Economy of Ghana: Yesterday, Today and the Way Forward

Wed, 29 Mar 2006 Source: Thompson, Nii-Moi

Part I

I. The Great Leap, Mass Disaffection, and Limited Government: 1920-1951

Significance of starting from 1920: Guggisburg, the most visionary of all the colonial governors, launched the world?s first national development plan, the Guggisburg Plan of 1920-1930. As will be shown below, he was a highly perceptive man, careful in his thoughts and their expression, and pithy in his analysis of development issues. Although the plan was implemented for only 7 out of the proposed 10 years, and only half of the ?24 million price tag was realised, important projects under the plan were implemented. By the standards of the time, the Guggisburg Plan constituted nothing short of a Great Leap.

Highlights of proposed projects and results:

? Link Akim Tafo to Kumasi by rail (completed)

? Takoradi Harbour (completed)

? Link Kumasi to Tamale by rail (not done)

? Pra River Hydro Electric Project (not done)

? Korle Bu Hospital (completed)

? Prince of Wales (Achimota School) (completed)

? 3,380 miles of new road built between 1920 and 1927, in addition to 260 miles in existence.

? Chiefs and their people played active role in resource, including labour, mobilisation for the plan.

It is important to note that even before the implementation of the plan, Guggisburg had warned of the possibility of shortfalls in funding that may result from a fall in world cocoa prices. If that should happen, he warned, there would be a need to scale back the plan and then ?prioritise?, an important strategy in development planning and economic management that seems lost on contemporary managers of our economy.

Today, shortfalls in development funding co-exist incongruously with vulgar extravagance in the midst of growing privation, popular despair, and deteriorating living conditions. The 2006 budget, for example, announces nearly 50 percent reduction in allocations for rural water in 2006, the same year that the government, with the approval of Parliament ? which, incidentally never ceases to complain openly about its lack of office space ? announced a $30 million loan to build a ?fitting? office, residence and retreat for the president.

By way of moral comparison, I should note that the Daily Graphic of May 24, 2005, reported that the people of Mankranso in the Ashanti Region could not afford to pay ?100 (the equivalent of about one U.S. cent) for a bucket of water and were drinking from the polluted Mankran River. What a shame ? shame for our leaders, shame for us all ? for allowing such egregious moral contradictions and hypocrisy to persist in our body politic. We seem to have forgotten the purpose of leadership, which is to give OF yourself for the public good, and not to give TO yourself at the expense of public welfare. We need a new type of leadership, for sure.

It is a tribute to the vision of Guggisburg that he, though not a ?native son,? subordinated his personal comforts to the necessities of the people of the Gold Coast and left some of the most enduring legacies that any visionary leader could hope to bequeath to his people. I am told that Korle Bu Hospital is the second largest medical facility in Africa. Now that is vision. The only other leader to have matched Guggisburg ? and indeed surpassed him ? in vision and accomplishments has been the Osagyefo. No other Ghanaian leader, with the possible (and qualified) exception of Kutu Achemapong, has come anywhere close. But then again, a lot of the technocrats of the Acheampong era were from the CPP era!

Beyond the development successes of Guggisburg, there were other events of his period that have served as a leitmotif in our economic history and are thus worth being repeated here for instructive reasons. Addressing the Legislative Council in 1921-1922, Guggisburg reminded his audience of the boom and bust of cocoa in 1919 and 1920 and made the following insightful observation:

There can be no doubt that there are natives in this country who did well and permanently increased their wealth out of the great cocoa boom. But as in the case of other booms all the world over, for every one who succeeded there were a hundred failures. To begin with, hundreds of educated young Africans threw up their jobs, over a hundred in the government service alone, and rushed off to the cocoa fields and markets. The majority have had a severe lesson. Government appointments have naturally been closed against the return of those who deserted the service of their country?. Many young natives in fact learned that a bird in the hand is worth two in the bush.?

He continued:

The unfortunate feature of so many cases was that money easily earned was easily spent. Motor cars were purchased right and left, champagne flowed freely, smoke of expensive cigars scented the air, European clothes both for men and women, at far more expensive prices than in any period in our history, were purchased freely?What made matters worse was that the farmers neglected their food crops for their cocoa and consequently the price of provisions rose to a height unprecedented in the history of the Gold Coast.?

And then in a refrain that has a chilling echo in today?s circumstances, he bemoaned:

If the cocoa boom has done us harm, it will anyway have done us one good thing if it has made everyone realise the danger of depending entirely on one main article of produce. In 1920, 83 percent of our exports consisted of cocoa. Again and again, we have talked of ?all our eggs in one basket.? Verily the truth of this has come home at last!...What we want is something that will rival cocoa ? something that will place us more firmly than ever at the top of the Crown Colony produce ladder. For we must remember that head for head and acre for acre, we are a long way ahead of any other Crown Colony in both trade and revenue. We must maintain that position by finding something new that will compete with their steadily growing new products?.Undoubtedly, the next best product ? if not a better one than cocoa ? is that of our oil palm. Neglected by everyone except that far-seeing and capable chief Mate Kole and his Krobo farmers, our palm oil and kernel export had dwindled down to a few miserable thousand tons a year.

Four things we must do:

1. Take up again our old oil palm cultivation

2. Improve the method of cultivation

3. Run a railway and more feeder roads through the oil palm belt

4. Provide local centres for decortication and crushing.

If you have read E.T. Anin?s book, Banking in Ghana, where he, too, documents the remarkable ability of early Ghanaian businessmen to squander their profits, rather than plow them back into their business, or read the story of how the original owners of what later become Ashanti Goldfields, sold out to a ?foreign investor? because they lacked the capital to run the mines ? a scenario that was to play out 100 years later with the sale of Ashanti Goldfields to Anglogold ? you would agree with me that ultimately we, more than any scheming external imperialists or globalisers, are responsible for our under-development despite a half century of independence. My fear ? and this is a deeply held fear ? is that unless there is a radical change in leadership, in attitudes, in policy, we are likely to crawl along for another couple of centuries, shamelessly dependent upon the charity and pity of better-managed societies.

In fact, for those of you who believe in the after-life, it is possible that you would come back in 200 years and find a Ghana which is still HIPC, if not in name certainly in fact, a Ghana whose leaders are bereft of vision and perfectly happy to be treated as objects of pity by others, contented with hand-outs rather than their handiworks. Think of Haiti and you know that this is not a far-fetched conclusion.

In fact, two quotations, one from Mr. Anin and the other from a recent edition of the Daily Graphic, amply if uncomfortably buttress this assertion. Quoting a correspondent of the Illustrated London News in 1874, Mr. Anin tells us on p.8 of his book:

The principal street of Accra is an amusing sight: Some effort appears to be made to keep it clean and the sales people sit upon little mats, or upon low stools which are used all over this country. They line both sides of the street, and expose for sale every sort of article prized by the natives, and the goods being contained in wooden trays everywhere in use here.

In other words, the petty trading which is the hallmark of our economy today existed some 130-plus years ago! On January 2, 2006, the Daily Graphic reported, with an accompanying photograph of people sitting on ?low stools? in the middle of a street in Accra, that ??the Ghana Agric Products Handlers Association?are negotiating with a landowner nearby to enable them to move from the streets.?

As we say in Ga, ?Wonya aloo womba?? Are we going or coming? It seems we are actually going ? but backwards, for in 1874, the people of Accra were on ?both sides of the street?. Today they are not only on both sides but they are, as most of you should know, on the streets themselves, blocking vehicular traffic and generally making life miserable for pedestrians and motorists alike. It is important to remind ourselves that between 1874 and 2006, others invented things like automobiles, airplanes, space shuttles, and of course the computer that I?m using now. They have even put a man on the moon. And we are yet to move from the streets to factories and eventually to space. What a shame.

Now, to continue with the evolution of the Ghanaian economy, the Guggisburg era was followed by periods of recession, disaffection, and public unrests. There was the collapse in world cocoa prices during the great depression of the late 1920s and early 1930s, leading to a 40% fall in cocoa exports from the colony. By 1932, development expenditures had fallen from ?1.0 million in 1928 to zero. On the eve of the Second World War, cocoa prices fell further, precipitating a hold-up by cocoa farmers in 1937.

What little was left in the form of resources for the colony?s development was diverted by the colonial powers to the War effort, deepening public antipathy towards the colonialists and worsening social conditions. The end of the War and its attendant shortage of consumer goods and high prices only made matters worse, leading on February 11th 1948 to the boycott organised by Osu Mantse Nii Kwabena Bonne of European goods in the Gold Coast. The infamous fatal shooting of demonstrating ex-service men on February 28th of the same year ? and the subsequent arrest of the Big Six in connection with the unrests ? inflamed public passions further. The official inquiry by the colonial authorities led to the granting of limited government under the Convention People?s Party (CPP), with Kwame Nkrumah as the leader of government business, in 1951.

II. Limited Government, Unlimited Ambition: 1951-1957

The CPP inherited another ?10-year Plan for the Economic and Social Development of the Gold Coast,? which provided an ?outline of what it is hoped will be achieved in all fields of development during the ten-year period beginning April 1, 1950.? In an allusion to what economists call ?perspective? (or long-term) planning, the document referred to the ten-year period as ?merely one phase in the development of the country which has been going on steadily for many years and will continue beyond the decade with which the plan is concerned.?

But gripped with the urgency of the moment, the Nkrumah government decided to reduce the 10-year plan (worth ?75 million) with a five-year version costing ?117.6 million. There was continued emphasis on infrastructure, and the ?Volta Valley Scheme,? along with an aluminium smelter, was among the projects discussed. As well, the Industrial Development Corporation was formed to do the following, among others:

? Encourage companies using local materials

? Loans to ?small industrial concerns?

? Establish industrial estates

... to be continued

Presented by Dr. Nii Moi Thompson, Economist
In Observance of the 49th Independence Day of Ghana
Organised by: Patriots of Convention People?s Party (CPP) and Youth for Action, University of Cape Coast
University of Cape Coast Auditorium

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.

Columnist: Thompson, Nii-Moi