Ghana’s grand vision of a life beyond foreign aid

The idea of a Ghana that aspires to life “beyond aid” began to resonate internationally last December, when Nana Akufo-Addo, the country’s grandiloquent president, stole the limelight at a joint press conference with the visiting French president, Emmanuel Macron.

A local journalist had asked what Paris proposed to do for Africa. After the French president’s reply, Mr Akufo-Addo cleared his throat and began a 10-minute discourse in his plummy tones.

Elected at the end of 2016 on his third attempt, the 74-year-old leader of the centre-right New Patriotic Party (NPP) began: “It is not right for a country like Ghana, 60 years after independence, to still have its health and education budgets being financed on the basis of the generosity and charity of the European taxpayer. By now we should be able to finance our basic needs ourselves.”

A nation, he said, should chart its own development path and not allow priorities to be set by donors. Although Ghana receives less aid than many poorer countries, it is still supported by bilateral donations from the likes of the EU, France and Denmark. Other organisations are also involved, like the Millennium Challenge Corporation, the US aid agency, which is pumping $498m into Ghana’s electricity sector. The Bill & Melinda Gates Foundation supports agriculture and health programmes.

Noting that South Korea, Malaysia and Singapore had set out from a similar point, the president asked: “What happened? Why did they make that transition . . . Why are we where we are? We need to have a mindset that says, ‘Others have done it. We can do it.’”

By regional standards, Ghana has done modestly well. It has been robustly democratic since 1993 when the state’s military went back — apparently decisively — to barracks. Ghana counts as a lower middle-income country, according to the World Bank. And though it has now discovered oil, it has a far more diversified economy — with gold, cocoa and tourism to the fore — than Nigeria, the regional behemoth.

These achievements are not to be sniffed at. Nor should they be exaggerated. By most standards, Ghana is still locked in low value-added, extractive patterns of capitalism. Between them, Ghana and neighbouring Ivory Coast control about 60 per cent of the global raw cocoa market, yet both continue to be price takers, competing for what the finance ministry estimates is just $6bn of a $140bn chocolate market dominated by multinationals.

In purchasing power parity terms, Ghana has a per capita income of $4,600, according to the International Monetary Fund. That compares with $39,000 in South Korea.

Ken Ofori-Atta, finance minister, says this is not good enough. A former investment banker, he aspires to Ghana having a “strong middle class” in some 10-15 years — and a society that “ensures the good life, the Aristotelian life for every individual”.

The administration has much to prove if that vision is to gain credibility.

Charles Adu Boahen, deputy finance minister and one of several members of the government drawn from the private sector, argues that rhetoric has its place. “The ‘Ghana beyond aid’ mantra is a way of instilling that sense of responsibility and aspirational drive in the Ghanaian people,” he says.

However, good government, as demonstrated by the Asian examples cited by the president, has an indispensable role. The NPP sees its job as providing macro­economic stability and the right enabling environment for private sector growth.

In the short term, that has meant reconciling some of the grandiose promises made during the 2016 campaign — free high school education, a factory in every district, lower corporate taxes — with the administration’s fiscal rectitude.

The previous government of John Mahama, plagued by allegations of corruption, had increased spending largely in an effort to win a second term. That left the incoming administration with a budget deficit of 9 per cent of gross domestic product and tough decisions, as yet unmade, over bloated state-owned enterprises and a civil service that gobbles up more than 40 per cent of revenue.

After a sharp fall in commodity prices, in 2015 Ghana went to the IMF for a three-year loan of nearly $1bn. The new government is preparing for life after the IMF when the programme ends next year.

“They inherited a big mess and I think they have done well, given where we have come from,” says Mr Edward Effah, chief executive of Ghanaian bank Fidelity, referring to the main macro­economic indicators, as well as to a bubbling banking crisis that the authorities have moved swiftly to tackle.

Kwasi Prempeh, executive director at the Ghana Center for Democratic Development, a non-profit based in the capital Accra, concedes the administration’s achievements but says growth is not being widely felt.

 “The government had an extraordinary mandate. There was something messianic about their campaign,” he says, hinting at the Christian zeal that runs through the administration. “There was an expectation that they would right all the wrongs of the Mahama government in terms of tackling corruption and restoring good economic management. But growth hasn’t effected the change on people’s lives that they’d expected.”

Mr Prempeh argues that the government will struggle to both keep borrowing in check and pay for interventions necessary to enact its grander vision.

Tension has emerged over a presidential pledge to fund free high-school education. Mr Ofori-Atta wanted to means-test payments but lost that battle.

President Akufo-Addo considers raising educational standards the foundation of his vision for a nation that can stand on its own feet. He was not, says Mr Ofori-Atta with a wry smile, to be dissuaded. Even so, the government has had to introduce a staggered school year to make the plan work, provoking parental grumbles.

In the longer run, in spite of his free-market leanings, Mr Ofori-Atta wants to draw more people into the formal economy, taxing corporates more rigorously and stopping what he calls “illicit flows”.

Thus, he wants to raise tax revenue from 15 to 22 per cent of GDP. “Widening the tax base is essential in terms of citizens and the republic,” he says.

If that is the basis for creating a new kind of society, Ghana must tackle the scourge of corruption urgently, which critics say erodes the idea of a shared national project.

Daniel Domelevo, Ghana’s auditor-general, sees this as crucial, if a long way off. “The new government said: ‘See how corrupt the old government was’,” he says. Yet the problems are endemic, Mr Domelevo argues, perpetuated by impossible-to-sack bureaucrats who all too often consider padded contracts and backhanders a perk of the job.

“They don’t see financial malfeasance as a crime,” he says, adding that the government should staff the under-resourced special prosecutor’s office adequately as a sign that it is serious about bringing perpetrators to book.

“Our office is much more pro­active,” he says of the lightning audits he has conducted to rattle the corridors of power. “But it has not stopped the leakage. It still goes on.”

Source: Financial Times

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