Economic Surge, But Inequality On The Rise

By Kofi Akosah-Sarpong

On the streets of Ghana’s top cities, Kumasi and Accra, it is easy to observe increases in the perennial beggars – from the physically disabled to healthy men and women of all ages. “Please could you spare some change,” is a constant irritating tune. Aside from the beggars, more Ghanaians are falling below the poverty line of US$2.00 a day. No doubt, labour strikes have become daily occurrence.





Inequalities are responsible for these distresses. Inequalities’ painful scenes on Ghanaian streets and homes are captured by the celebrated Indian economist Amartya Sen in a foreword to “From Poverty to Power.” “…lives are battered, happiness stifled, creativity destroyed, freedoms eradicated by misfortunes of poverty.”





Against this backdrop are rows between the Ghana Statistical Service (GSS) and the main opposition National Patriotic Party (NPP) over the true nature of inflation figures released by the GSS and their impact on the average Ghanaian. The GSS says there are downward trend in the prices of food and non-alcoholic beverages group, but the NPP counter that the prices are rather going up. Sandwiched between the rows are the bread-and-butter inequalities of majority of Ghanaians.





The dawn of democracy has come with it not only some freedoms but also some economic growth. A recent study by Nake M. Kamrany, an economist at the University of Southern California, and Martin Park, of the Research Group for Global Convergence of Per Capita Income in Los Angeles, says, “Ghana's economic turnaround from 1965 to 2009 has allowed greater political accountability and improved fiscal responsibility. Between 2000 and 2009, Ghana's average annual growth rate in terms of GDP per-capita stands at 17.6% as compared to the rich countries' 3.05%.”





Sound structural reforms and economic policies with the assistance of the World Bank and IMF aside, part of the reason for Ghana’s economic growth is due to significant investment by China, argued Kamrany and Park, for its strategic African calculations. China has poured over US$10.4 billion concessionary-loan program into infrastructure projects. Most of this goes to funding the development of new found oilfields, which may contain over 3 billion barrels of light oil.





But Ghana is also one of the world’s most unequal countries. In the real world, the inequality is worsening. The 2012 Presidential Candidate of the main opposition New Patriotic Party, Nana Akufo-Addo, citing polls from Gallop, revealed that since 2008, 12.7 million Ghanaians, who represent 53 percent of the 24 million population, “cannot afford the cost of food …Those who admit to living comfortably have dropped from 20% in 2007 to 4% of the population in 2010. In 2007, 11 percent of Ghanaians said they were suffering under severe economic hardships.”

The economic hardship come with it increases in inequality – a dangerous phenomena. More than 100 years ago, the English writer George Benard Shaw revealed that, “The greatest of evils and the worst crime is poverty.” The former head of the International Monetary Fund, Dominique Strauss-Kahn, echoing this, has argued that inequality distribution of wealth could “wear down the social fabric ... More unequal countries have worse social indicators, a poorer human development record, and higher degrees of economic insecurity and anxiety.” …..





Inequitities are seen more in global development indicators across countries. Ghana’s Gini coefficient – a measure of income distribution in which zero indicates perfect equality and 1 corresponds with perfect inequality – is 0.41. Added to the perfect inequality is the fact the Gross Domestic Product growth of 6.6 percent compared to the sub-Saharan Africa growth of 2.0 percent aren’t felt by majority of Ghanaians.





Under Ghana’s new status as a Middle Level Income Country is the fact that most of the benefits of the economic growth over the years have gone to a fairly small elites that live in places like East Legon and Airport Residential Area, with ritzy surroundings inside walled enclaves. It is easy to see the latest expensive cars roaming around and the floating of the famed African bling, bling.





Overnight, it is easy to see the effects of the rapidly growing rural-urban migrations. As joblessness, hopelessness and homeslessness increases more people are migrating to the already choked cities. There are immense pressure on inadequate socio-economic infrastructure. The number of people sleeping on the streets in Kumasi and Accra are growing. Armed robbery is recurring menace. Prostitution is on the increase. The Sub Metro Director of Okaikoi South, an Accra subburb, Nathaniel Adzotor, says “about one-third of residents in Accra live in slums and as a result do not enjoy adequate social services.” The 60-year-old National Malaria Control Programme is yet to fully control the devastation malaria that weakens and kills most Ghanaians.





Only 13 percent of Ghanaians have access to toilets. In Accra, the capital, 90 percent of its population have no access to toilets. The Accra Metropolitan Assembly has ordered landlords to construct appropriate toilet facilities in their houses. In the absence of toilets, people defecate at unapproved places and these are increasing the rate of cholera outbreak. Most Ghanaians die from cholera-related diseases.

Under its “Better Agenda” policy, the governing National Democratic Congress says all the rights things about improving public service. It promises “toilet for all,” “water for all,” “better life for all,” and plegded to build thousands of houses but Ghanaians have not really felt all these promises. Even if built at all, most Ghanaians cannot afford the houses but the rich. Unitl more hydro-dams and other energy are built, power supply from the Akosombo Dam, built in 1965, is increasingly becoming erratic and has serious implications for businesses and investments. The tourism sector, for instance.





Inequality among Ghanaians is seen more at the country being at the 130th position of the 2010 UN Human Development Index ranked among 169 countries for their wellbeing. Though Ghana is at the medium human development, issues of life expectancy, literacy, education, child welfare, healthcare, energy, access to water, toilets/sanitation and general standards of living aren’t equally distributed.





As of 2009, life expectancy at birth is about 59 years for males and 60 years for females with infant mortality at 51 per 1000 live births. In a country of 24 million, there are only about 15 physicians and 93 nurses per 100,000 persons. In 2003, 4.5 percent of the country’s Gross Domestic Product was spent on health. This affects equity as a development issue.





The human wellbeing inadequacies do not affect the rich who can easily afford the basic necessities in life and can easily send members of their families abroad for better services. That makes Ghanaians unequal.





The latest government budget statement, entitled “Stimulating Growth for Development and Job Creation,” isn’t only to minimise inequalities but deliver on its promise. Eleven percent of Ghanaians are unemployed. Substantial underemployment is a fact. Aid agencies are still the best card for ordinary Gnanaians. In East Gonja, a town in the Northern Region, parents refuse to send their children to school despite the popular school feeding programme. They prefer they help them in their farms.





Certain sectors of the Ghanaian development process still lacks skilled personel. Press reports say there are only four psychiatrists in a country of 24 million. In most rural areas, there are no medical doctors and medical facilities aren’t there. Red tape in the civil service is a monumental problem. The bureaucracy isn’t as efficient as expected. The private sector still suffers from the inadequacies of the public sector. While it takes 11 steps to set up business, much better than most Africa countries, the steps could be shortened for greater efficiency.

The overall skilled labour picture is good among African countries, yet governments over the years still depends on foreign countries to undertake strategic infrastructural projects, including the very basic projects like housebuilding. These firms in turn sub-contract to local Ghanaian firms at a small fraction of the budget, resulting always in a net drain of Ghana’s wealth to the said countries. The award of a US$1.5 billion housing contract to South Korea’s STX is typical case.





Big projects are gateway to corruption. Patronage system is still active, 32 years after the bloody revolution that had aimed to stop the destructive practices. In the ranking of perceptions of corruption published by Transparency International, a Berlin, Germany-based corruption watchdog, Ghana was ranked 62nd on the list of 178 countries in 2010 compared with 69th in 2009. Some improvement. Yet, most Ghanaians have strong perception that public servants and politicians are corrupt. Contract padding is still a major problem. Ghanaians point to politicians building houses which cost far exceed their incomes.





The logic behind the kleptocracy could be cultural, but the complexity goes beyond that and was seen more in the almost 20-year rule of Jerry Rawlings regimes. While the bloody June 4, 1979 coup that saw the killing of some Ghanaians was to restore accountability and social justice, contradictorily, Rawlings and his associates didn’t submit themselves to public accountability when allegations of corruption and abuse of office were made against them. They are today some of the richest men and women with property scattered in Ghana and around the world.





The long military systems that was supposed to minimize inequality also favoured public, tribes-men and -women over private sector and foreign competition. Protectionist practices had been the order of the day. Today, there are still trade barriers. There are still rent-seeking minions.





Already one of the rapidly emerging democracies in Africa, Ghana is yet to fully implement a decentrailization system driven by its democratic tenents as a way of closing the gaps in socio-economic inequities. Centralized politics and a grasping state are still existing. The system still has ramnants of miliatry/one-party dictatorship practices. This is seen in the on-going decentralizations exercises that was set up under Jerry Rawlings dictatorial mind-set. The decentralization system, as a way of deeply involving Ghanaians in their governance and further growing freedom, could bridge the inequality gaps through accountability, transparency, better redistribution of power and national services and goods.

But the power to appoint executives and other members for district assemblies, the key forum of the decentralization programme, still rest with the President of Ghana. That makes the decentralization exercises unrealistic in the face of Ghanaians determining their competiting priorities. That’s undemocratic and the government has been asked to get off the back of Ghanaians. The central government still controls all the budgets for district assemblies. This undermines the very ideals of the programme. In “From Poverty to Power,” Duncan Green makes the case that the erasing of inequalities reguire “a radical redistribution of power, opportunities, and assets to break the cycle of poverty and inequality and give poor people power over their own destinies …”





Yet, such challenges wont dim Ghana’s economic future. More oil and gas are being found. Theoilis expecvted to account for 6 percent of the revenue for 2011. On June 7, the New York-based Hess Corp announced that it has hit oil and gas deposits off the coast of Ghana. Earlier, Texas-based Kosmos Energy had discovered more oil and gas at Cape Three Points. The expanding oil and gas finds are gradually positioning Ghana as major oil and gas producer.


But how majority of Ghanaians will benefit from the oil and gas find depend on the degree of democratic growth. Accountability and transparency are the key issues. In the events leading to the formal exploitation of the new oilfields, democracy had driven the lively debates about how revenues from the oil and gas should be used. The idea is to avoid the dreaded oil curse.


The European Union Delegation in Ghana has stated that if Ghana’s oil finds are well developed, the country would be able to free itself from its addiction to foreign donor funding by 2020. Nevertheless, that will depend on how the current political and economic stability is preserved. It is from such democratic practices that Ghana could develop and become a focus for more investment. As the Chinese have shown. This will help narrow the increasing inequality gap and avoid the wearing down of the social fabric.


Either in health, water, sanitation, primary healthcare, waste management or electricity, inequalities have more to do with privatization and commercialization of the development indicators, especially where corruption and tribalism negatively drives the distribution of goods and services. The on-going heated row over the management of water by Aqua Vitens Rand Limited, a South African based company that acts for and on behalf of Ghana Water Company, is a case in point.


Is there a solution to this perennial development inequities? Yes, says the Municipal Service Project (MSP), a non-government outfit based simultaneously in Queen’s University, Kingston, Canada and Rhodes University, Grahamstown, South Africa.


The MSP attempts to taxonomically explore alternatives to the privatization and commercialization of service provision in the health, water, sanitation and electricity sectors, among others, in Africa and other developing countries. “We evaluate service delivery models deemed to be successful alternatives to commercialization in an effort to understand the conditions required for their sustainability and reproducibility,” MSP says.


The MSP’s key mission of alternate approaches in addressing inequalities would impact on equity and development countries like Ghana. How about this idea in addressing Ghana’s development inequality issues?