Statesman: Why Ghanaians are better off under NPP

On June 21, 1983, Chairman Jerry John Rawlings of the Provisional National Defence Council said that he personally would not rest on his oars, "until the ordinary people of Ghana have comfort and satisfaction in life.”

Perhaps, this may explain why just this month he was criticising the governing New Patriotic Party for the continued hardship in the country.

But a critical look at the facts unveils some startling statistics, giving ample evidence that Ghana is making progress, though, still far from at the desired rate.

For example, the National Democratic Congress managed to reduce the national headcount of poverty from 52 percent of the population in December 1992 to 40% by December 1998, when the next survey was conducted by the Ghana Statistical Service.

The latest report indicates that by the end of 2006, the number of Ghanaians living below the poverty line had reduced further to 29%.

In 2000 the average monthly income of public workers was 333,924 cedis. With the dollar buying 7047 cedis then this meant the average worker's income was $47.39.

But even before the surge in strikes in the last couple of years, Ghanaian workers were seeing refreshingly real increase in their income. In December 2004 the monthly income of public employees was 1,212,653 cedis. At an exchange rate of 8900 cedis then, the average monthly income in 2004 was $136.25, registering a significant difference of $88.86 or 187.51%. But, this was even before the 20% across board salary increase in the 2007 budget statement.

By 31st December 1981, the day that Flt Lt Rawlings toppled the constitutional Nkrumaist government of Hilla Limann and accused the PNP of leaving the state coffers empty, this country"s daily minimum wage was $4.4. Nearer to the end of the PNDC era in December 1992, daily minimum wage was 90 cents ($0.9). When the National Democratic Congress was leaving office in December 2000, the figure was 41 cents (though it had been increased to 60 cents awaiting implementation in 2001).

Today, the minimum wage is $2. Still 50% lower than the 1981 figure, when the dollar could buy even more.

Between 1986 and 2007, the daily minimum wage in Ghana has shot up from ¢90 to ¢19,000, as the latest rate was announced this week, representing a whopping 2,112 percentage rise. But, the scorch of inflation took its toll.

Thus, under the eight years of the National Democratic Congress never once did the daily minimum wage exceed the one dollar mark, even though lowly paid workers saw an 813% wage increase from ¢460 to ¢4,200 over the period. Under the NPP, the minimum wage has risen by 353%.

Compare the NPP performance on the purchasing power of the Ghanaian to that chalked under the NDC: in 1993, the minimum wage was ¢460, way below the dollar, with $1 exchanging for ¢649.06 and the rate of inflation over the year measuring at 27.7%.

Over the next eight years under President Jerry John Rawlings the cedi depreciated by nearly 1000% (in fact 962%), well below the accumulative rise in the minimum wage (813%), which forever remained under $1.

With the minimum wage above $2, what it means is that if it can be adhered to by all employers in the country, then Ghana should rise significantly above the African statistics, which put the majority of the people below the $1 mark. The production of Ghana’s number one export earner, cocoa, was 258,000 tonnes in 1981. In spite of all the efforts to increase production, the volume had decreased to 243,000 tonnes at the end of 1992. But, the NDC almost doubled it to 437,000 tonnes in 2000. The NPP pushed it further up to record yield of 740,000 tonnes in 2006.

Corporate Tax rate which was 35% for all the eight years under the NDC was reduced last year to 25%.

Ghana’s international reserves stood at $202 million at the time the PNDC accused the Limann government of emptying the coffers. By the end of the Rawlings era in 2000, Ghana’s reserves, which could only cover less than a month worth of imports, was $233.4 million. It stood at ¢2.3 billion cedis in 2006.

Probably, the best indicator of the economic trends is the rate of inflation. Inflation stood at 100.4% in 1981. The PNDC managed to push it radically down to a very respectable 13% when they left office. Yet, by 2000 it had continued its see-saw journey to end the year at 40.5%. Last year it was 10.5%. Inflation rates are not determined about by any means alien to the Ghanaian consumer. Every month, researchers of the Ghana Statistical Service visit various markets throughout the country to find out the prices of basic commodities.

In the words of a government spokesperson, "When they take the prices of the commodities, they compare them with the prices of the same commodities in the past. From this comparison, they are able to tell us how slowly or quickly the prices of things are changing. In other words, from the comparisons, they give us the rate of inflation.

"So, how true is the talk that pockets are still empty, despite of the macro-economic gains? The talk may be true to the fact that you may be unemployed or your income has not increased."

Kwaku Kwarteng, Government Spokesperson for Finance, thinks inflationary movements should be of interest to all of us.

Good living, he says, is all about being able to buy the things you need. "The more things the money you have can buy, the more satisfied you would be. Which is why we have to be interested in inflation because inflation has a way of stealing money from our pockets." Inflation steals your income if the prices of goods you normally buy rise above your income.

"It is clear that if the rate of inflation is high, then a lot of our money gets stolen from us with time. And if the rate of inflation is low, then only a small amount of our money gets stolen by inflation," Mr Kwarteng says.

But, the heightening of the rural-to-urban migration drive seems to be shifting poverty from the countryside to the cities. A Survey on Urban Development and Economic Growth shows urban poverty to be increasing, while poverty has, on a whole, declined in many parts of the country.

The survey conducted by the World Bank and supported by Ministry of Finance and Economic Planning and the Ministry of Local Government, Rural Development and Environment targeted strategic areas as urbanisation and market, decentralisation and local economic development.

The survey indicated that every region of the country has seen a decline in poverty since the 1998/9 survey, with the exception of Upper West and Greater Accra. In the latter, continued rural to urban migration, especially of those from the poorer areas of Ghana, may explain the anomaly.