Economic frustration due to inability to transform colonial structures

Accra, July 12, GNA - Ghana's frustration in the desire to attain a middle-income status has been blamed on the nation's inability to transform its inherited colonial economic structure, a university lecturer said on Tuesday.

Speaking on the second day of the 2006 Ghana Academy of Arts and Sciences Lectures, Professor Jacob Songsore, Head of the Department of Geography and Resource Development at the University of Ghana, said that economic structure had limited the country's capacity for growth and wealth creation.

He said it was most defeating to know that after several decades of structural adjustment programmes all the 33 African countries, including Ghana, which were touted as high performers of such programmes, were those mired in debt and poverty.

"Almost all of these countries are those who have had to shift to HIPC status with just a modest goal of reducing poverty. They are implementing the same poverty reduction strategy papers, this time as a condition for further donor assistance," Prof Songsore said. His topic was: "Addressing Poverty in National Development". Drawing from colonial experience, he argued that growth and wealth creation, which were not shared, had invariably resulted in poverty for those who had been excluded, citing populations in the three northern regions and the Central Region as most affected. "The neoclassical myth of trickle down theory of economic growth has not occurred and the export base multipliers are not borne out by the Ghanaian experience.

"Therefore, what we perceive as poverty today is the result of overlays of conscious policies pursued over a long historical period by the state in support of specific interests groups." Prof. Songsore said the limit to growth itself was the general lack of self-belief in home grown solutions to national development and the manner of integration into emerging global capitalist systems and called for a home grown definition of poverty.

He said the current model of economic recovery represented the colonial structure of priorities with a focus on primary products stimulated by government policy of preferential treatment and not the market per se.

Professor Songsore said in Ghana it resulted in a positive five per cent GDP growth. However, he added, it would take Ghana more than 50 years to climb out of poverty. "Not surprisingly, eminent economists are calling for a new accelerated growth strategy."

He mentioned debt overhang, unfavourable international terms of trade and backwash of urbanization through migration as major means through which structural forces had had negative effects on national economies.

"Overall, whatever growth has occurred has been lopsided with a focus only on the services sector, mainly retailing of imported manufactured items and raw material exports, notably cocoa, gold and timber as in the past."

He noted that the agriculture sector had seen significant declines with the food sub-sector accounting for 60 per cent of agricultural GDP, while the manufacturing sector continued to fester through excessive liberalization and withdrawal of state support in the case of food crop sector.

Prof. Songsore said it was disturbing that the contribution of manufacturing to total GDP had declined further from a low of nine per cent in 2000 to 8.75 per cent in 2004. "These trends, however, do not indicate an economy about to generate wealth on a generalized scale let alone distribute it."

In terms of investing in human capital, the social inequities of the past continue to endure as a result of deliberate policies, he said. But the emphasis on cost recovery to access social services simply meant that the poor could not buy themselves out of poverty and the ensuing generation made worse given the unequal investment in human capital for the poor and the wealthy, he said.

On regional distribution and investment of capital, Prof Songsore said the situation was worse with only one per cent of all private capital flows coming in through the Investment Promotion Centre being directed to the entire Northern Region. He said wealth creation and distribution had been most unfair and uneven with the removal of all agric input subsidies and support for all staple food crops in the North.

He argued that the Greater Accra Metropolitan Area alone attracted 76 per cent of the amount.

"Therefore without any significant manufacturing industry, no comparative advantage in cocoa production for export markets, the economy of the Northern Region is increasingly falling out of tune with growth trends and can hardly be sharing in the growth occurring in Ghana since the inception of the Structural Adjustment Programme (SAP)." He said the area, which was yet to benefit from any Presidential Initiative had neither seen any redress in the imbalances in economic fortunes by the years of the NDC regime. "Instead, it is more of the same order."

Prof. Songsore noted that failure to address the national question or the question of social exclusion under the free play of unrestrained market forces had and would continue to lead to the collapse of many emerging states on the continent including Ghana.

He said Ghana seemed to be a bright star in the sub-region. "But this is because of the plethora of failed states - Liberia, Sierra Leone, Togo and Cote d'Ivoire - engulfing it."

"The condition in Ghana is a mirror image of conditions in Cote d'Ivoire sometime back when people talked of a so-called Ivorian miracle which only showed an illusion where foreigners controlled the economy. "To change the situation, we need an export product for each region and massive investment in human capital formation. With wrong policies agriculture has failed to produce raw materials for industry and cheap food for the industrial labour force."

He said wealth could only be meaningfully created and distributed by the input-output mechanism on a generalized scale with industrial development and agriculture transformation nourishing each other, he said. "There is no developed or middle income country anywhere in the world which is not an industrial economy."

Another way out, he said, was to increase the District Assemblies' Common Fund by 20 per cent so that, poor regions which lacked the political clout and social capital could, at least, alleviate their poverty and greater feeling of shared growth.

"We must stop exporting wealth and importing debt and ecological degradation by adding value to our primary goods for export. We must industrialize and stop being a quarry for those who have learnt to apply science and technology to material production."

He also asked government to settle down to pragmatic solutions for spreading wealth and growth.

He urged government to transform agriculture from a way of life to an industry by applying improved technology developed locally and catch-up on the knowledge economy of ICT and biotechnology. Prof. Songsore commended strides in the education sector through the setting up of the capitation grant and health insurance schemes saying they were positive leads in the right direction.