Economic’Growth’and’Development’ Strategies’inGhana:’ A ...€¦ · efficient...

(Image: CIA World Factbook)

U n i v e r s i t y o f N o r t h T e x a s | S p r i n g 2 0 1 2

08 Fall

Economic Growth and Development Strategies in Ghana:

A case study

April Allison

Growth & Development Strategies in Ghana A. Allison May 2012

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Abstract Propelled by foreign aid, investment, and counsel, Ghana steadily moves toward increased social development and economic growth by fostering efficient sustainable agricultural practices, education, gender equity, and the expansion of its infrastructure. Although Ghana currently maintains an approximate 11% unemployment rate, as the economy continues to mature, debt may be reduced and more government spending may be directed toward supporting programs that nurture and sustain social improvements.

Background

Ghana, located in West Africa, is nestled between Côte d’Ivoire, Togo, and Burkina Faso, and is bordered by the Gulf of Guinea. Historically, Ghana has consisted of several independent kingdoms, including: Gonja, Dagomba, Asante, and Fante. The Fante depended upon the British for protection from the Asante. In 1872, the British purchased Elmina Castle, a Dutch fort, which stripped the Asante of their only access to the sea for trade. This then prompted an attack in 1873 by the Asante in an attempt to re-establish trade on the Guinea coast. In 1874, allied with the Fante states, the British defeated the Asante in order to suppress any further invasions (Britain and the Gold Coast).

After having gained its independence in 1957, Ghana, still upholding a decentralized government, aspired to secure improvements in its economy and the quality of life of its people. Through government policies, local programs, and foreign initiatives, Ghana strives for both economic growth and development. Through international and domestic cooperation, Ghana hopes to break the vicious cycle to which most Less Developed Countries find themselves, seeking a better standard of living for its people. At the turn of its independence, Ghana showed promise in achieving these aspirations as it had significant natural resources, such as gold and


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cocoa, and had an encouraging educational system in comparison to the rest of Africa. Utilizing its resources, Ghana temporarily established a role in the global market as a leading cocoa producer. Due to its interconnectedness to the global market, however, and fueled by corruption and political mishap, this dependence on a primary product export prompted the Ghanaian economy to collapse in the 1970s (Ghana’s Story). A major contributing factor of this economic decline was the plummet of cocoa prices in the mid 1960s. Like a domino effect, a reduction in world cocoa prices led to less foreign revenue entering into Ghana. This decline in foreign revenue added difficulty to Ghana’s repayment of foreign loans, leading Ghana to take out more loans (Modern Ghana). Swept up in a vicious circle, Ghana’s debt increased rapidly as production fell. This economic decline continued into the early 1980s, having endured a 66% drop in cocoa production by 1983. Currently, Ghana has an external debt of about eight billion dollars (CIA World Factbook). Over the next 25 years, Ghana showed miraculous economic and agricultural growth as cocoa production surpassed all prior levels of output. See Figure 1 on page 10. Staple food output rose faster than population growth, curbing malnourishment. Introduction The growth in the supply of Ghanaian fruits and vegetables has been quite beneficial as it has provided food for local consumption, and, thanks to high yields, has also allowed for exportation to foreign markets. This food surplus is notable as many Less Developed Countries are burdened with the expense of importing foodstuffs or become dependent on donated food supplies in the form of foreign aid; and many others are burdened with the necessity of subsistence farming which tends to restrict individuals, especially women, from acquiring education and paid work. Thanks to the shift from subsistence farming to paid work, the Ghanaian labor force has become more mixed. See Figure 2 on page 10. Some Ghanaians, however, still rely upon subsistence agriculture due to insufficient means to acquire the readily available food sources (Ghana’s Story).


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This food surplus is also advantageous as food shortages are common in northern Ghana due to “erratic rainfall and a short harvest season” (Integrated Approach), allowing the purchase of foodstuffs to be kept within the borders. This economic and agricultural growth has also lessened the percentage of people living in extreme poverty, slightly shrinking the economic inequality, although it should be noted that an income distribution gap is still prevalent in Ghana. Participation in the global market has positively impacted the Ghanaian economy through the combination of remittances and exports, namely the exportation of fruits, vegetables, cocoa, and gold; additionally, Ghana has recently added petroleum to its exports (CIA World Factbook). Ghana began officially exporting oil in December of 2010. In the first quarter of 2011, the exportation of crude oil accounted for around $484.2 million USD (Ghana Business News, Dogbevi). Petroleum has created a new sector in the economy, bringing in foreign revenue and investment, as well as stimulating job creation. Former President J. A. Kufuor, in reference to funds generated by Jubilee Field offshore drilling, asserted that, “Oil is money and we need money to do the schools, the roads, the hospitals…” (Joy Online). Apart from focusing on economic development, Ghana has also implemented policies and has received funding and foreign advice on promoting and sustaining social growth, seeking better education and health for all of its citizens. Current revenues in Ghana are estimated at $7.358 billion and are depleted by $9.431 billion in expenditures, adding to the Ghanaian debt; however, it is expected that petroleum exports will begin to relieve this debt, and will shrink annual deficits. The Organization for Economic Co-Operation and Development, or the OECD, is a collective group whose mission is “to promote policies that will improve the economic and social well-being of people around the world”, including Ghana. Recently, Jeffrey Owens, head of the OECD Tax Centre, advised against Ghana’s continuing position as a tax haven due to its geographic location, as it would be a prime location for corruption. Wilson Prichard of the Institute of Development Studies backed this assertion, claiming that, “in the absence of a very strong regulatory framework and very strong standards of transparency there’s a particularly high risk that a


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tax haven in west Africa, which is home to major oil wealth and high levels of corruption, could facilitate large-scale corruption and tax evasion, and pose a correspondingly large risk to good governance and economic growth in the region.” (Ghana Web) Advice from outside institutions, like the OECD, is believed to be one of the main contributing factors facilitating growth and development in Ghana. Many of the transnational organizations influencing development in Ghana employ multiple tactics or seek multiple objectives. The United Nations Development Programme, for example, promotes economic growth via economic policy, and promotes private sector expansion through sustainable practices. The main goal of the UNDP is to achieve poverty reduction via sustainable development through the use of environmental management and energy efficiency. The UNDP is coordinating with both the Environmental Protection Agency and the National Disaster Management Organization to promote sustainable acts and preventative measures against additional enablers of climate change as well as policies and strategies for dealing with the consequences of climate change. This collective effort promotes sustainable land management and warning systems against factors that threaten human health and safety. The UNDP encourages the reduction of energy waste and more efficient technologies, reducing Green House Gas emissions (UNDP.org). In addition to lending guidance in an array of affairs, many International and local Nongovernmental Organizations also promote and fund programs that foster development in Ghana. These organizations promote, for instance, more efficient and sustainable agricultural practices, education, and gender equity that will lead to social improvements in the long run. Having learned from the ills of the “Green Revolution” and the environmental degradation and social harm of industrialized farming, small sustainable farms are promoted within Ghana. As a result, soils are not deprived of organic material, and water-intensive irrigation projects have not led to waterlogging, salinization, and desertification, as is the problematic case found in many African countries. The government is also actively seeking foreign investors for improvements to Ghana’s infrastructure. The National Food and Agricultural Show, or FAGRO, is an event held in Ghana that gathers innovators in agribusiness and efficient agrarian


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practices and technologies, and spreads this information to the farmers of Ghana. In addition to this organization, the African Green Revolution Forum is concentrating its focus on several regions of Africa, including Ghana. For 2012, The AGRF plans to “bring together Heads of State and government ministers, business leaders, grass root organizations, farmers, global thought leaders and numerous other inspiring and leading stakeholders to discuss and debate current international and national efforts to secure food security and drive transformative agricultural change and green growth on the African continent” (African Green Revolution Forum). According to the official AGRF website, this year’s key focal points will include the following: Climate change and sustainable agricultural practices; agriculture and infrastructure investment needs; transformative agricultural partnerships, as well as the role of smallholder farmers; agricultural trade and investment environment; and science, technology and innovation (African Green Revolution Forum). The United Nation’s Food and Agriculture Organization also has a presence in Ghana. In 1999, for instance, the FAO promoted simple but more efficient agricultural practices. During the time span of May 31 through June 3 of 2011, the FAO held a workshop in Accra, the capital of Ghana, on post-harvest loss reduction in West Africa (FAO.org). According to the FAO sponsored video, Missing Food: The Case of Post-Harvest Grain Losses in Sub-Saharan Africa, as much as 20% of grain harvested in Sub-Saharan Africa is lost as a result of pests and decay. The FAO projects that this could feed 48 million people for one year. A reduction in these losses, worth around $4 billion, would not only add to food security in Africa, but would also be financially beneficial as grain prices continues to rise in the global market. Simply put, a reduction in post-harvest losses would lead to a reduction in expensive, imported grains, as, according to the FAO, these losses are equivalent to roughly half of Africa’s annual grain imports. The FAO encourages efficient practices that do not require additional land or water. Farmers are encouraged to practice better drying and storing techniques. Such techniques include the utilization of drying cribs, and metallic silos and grain cocoons for storage. Additionally, women were previously burdened with the task of manually grinding the grains, but electric hammer mills have relieved them of this task. These hammer mills


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not only make work easier, but are also more efficient as grains may be processed in mere minutes rather than hours, increasing production and granting women more time to invest in their families and education (Missing Food, Video). Education is believed to be a major catalyst for development, especially the education of women. John Dramani Mahama, the current Ghanaian Vice President, understands the important role women play in development. He recently stated that, “No nation can move on without emphasizing the education and emancipation of women.” The number of female entrepreneurs is Ghana is on the rise, as is the female literacy rate, currently having reached 78%. Armed with education, and funded by microfinance, women now account for an astonishing 50.1% of the labor force. This is quite notable as women make up 50.2% of the population, and typically women have less job opportunities in the developing world (Gutierrez). Apart from educational and employment opportunities, gender equality in Ghana has been furthered by the the 1992 Ghanaian constitution that banned “all cruel and inhumane aspects of cultural and traditional norms.” This constitution has supported a set of laws that protects Ghanaian women from “defilement, forced marriages, customary servitude, female genital mutilation, abuse of widowhood rites and the practice of banishment of ‘witches’.”; these crimes against women are prevalent in Africa and typically go unpunished in many developing countries. Unfortunately, these crimes do still occur in Ghana, especially in rural areas (Gender Equality and Social Institutions in Ghana). Although the constitution is sometimes violated in relation to women, it’s existance is a stepping stone toward increased equal rights. Women even hold 8.3% of the seats of the Ghanaian National Parliament, giving women representation in government. Again, a relatively small feat in comparison to the number of seats held by men, but it does allow for a female voice to be heard in parliament (data.un.org). According to the short film, Why Women Count, “forced marriage” is problematic in Ghana, despite laws. The video concentrates on one female victim of forced mariage, Comfort Adongo. Kidnapped and sexually abused at the age of 14, Adongo maintains a drive to better her life, and equipped


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with the backing of the Anglican Diocesan Development and Relief Organisation, or ADDRO, she has begun to acquire an education and stability. Marriage of girls under the age of 18 is illegal in Ghana, but this law is rarely enforced; foreign presence and spotlight on Ghana, however, is helping to lower this rarity. Forced marriage of girls as young as 8 years old are still “rampant” in Ghana, adhering to old customs forbidden by the 1992 constitution (Why Women Count, Video). Apart from providing basic funds for the acquisition of education for women like Adongo, the Anglican Diocesan Development and Relief Organisation attempts to improve “the food supply, gender and reproductive health, malaria, disability rehabilitation, and water and sanitation throughout northern Ghana (Integrated Approach). Another organization that promotes gender equity in Ghana is the Women’s Initiative for Self Empowerment, or WISE. This organization is a local Non-profit NGO. WISE is “dedicated to providing counseling and support services to women and children survivors of violence” and to ending violence and sexual assault. In order to achieve this goal, WISE operates on a three-prong strategy: response, economic empowerment, and prevention. The response step is focused on providing multiple services. These services include: counseling and support; training and capacity development; research and advocacy; networking and collaboration; organizational capacity building. The Economic empowerment step operates under the WISE program: Women’s Economic Empowerment and Development, or WEED. This is a program that promotes “economic independence for survivors, drawing on the fundamental benefits of integrating counseling, micro-credit schemes, skill training, and public advocacy”. And lastly, the third step of prevention is achieved through “advocacy and outreach campaigns to targeted communities, schools, churches, correctional institutions and the public at large.” (www.wise-up.org). Many other organizations present in Ghana understand the significance of gender equality and the burden of disease that many women face, such as UN Women, previously UNIFEM. In Ghana, UN Women has “enhanced the participation and leadership of women living with HIV and AIDS through a gender and HIV and Aids assessment, conducted by the UN,


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the Society for Women and AIDS in Africa, the Ghana AIDS Commission and the Ministry of Women and Children’s Affairs.” (UN Women: Africa). Infrastructure is another key component of development. With foreign investment and active Ghanaian participation in the global market, larger and better quality airports are becoming a necessity. The Canadian Commercial Corporation is one foreign investor that seems keen on an expansion of the Accra Airport. The current intention of this enlargement plan is to increase the existing three million-passenger capacity to five million (Ghana Airports). The Institute for Infrastructure Development has noted the necessity of infrastructural improvements in Ghana, and thus has decided to contribute to the development of Ghana by implementing its services. This organization believes that “good infrastructure encourages additional foreign investment, creates jobs, drives GDP growth, and improves private sector competitiveness.” (Institute for Infrastructure Development). The goals of this institution include projects and improvements in urban development, energy, transportation, environment, and water and sanitation. This in turn promotes a better quality of life for the citizens “because investment in the [private] sector is the foundation on which economic and social life are built.” (Institute for Infrastructure Development). Furthermore, this Institute has noted the importance of infrastructure to industrialization, in which Ghana holds a comparative advantage. This organization goes on to posit that improvements that benefit infrastructure and industrialization will “in turn help us extend our limits in agriculture, manufacturing and services.” (Institute for Infrastructure Development). Conclusion Armed with a dense presence of foreign aid and investment, and backed by natural resources, Ghana can continue to expand its economic growth and reduce its current debt. Through investment of human capital via education and gender equity, continued social development can be achieved as well. Development policies also play a vital role in the future of


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Ghana. For example, the implementation of fertilizer, and use of improved varieties have led to an increase in cocoa output. Improvements in social well being, such as access to affordable health care, will be a natural outcome of economic development and growth. Moreover, access to pre- and post-natal nutrition has been proven to aid in brain development and productivity of individuals. This greater capacity to achieve will lend to greater productivity in the Ghanaian citizen, leading to even more economic growth.

(Ghana’s Story)

Figure 2: Labor Force

Labor Force

agriculture industry services


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Works Cited Africa :: Ghana. <https://www.cia.gov/library/publications/the-world- factbook/geos/gh.html>. African Green Revolution Forum 2012. <http://www.agrforum.com/node/92>. Akosah-Sarpong, Kofi. "Ghana: Economic Surge, But Inequality On The Rise." 18 June 2011. African Herald Express. <http://africanheraldexpress.com/blog7/2011/06/18/ghana-economic- surge-but-inequality-on-the-rise/>. Agriculture and Conumer Protection Department. "Food and Agriculture Organization of the United Nations. <http://www.fao.org/ag/portal/ag- archive/detail/en/item/82303/icode/?no_cache=1>. Ashgate. Globalization and Thrid World Women: Exploitation, Coping and Resistance. Ed. Ligaya Lindio-McGovern and Isidor Wallimann. 2009. Britain and the Gold Coast: the Early Years. <http://countrystudies.us/ghana/7.htm>. Diao, Xinshen. "Economic Importance of Agriculture for Sustainable Development and Poverty Reduction: Findings from a Case Study of Ghana." 29-30 November 2010. OECD. <http://www.oecd.org/dataoecd/50/2/46341169.pdf>. Dogbevi, Emmanuel K. Ghana crude oil exports yield $484.2 million. 13 May 2011. <http://www.ghanabusinessnews.com/2011/05/13/ghana-crude- oil-exports-yield-484-2-million/>. Environment and Energy. <http://www.undp- gha.org/site/mainpages.php?page=povertyeconomy>. Gender Equality and Social Institutions in Ghana. <http://genderindex.org/country/ghana>. Ghana. <http://data.un.org/CountryProfile.aspx?crName=Ghana> Ghana. <http://www.who.int/countries/gha/en/>. Ghana Airports Company sign MoU with foreign Investor for the expansion of the Accra Airport. "African Travel Blog". 13 April 2012. <http://flightsafrica.blogspot.com/2012/04/ghana-airports-company-


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sign-mou-with.html>. "Ghana oil: groups question Ghana’s readiness to manage environmental challenges." 10 April 2012. Ghana Oil. <http://ghanaoilonline.org/2012/04/ghana-oil-groups-question-ghanas- readiness-to-manage-environmental-challenges/>. Gutierrez, Yadira. Women entrepreneurs in Ghana help ignite an economy boom. 29 November 2011. <http://www.csmonitor.com/World/Making- a-difference/Change-Agent/2011/1129/Women-entrepreneurs-in-Ghana- help-ignite-an-economy-boom>. "Historical Background". Modern Ghana. <http://www.modernghana.com/GhanaHome/ghana/economy.asp?me nu_id=6&sub_menu_id=13&gender=&s=a >. Huston, Perdita. Third World Women Speak Out: Interviews in six countries on change, development, and basic needs. New York: Praeger Publishers. Institute for Infrastructure Development: Building a better Ghana. <http://www.infrastructureghana.org/exe_director.html>. Integrated Approach to ending Poverty in Ghana. <http://www.er-d.org/ghana_ADDRO_>. Jaquette, Jane S. and Gale Summerfield, Women and gender equity in development theory and practice: institutions, resources, and mobilization . Durham, N.C: Duke University Press, 2006. Leturque, Henri and Steve Wiggins. "Ghana's Story: Ghana's sustained agricultural growth: Putting underused resources to work." 2010. Development Progress. Development Progress Institute. <http://www.developmentprogress.org/sites/default/files/ghana_agricu lture_0.pdf>. "Missing Food: The Case of Post-Harvest Grain Losses in Sub-Saharan Africa". YouTube.com. www.fao.org. <http://www.youtube.com/watch?v=- g3qxatShTs&feature=player_embedded>. Obour, Samuel K. Feature: Ghana's oil must benefit education and agriculture. September 2011. <http://opinion.myjoyonline.com/pages/feature/201101/60265.php>. Stokland, Torill, Mallica Vajrathon and Davidson Nicol, Creative Women in Changing Societies: a quest for alternatives. Dobs Ferry: Transnational Publishers, INC.


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Tax haven risks corruption, OECD warns Ghana . January 2010. <http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.ph p?ID=175511>. UN Women: Africa. <http://www.unifem.org/worldwide/africa/>. "Why Women Count: Ghana - Picking up the Pieces". viewchang.org. <http://www.viewchange.org/videos/why-women-count-ghana-picking- up-the-pieces>. Women's Initiative for Self Empowerment: Putting Women and Children First. <http://www.wise-up.org/>.

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