These structures constitute the judiciary system in use by
Ghana according to the 1960, 1979 and 1992 Constitutions[ix]. The legal system in use is based on the
English common law as well as the customary law.
Military Efforts in Peacekeeping Operations
Ghana has been
involved in peacekeeping since 1960 with over 80,000 men and women involved in
different peacekeeping missions around the world. The Ghanaian peacekeeping
troops have served in various capacities including military patrollers,
electoral observers and humanitarian aid workers. One of the preeminent peacekeeping
operations known to most Ghanaians is the country’s major role in the
sub-regional Economic Community of West African States Monitoring Group
(ECOMOG). Its initial formation in 1990 was to help bring an end to the
bloodshed that was going on in Liberia at that time. It has however continued to be in existence and helped in the
reinstatement of President Ahmad Tejan Kabbah of Sierra Leone in 1998[x].
A contingent of Ghanaian peacekeeping forces also joined forces with Nigerian
counterparts to extend the peacekeeping efforts as the rebels renewed their
promises to allow the free passage of aid workers coming into the area to
deliver food[xi]. According to the United Nations Secretary
General Mr. Kofi Annan, "Ghanaians have served in 29 United Nations peacekeeping
operations around the world as well as in ECOMOG in Liberia and Sierra
Leone." He furthermore added that, "In UN peacekeeping alone, 98
Ghanaians have made the ultimate sacrifice, giving their lives in the service
of peace." This was part of a speech given by Mr. Annan while speaking at
a photo exhibition in Accra to mark the 40th anniversary of Ghana’s
peacekeeping efforts. The country considers its participation in peacekeeping
efforts as its contribution which is required under the United Nations charter
to the maintenance of international peace and securityx.
Commercial Relations
In addition to the political instability,
another factor hindering Ghana’s development is over reliance on a few primary exports.
Due to the lack of industries to process the raw materials that are obtained
from the environment, Ghana has to continuously depend on the sale of their
goods to foreign countries in order to generate income. Some of the country’s
main industries are agriculture and mining which account for most of Ghana’s
exports including cocoa and gold respectively. Examples of some subsistence
crops grown by the local farmers include yams, oil palm, grains and kola nut.
Cocoa
Cocoa production in Ghana has been the
backbone of development in the country and is produced in six out of the ten
regions. Almost half the population relies on its production as a source of
income. The benefits from the sale of cocoa have been felt in all aspects of
life ranging from the building of infrastructure to the awarding of educational
scholarships which enables some of the country’s citizens to be educated both
within and outside the country. Cocoa production has been present in Ghana for
about one hundred and thirty three years since it was brought to Ghana by
Tetteh Quarshie upon arrival from his travels to Fernando Po, now Bioko in
present day Equatorial Guinea in 1870[xii]. The growing of cocoa became such a success
that in the twentieth century, the British showed a desire to take control of
it so they could dictate and stabilize prices since they needed it to power
their industries back in England. This was because the sale of cocoa which was
due to the effort of the individual farmers, led to these price fluctuations. A
government managed marketing board known as the Cocoa Marketing Board (CMB) was
formed in 1947 to buy the cocoa from the farmers and control how and when it
was marketed in order to avoid the price fluctuations. The government however,
did not act as the middleman for free. The board paid the farmers substantially
less money in comparison to the price that was being fetched on international
markets and this basically amounted to a tax on the industry. At the time of
independence, funds that had been accumulated as a result of this tax totaled
one hundred million dollars3. The creation of this government board
ended up doing more harm than good. The low price received by the farmers
prompted them to smuggle the cocoa to other countries that were willing to pay
a better price. In addition, official neglect by the government caused the
dwindling of the resources obtained from the sale of cocoa. The increase in
price above the normal market levels also encouraged other countries to start
producing and establishing cocoa industries. Due to the increase in the number
of producers, the price of cocoa fell and the country ended up losing some of
its initial market share.
Currently, countries such as Malaysia and the
Ivory Coast that borrowed the cocoa production technology from Ghana have
surpassed the country in both its processing and production. Further manipulation as well as over
dependency of the economy on the sale of the raw cocoa produced has also led to
declining income realized from cocoa production. Over 60% of Ghana’s foreign
exchange is dependent on cocoa. It is therefore not too difficult for the
European market, which dominates cocoa consumption, to influence the country’s
economy by manipulating the price of cocoa on the international market. A
typical example was the projection of cocoa prices in 1998 to be over 1700
pounds per ton. Due to unpredictable market conditions at the end of the year,
however, a ton of cocoa cost about 800 pounds per ton. A further decrease in
price in 1999 to an all time low of 751 pounds per ton overturned the
developmental budget in Ghana during that same year[xiii]. The use of cocoa butter substitutes (CBS)
as well as cocoa butter equivalents (CBE) is also another major threat to cocoa
production in the country. It is estimated that over 250,000 tons of real cocoa
beans per annum stand to be replaced through the use of these cheaper
substitutes. These substitutes are already in use by some European chocolate
and confectionery manufacturers and there is a fear of American companies also following
suit. Over 400,000 tons of cocoa beans are produced in Ghana annually making
cocoa the second largest export earner to gold[xiv]. In order to reduce the economic depression
which will take place as a result of the loss of cocoa value, measures have to
be taken which will either reduce the over dependency on this commodity or a
change in the cocoa production process in order to either make it the money
earner it used to be or separate the international economical shocks from
having a direct influence on Ghana’s economy.
Gold
Gold being another key money maker for the
country also provides the world economy a direct way in which to affect the
Ghana economy. Ghana has been a supplier of gold since the 16th
century. Even though it is somewhat of a success story in terms of its turn
around it still has detrimental effects on the country. The gold industry
followed the economic downward trend that was being experienced by the county
in the 1970’s. By 1980 there was no advancement in output due to a lack of foreign
investments. However, in 1992 output exceeded one million ounces, which was due
to government policies of market liberalization that were aimed at increasing
foreign investments. Over 90% of the country’s gold production is from the
underground mines located in the Ashanti region. Ashanti Goldfields Corporation (AGC), one of the major players on
the mining scene was able to modernize its operation in 1993 through its
privatization by a British company named Lonrho. Lonrho has since then changed its name to Lonmin and now uses an environmentally friendly production
process called naturally occurring bacterial oxidation. Resulting from the
government’s 1989 legalization of unregistered gold mining, the remaining 10%
of gold mining is done by an increasing number of small scale miners. The
government took this step because it claimed that over 20% of the country’s
local production was obtained this way and therefore, this was a way to prevent
a decrease in the potential revenues which could be obtained from gold
production. However, the small-scale farmers do not use environmentally
friendly processes in their gold operations. A majority of these small-scale
miners extract alluvial deposits of gold through outdated means which are very
harmful to the surrounding environment and emit pollutants such as mercury. As
a result, atmospheric air pollution is degrading the Ghana’s environment. In
some extreme cases, desertification has occurred. The greatest environmental
impact, however, results from the diversion of rivers that are used in the
mining operations. The inhabitants of the surrounding towns and villages are
also being affected by the mercury used in separating gold from the sediments.
The mercury enters the local water supplies and contaminates it. Fishes and
their surrounding ecosystem experience the harmful effects first after which
humans are affected next[xv]. Even though the turn around of gold
production is a good example of the turn around of one of the major money
generators, the after effects of the operations of the small-scale operators
taint its success. The Ghanaian
government has a 17% stake in AGC; Lonmin owns 28%[xvi] and other shares are floated
on different exchanges such as the Ghanaian Stock Exchange (GSE) and the New
York Stock Exchange (NYSE).
Gold
Contribution to National Export: US$ 651.1 million
Source: http://www.moles.org/ProjectUnderground/drillbits/5_19/vs.html
Trading Relations
Ghana’s major trading partners
include Germany, Switzerland, France, the Netherlands, United Kingdom, Japan
and the United States. With these countries, Ghana has trading relations in the
export of cocoa and gold as well as other agricultural and mineral produce. The
country does about 29% of its trade with Germany, 12% with the United Kingdom,
12% with the United States, 5% with Japan and the remainder with other smaller
countries. Available data shows that revenues from export in the year 2000 were
US$2,239 million[xvii].
Trade
with the United Kingdom
The United Kingdom has been the country’s main trade
and developmental partner since independence. The British have put money
totaling over 100 million pounds into developmental projects in sectors
including agriculture, roads and water. Ghana exports to the United Kingdom in
2000 totaled over 100 million pounds and increased by over 31.43 percent in
2001. Imports from the United Kingdom in 2000 were 169.4 million pounds and
increased by 9% in 2001. Cocoa, coffee, spices, fish and non- ferrous metals
are among the top items exported to the United Kingdom. Imports to Ghana
include tobacco, general industrial machinery as well as telecom equipment[xviii]. Pre independence, British producers used the raw
products from its colonies such as Ghana to fuel their factories and to create
new markets for the sale of their goods. While using up the country’s resources
however, it did not invest in the infrastructure of the country, which can be
attributed as one reason why the country is still heavily dependent on its raw
material. It is apparent that economic relations with Ghana not to mention its
other colonies, to some extent helped to fuel some of the initial industrial
revolution in Britain whereas Ghana is still under developed and its economy continues
to be subject to the whims of external economic decision-makers.
Trade
with the United States
The United States is Ghana’s third largest trading
partner and the country is the third largest export market of the US goods in
Sub-Saharan Africa. Ghana has also become one of the popular destinations for
visitors trying to establish business links within Africa as well as for the
hosting of international conferences.
Trade deregulation has also made it possible for investments in the
telecommunication sector. This led to the second wire telecommunication
provider in 1998 by a US company[xix].
Trade
with Switzerland
The Swiss have also benefited greatly from their
relations with Ghana, starting with the Basel Mission which arrived in the
early 19th century. Various commodities such as coffee, cocoa and
palm kernel were exported. Unlike the British, the Swiss developed some road
networks to make it possible for them to transport the goods for export. Having
come to Ghana on religious grounds, the Swiss set up the Basel Mission Trading
Company (BTMC) in 1854. It is noteworthy that the Swiss changed their initial
religious intentions to that of profit making ventures. Some remnants of the
BTMC businesses are still evident today with about 53 Swiss management companies
in the country. The relations between the 2 countries were further strengthened
in 1973 when cocoa, which had been harvested by Tetteh Quarshie, a Basel
Missionary trainee, was harvested and exported to Europe. Ghana became the
number one exporter of cocoa to Switzerland in 1975 after the Swiss company
Cailler, had introduced the milk chocolate in Switzerland. Other agricultural
commodities such as the Lady Victoria pineapples continue to be in high demand[xx].
Debt
Accumulation and Restructuring
Even though the country started out with foreign reserves of over one
hundred million dollars during independence, continuous mismanagement coupled
with external economic shocks over the years has led to the country being in
debt with various foreign banks and countries.
Debt Accumulation
As of independence, the country
had over 481 million dollars in foreign reserves. However, many projects and
investments undertaken during the Nkrumah regime consisted of poorly conceived
and badly managed agricultural and industrial schemes. An example of this is
the sugar plant that was built at Asutuare without a water supply system and
which was in existence for a whole year before the flaw was discovered. Other
examples include a tomato and mango plant built in Wenchi, a town located in
the western region of Ghana. The plant was built with the capacity of producing
5000 and 7000 tonnes of tomatoes and mangoes respectively. After the completion
of the factory at an added cost of 80% over budget, it was discovered by the authorities
that there were only just a few mango trees in the factory’s surrounding area
and that it would take seven years before newly planted mango trees would start
bearing. Soviet Ilyushin
planes were also purchased for use by Ghana Airways which could only be
serviced in the Soviet Union. As a result, the airline had to maintain service
to the Soviet Union in order to accommodate this servicing requirement. This
travel route had to be maintained even though there were hardly any passengers
on board and the few that were, were government officials who were flying for
freeiii. Nkrumah also signed an agreement with Kaiser
Aluminum who happened to be the owners of Volta Aluminum Company (VALCO). Under
the agreement, VALCO was mandated to pay 1.1 US cents for a kilowatt of
electricity which was supplied from the Volta Lake. Over forty years after the signing of this contract, VALCO still
stands by the old agreement and pays 1.1 cents/KWh while the Ghanaian public pays 7.8 cents/KWh[xxi]. The Volta River
Authority (VRA) which is in charge of producing electric power and its
transmission for use pays the difference of 6.7 cents/KWh.
The country had to resort to supplier credit to finance some of its
projects because of its fast depleting foreign reserves and falling cocoa
prices. Nkrumah also used some of the reserves to pursue his initiative of
African unity by giving countries such as Guinea money for their development.
By the mid 1960’s the reserves were completely depleted and the country was
unable to make its repayment schedules on its loans. Foreign donors led by the
United States provided imports loans to be used for the importation of
essential commodities. During the Busia regime, increase in exports in addition
to falling cocoa prices led to a serious trade deficit. There was a stagnant 10
year period preceding the take over by the NRC due to an increase in population
growth that offset the increase in GDP as well as a decline in real earnings of
many Ghanaians16.
Debt Restructuring
A restructuring program, which
stressed self reliance particularly in the area of food production, was
undertaken during General Acheampong’s administration from 1972-1978. The
program however did not last because of post 1973 oil price increases and
inherited foreign debt which totaled 1 billion dollars. An economic recovery program was launched in
1983 in conjunction with the IMF with an aim of reviving unproductive sectors.
One of the aims was to curb inflation through increased fiscal and monetary
discipline. Through 1987, the cedi declined by more than 6300%. For the first
time since 1978, the country experienced solid growth from 1984-1988. Three supporting
IMF standby agreements and two other credits from the World Bank totaling 611
million dollars and 1 billion dollars respectively have been pumped into the
economic recovery program since the initial August 1983 standby agreement. The
second phase of the IMF program which was implemented from 1987 to 1990 focused
on economic restructuring and revitalization of social services. The third
phase which started in 1998 focused on financial transparency and macroeconomic
stability. In March 2001, Ghana opted for debt relief under the Highly Indebted
Poor Country (HIPC) program. The IMF and the World Bank Group's International
Development Association (IDA) agreed to a comprehensive debt reduction package
under the HIPC initiative in February 2002. Under the package, total relief
totaling approximately 2.18 billion dollars which covers about 67% of the debt
service obligations owed to multilateral lending institutions and bilateral
creditors will be delivered over a 20 year period. A detailed plan for the
dispersion of the HIPC funds has been developed and areas to receive funding
include education, health, infrastructure and improved governance. A portion of
the funds is also being used to reduce the domestic public debt. In accordance
with the plan developed, there was an increase in the price of electricity,
fuel and municipal waste disposal in 2002 and 2003[xxii].
Reducing the Wealth Disparity
With all these positive measures put in place, the country must ensure
that it does not lose focus of its final goal, which is to reduce the disparity
between the rich and the poor. In order to be successful, it needs to develop
projects mainly targeted at the rural areas which have under utilized physical
and human resources. An important role which the government can play is to
transform the farming operations from one of subsistence farming into that of a
commercially viable enterprise. It can put in place reforms that will include
the commercial value of the land into the prices of the products obtained from
it. This is presently not the situation and can be transformed into a way of
increasing the revenues obtained from the farmers through increased market
value of their produce.
Furthermore, since Ghana has a mostly agriculture-based economy,
industrialization needs to take place in this sector. Factories need to be
established to add value to the raw materials obtained before it is exported.
This will enable it to command a better market value and increase the country’s
market share in the produce. A typical example is that of cocoa.
Cocoa Based Solutions
Rather than export raw cocoa beans for a minute value to European
confectionaries such as Cadburys and Nestle who use it in their products and
sell it to their consumers at inflated prices, Ghana can stop being the
middleman and manufacture its own cocoa products and market them. Initially to
get market share and recognition, it can align itself with an international
known company or symbol and market it through that avenue. An alternate route
to manufacturing its own cocoa products would be to improve upon the quality
and increase the quantity of already existing locally produced cocoa products.
One such example is the award winning Golden Tree Chocolates brand. The brand
won four gold medals and one silver medal in the Monde Selection International
Competition held in 1980[xxiii]. By increasing investments in Golden Tree
Chocolates, it current market share and facilities can be increased till the
point where it has the capability to use up a majority of the locally produced
cocoa. The chocolates could then compete in terms of both price and quality to
that of the chocolates produced by Cadburys, Nestle and other international
confectionaries.
At the local level, the Produce Buying Company (PBC), a subsidiary of
the Cocoa Marketing Board, is currently responsible for this function. The PBC
has been diversified and the whole cocoa buying industry has been open to
private investors. The PBC has been responsible in breaking up the monopoly
that the CMB has in the purchase of cocoa and increase the farmers’ revenue.
With this increase in revenues, the farmers then have no need to smuggle the
cocoa to other countries where they can get better prices. Joint ventures as
well as foreign direct investments should also be encouraged with the farmers
providing the local expertise and the investors providing the required capital,
technology and equipment.
At an international level, Ghana should consider forming a cartel with
other cocoa producing countries. They can then sell cocoa to the countries and
firms that need it for their production at an agreed upon price which is favorable
to all members of the cartel. This would lead to a far greater increase in
revenue in comparison with the revenues obtained from Ghana’s individual cocoa
sales.
Gold Based Solutions
In the area of gold production, the government and the Ministry of
Mines should find ways to reduce the human and environmental dangers being
caused by the operations of the small-scale miners. The government can tax the
foreign mines to generate revenue which can be used for government programs. For
instance, the tax could be used to ameliorate the health and environmental
degradation problems which have resulted from the mine operations. Foreign
investments should also be encouraged which lead to a conglomeration of these
small groups of miners. By so doing, they can streamline their operations,
reduce internal competition and also be viewed as an attractive investment
since by merging, they form a bigger group.
Renegotiating of Outdated Contracts
Contracts
such as the Kaiser contract need to be revised. This is even more pressing
considering the fact that Ghana is currently stretched thin with its commitment
to supply electricity to VALCO. The revision of contracts is essential to
reflect current economic conditions. It is absurd for Kaiser to expect to still
pay its initial price offering of 1.1 cents/KWh while the prices of all other
goods and services have increased to reflect changing times. The old contract
needs to be nullified and a new one created which has the interest of the
Ghanaian people at heart.
Debt Reduction
Ghana has currently put in place measures such as the HIPC initiative
to reduce its debt. Still, a continuous effort is required to ensure that the
remaining debt decreases as opposed to increasing through unpredicted
expenditure and mismanagement. In effect, the government has to put in place
checks and balances that ensure transparency in the use of allocated funds.
Regular audits need to be performed to ensure that no misappropriation of funds
is taking place. The domestic debt needs to be monitored, restructured and
reduced. In order to do this, it should be ensured by the appropriate
monitoring body that the expenditures keep up with the revenues to prevent an
increase in the domestic debt. Expenditure on poverty related programs using
the targeted funds also need to be tracked to ensure that it is used for its
intended purpose[xxiv]. The Bank of Ghana, which is the country’s
central bank, needs to limit its domestic borrowing. This is because the bank
in the past has acted as a guarantor of loans undertaken by some state owned
enterprises which have defaulted on their payments and made the bank liable.
The bank should therefore set a reasonable and effective cap on the amount
which the government can borrow from it in a given year. The bank should also
have autonomy from the government so that it can analyze the financial
positions and projects it undertakes from a practical point of view rather than
to satisfy the government’s needs.
Another essential measure which needs to be put in place is that of
price and exchange rate stability. This can be achieved through the
establishment of an inter bank foreign exchange market. Presently there are two
distinct markets: the small scale currency exchanges which do business with
individuals and banks which deal with corporations.
Conclusion
Even though Ghana won its liberation from its British colonial
oppressors in 1957, it has yet to become an economically self sufficient
nation. One factor which has hindered Ghana’s progress has been its frequent
change in political regimes, because each administration had its own political
agenda and was not in power long enough to carry out its goal. Another factor
is the country’s over reliance on primary foreign exchange earners instead of
adding value to its raw materials through domestic production. Ghana has
incurred a huge debt since independence and is now on track with its debt
restructuring program. It is hoped that the political stability which it has
enjoyed for the past twenty four years still continues in order to accelerate
the development schedule.
Works Cited