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1 Introduction
The politics of economic reform in Ghana – an overview
Richard Aidoo
Over the past six decades, the project of building a postcolonial Ghana, out of the controversies of exploitation and enslavement of the colonial and precolonial eras in Africa has been founded on some of Kwame Nkrumah’s rhetorical visions which serve as continuous inspiration to Ghanaians and Africans, along with years of political and economic uncertainty, and a return to a relatively stable democratic course with some economic gains. After political self-determination was reached in 1957, the more arduous task of economic autonomy has proven rather daunting and elusive, despite some of the ingenious development agenda of successive leaders and administrations, both military and civilian, after Kwame Nkrumah and the Convention People’s Party (CPP). Different periods of reported national economic growth and achievements are often interspersed with widespread economic stagnation or strife necessitating reform programs, repeatedly with the initiation of a new political administration. This characteristic start-and-stop feature has impacted Ghana’s economic development course as the lack of continuity in economic vision, and external dictates that come with diverse loans, aid, and technical assistance amid other domestic political–economic challenges have combined to slow the progress toward economic self-dependency.
Ghana, the first country to attain political independence south of the Sahara, has spent approximately half of its over six-decade existence in diverse economic reform agenda to right the political–economic unsteadiness created at different times in the post-independent years. Expectedly, results of the diverse economic reforms in Ghana have been largely debated and contested at various levels. Whereas some external organizations and state actors have praised Ghana’s political steadiness and long-suffering efforts toward economic progress, domestic rhetoric has been diverse and often criticisms as large segments of the Ghanaian population are yet to experience economic respite from these economic reforms. Different issues and challenges manifested in various sectors of the economy, society, and politics attest to these sentiments.
According to Sandbrook’s 1985 portrait of post-independent Ghana with dashed hopes of economic reform, he stated
The first colony to win independence, Ghana emerged as a sovereign nation in 1957 with living standards, infrastructure and administrative competence unequalled in Black Africa. But its economy has been in decline since the 1960s. In 1970s, per capita Gross Domestic Product fell more than three percent per annum. Output declined in all major sectors – cocoa, timber, mining and manufacturing. Annual price inflation averaged 50–100 percent.… While the modern economy collapsed, kalabule – the Ghanaian term for the black market or parallel economy – flourished.
(Sandbrook, 1985, pp. 2–3)
He further argued that this dire socioeconomic scenario was also shared by many other African countries such as Angola, Chad, Mozambique, Sudan, Uganda, and Tanzania but not as marked in selected countries like Botswana, Gabon, Kenya, and Ivory Coast. Obviously, different economic development fortunes have shaped these countries into their present development states. Since Sandbrook’s characterization, Ghana has seen upward trends of economic progress, albeit inconsistent and unevenly distributed. These notes of progress have often anchored the claims of exceptionalism and exemplariness of this African state. After recounting Ghana’s economic challenges in the 1970s and early 1980s, away from the halcyon days of the early post-independent period, Radelet (2010) notes the economic reform recipe that was adopted by the Jerry John Rawlings regime after 1983, and further highlights the impacts of the reforms on the Ghanaian economy. In his twenty-first-century assessment, Radelet reports
The result [of the reforms] has been a striking turnaround. The Ghanaian economy today bears little resemblance to the basket case of the early 1980s. Economic growth has averaged 5 percent per year for 25 years, translating into a 70 percent increase in the income of the average Ghanaian. The poverty rate, after dropping only slightly from 53 percent in 1984 to 50 percent in 1993 in the early days of the reform program, fell dramatically to 30 percent.
(2010, p. 72)
These two contrasting images of Ghana from Sandbrook and Radelet are both recognizable within a generation, as the country embraced different economic reforms to resuscitate, stabilize, and grow its economy which at independence was seen as a guidepost to other African economies. A decade after the launch of the Economic Recovery Programme (ERP) by Jerry John Rawlings and the Provisional National Defence Council (PNDC), the World Bank extoled Ghana’s reform efforts and characterized it as the beacon on the African continent (see Aryeetey, Harrigan, and Nissanke, 2000). This sense of approval was reechoed in 2011 by the Overseas Development Institute (ODI) (2011) referring to Ghana as a developmental “star performer,” years after structural adjustment under the Rawlings regime, and the designation of the country as a highly indebted and poor country (HIPC) in 2001 under John Kufuor and the New Patriotic Party (NPP).
In recent years, these economic development accolades and pronouncements are often supported by Ghana’s post-Cold War era stable democracy away from the disrupting effects of military interventions and inconsistent economic development plans from the mid-1960s to early 1980s. Admittedly, there are both causes for celebration and concern. As shown in Figure 1.1, Ghana has made some economic progress, after the reforms in the early 1980s which was significantly characterized by the jolt in GDP per capita from a –7.8% in 1983 to 1.7% two years later. Since then, unlike the whole sub-Saharan African region, Ghana has often stabilized its GDP per capita with some highs like in 2011 and many lows including 2015. However, the dizzying situations of intermittent economic performances have often been overwhelmed by Ghana’s image as a democratic reformer with consistently peaceful elections and turnovers that have earned the country a place in the ranks of the world’s known stable democracies. This is perceived exemplary as this country is nestled among some struggling democracies that are often an election away from political strife.
Nevertheless, Ghana’s praise of exceptionalism is not without immense critique as consistent and pro-poor economic growth has been elusive with insufficient political will to enact and execute policies committed to macroeconomic stability and fiscal discipline – two known objectives in most reform programs that the country has adopted over the decades. This is further compounded by the penchant to access diverse loans from external actors that many argue does very little to change the economic development fate of Ghana. Despite the consistency in political development as shown in Figure 1.2, the country’s democratic credentials have also been cautioned over frailties such as the unfair advantage of political incumbency, the feature of underperforming minor political parties, and the often-stated ethnic influences in democratic politics. Thus, this volume is a collection of multiple perspectives to highlight, dissect, and reflect on the political, economic, and social characteristics that have continuously intrigued, weakened, and undermined the gains of economic reform efforts, if any. With different global, regional, and national inputs from multiple disciplines and expertise, the theoretical thread that connects these perspectives is the dynamic interactions among political actors (both international and domestic) continue to shape and perpetuate economic outcomes in a transitional polity. With over a generation of economic reform experience, is Ghana really exceptional? What has this sub-Saharan African state done that is worthy of emulation, and what needs to be done to assert and perpetuate any gains of economic reform in this century?
Figure 1.1 GDP per capita: Ghana and sub-Sahara Africa.
Source: Author’s construct based on Africa Development Bank, 2018.
Figure 1.2 Freedom House scores: Ghana (1998–2018).
Source: Author’s construct based on Freedom House, 2018.
The politics of economic reform
In a global economic order often criticized for marginalization of the developing or underdeveloped regions, there is always research effort in a bid to construe the challenges of economic growth and reform in these regions. These attempts are regularly guided by contested western political and economic ideologies. Discussions of the different processes and outcomes of economic reforms and development plans have often leaned largely on rationalist economic explanations and approaches and de-emphasized the core and disciplinary function of politics – in other words, a depoliticization of most of the issues that contribute to the adoption and implementation of the reform agenda. This is particularly important in a region where international financial institutions (IFIs) use economic models, and economists to offer critical advice and policy directives to help shape the needed outcomes. As noted by Jerven (2015), the tale of African economic growth is strongly linked to the history of policymaking on the continent, especially to the role of foreign policy directions and support. Furthermore, to appreciate the nuances of the policy outcomes in economic development, a study of the political interactions and perspectives of both domestic and foreign actors is of immense value. Therefore, there is the need to repoliticize economic reforms in Africa, to better understand the dynamism of the actors, the processes and some of the new but historically laden challenges that have evolved along the way. Hay and Marsh (1999, p. 9) aptly capture this intellectual need as they referenced Richard Higgot’s (1985) rejection of the conception of globalization as merely an economic phenomenon, and also considering it as a “politico-ideological rationalization” of a series of emergent tendencies and trends in the governance of the economy. Consequently, to value the scholarly reflections of gains or otherwise made after a generation of economic reforms in Ghana, conceptual considerations of ideology, institutions, regionalization, and globalization are imperative as these have variedly impacted the course of economic development.
Politics of ideology
Economic reforms in Ghana, and Africa have been driven by ideological overtones that date back to the immediate post-independence socialist and statist agenda of Kwame Nkrumah. Nkrumah’s attempts to reconstruct Ghana’s economy away from the imperialist economic identity led to the infusion of different economic ideas from renowned development theorists such as William Arthur Lewis who helped develop Ghana’s first Five-Year Development Plan (1959–1963). In the past generation, two significant ideological strands have characterized political and economic reforms in Ghana. First is the neo-Marxist conceptualization, which has its bedrock in the political and development ideals of Kwame Nkrumah at independence, and further embraced at different interruptive and insurrectionist moments in the country’s history by military interventionists. The second ideology is (neo)liberalism which is well entrenched in the Busia-Danquah tradition in Ghana, and also present in various reform agendas through arrangements promoted by IFIs like the World Bank and IMF, and western countries, and variedly supported by both military and civilian Ghanaian administrations.
Beyond the intent of anti-imperialism and support for African nationalism, in the past three decades, neo-Marxist agenda was mainly encountered in Ghana through the Rawlings-led military interventions in 1979 and 1981. This was much in line with the dominant approach of the dependency theory espoused by Latin American intellectuals, which welded together Marxist ideas and structuralism to critique the squelching impacts of developed world policies on underdeveloped countries within a capitalist global order. In addition to the focus on external factors that explain the struggle of underdeveloped and developing economies to access benefits from the global economy, there is also emphasis on the role of internal factors, and the relationship between both internal and external forces. So, as most revolutionaries and reformists in the underdeveloped world were intrigued and energized by the discourse of Andre Gunder Frank’s (1966) that centered on the external influences produced by the dominance of the developed North in their global capitalist linkages with the underdeveloped South, analysis by the Henrique Cardoso and Enzo Faletto (1979) also drew attention to the role of elites in the South. According to the latter school of thought, bureaucratic and national bourgeoisies of countries in the South acted through linkages and alliances with capitalists in the developed North to further perpetuate a relationship of dependency which disadvantaged the underdeveloped.
Though the Rawlings-led regimes in Ghana’s political history spent most of the almost two decades in political power pursuing a neoliberal ideological agenda mainly at the behest of IFIs and the West, the initial approach to radically reforming a free-falling Ghanaian economy in the early 1980s heavily gleaned from neo-Marxist ideas as the call for a change in the global economic order was juxtaposed with the injection of domestic conversations of class and social justice in the Ghanaian society. This consisted of tapping into the ethos of African nationalism as well as the controversial “domestic house-cleaning” efforts to purge the political and economic system of corrupt elites (compradors) (see Oquaye, 2004). At the World Summit for Social Development in 1995, Jerry Rawlings (n.d.) asserted:
From our experience in Ghana, we now believe that structural adjustment, to be successful, must be reciprocal. The developed countries must also restructure their economies to reduce excessive consumerism, to pay appropriate prices for primary commodities, and to open up their markets to fair and effective competition. Of course, we have little right to complain unless we can demonstrate that the limited resources available to us are being used equitably and efficiently in the best interests of all our people. But if we are sincerely and effectively making these efforts, and yet it is clearly not enough to address the social injustices in our countries, then are we not justified in questioning the present world order?
The neo-Marxist ideology provides explanation for the initiation and sustenance of the domestic populist fervor that was needed to propel the radical political intervention by Jerry John Rawlings, and to simultaneously help him draw international support from a fraternity of countries and leaders that were intellectually aligned with the neo-Marxist thought and its variants. So, while Rawlings rallied university students and educated urbanites to Ghanaian hinterlands to help transport cocoa beans for export, he trekked around the world to shake hands with leaders like Fidel Castro of Cuba.
Additionally, the (neo)liberalism ideology has considerably shaped Ghana’s economic reform agenda over the past three decades. Gyimah-Boadi and Jeffries (2000) state that the study of the politics of economic policy in Africa has been largely dominated by the liberal political economy as they challenge the rationalist argument by Robert Bates’s (1981) projection that African leaders and elites are rational actors – maximization of their interests and gains through the fostering of an “urban bias” political economy by ploughing the agricultural resources and gains from rural areas to benefit urban elites, in the interest of political expediency. Bates’s thesis seem plausible with a review of post-independent government administrations (including the military ones) that were largely haunted by the enormously high popular expectations and hence will grasp onto any approach to ensure the crucial urban support. As Gyimah-Boadi and Jeffries (2000) counter this line of reasoning and other aspects of Bates’s argument, they also elevate the discourse of liberalization – a main feature of the Washington Consensus – in Ghana’s reform policy.
The Washington Consensus has featured as market fundamentalism, and many scholars simply perceive it as an embodiment of neoliberal reforms which dominated academic discussions, media and policy domains, and corporate organizations in both developing and developed world (Broad, 2004). As conceptualized by the economist John Williamson, the ideas expressed in the Washington Consensus were politically embraced and further evoked by economic departments, institutions, and agencies in Washington. Though Williamson’s conceptualization consists of 10 major policy prescriptions, the list largely captures three dominant areas – liberalization, deregulation, and privatization. From the 1990s, these policy prescriptions were packaged into bilateral and multilateral trade and investment arrangements with developing countries, including Ghana. With the advent of the post-Cold War era, the Washington Consensus became the only way, and the desirability of its policies was presented as an objective economic truth (Broad, 2004, p. 132). In the early 1980s, Ghana’s economic reform was introduced with the Economic Recovery Programme (ERP) by the Rawlings and the PNDC administration, in conjunction with IMF and World Bank-sponsored Structural Adjustment Program (SAP). This was an adjoined attempt to combine structural and fiscal reform measures to help an anemic economy from inflationary burdens, balance-of-payment deficits, weak manufacturing sector, and deficiencies in other economic sectors. To help resuscitate the Ghanaian economy after decades of inconsistent economic planning and implementation coupled with an unsettling nature of political reg...
