Thursday, June 17, 2010

Ghana - Gateway to the World's Worst Economies

I hate to be a party-pooper, what with all the hoopla around the World Cup, and the great cohesive vibe it creates, but it has come to my attention that outside the football stadium, all the recent great press about Ghana, and it's potential is just that - words. Empty, disappointing and ultimately false.

Ghana has been called 'the Gateway to Africa' and Wikipedia's Ghana article even states that:

"The economy of Ghana has a diverse and rich resource base, and as such, has one of the highest GDP per capita in Africa"


Apparently, Wiki along with alot of others have their facts wrong.

Why is the average Ghanaian poorer now that they were a few years ago? Why is there no manufacturing here? Why is the country still heavily dependent on remittances from Ghanaians abroad, and on the macro level from various Governments and NGOs?

The sad news today is that Forbes have published this year's list of the WORLD'S WORST ECONOMIES. And our beloved Ghana, the star of Africa is on that list.

Forbes clarifies the criteria for their selection as follows:

"All the countries on this list have at least one trait in common: Their governments discourage private investment--and economic growth--through policies of crony capitalism, expropriation or arbitrary enforcement of the laws. That makes it difficult to generate hard currency to pay off government debt and discourages citizens from investing in education to improve their own economic lot."

This does not sound like the Ghana that is promoted by the development community and the politicians alike. This does not sound like the Ghana my fellow bloggers embrace and adore. This sounds like the harsh reality of numbers. The fact that corruption, at the end of the day, cannot be hidden completely. This sounds like the day of reckoning, when all the political dogma and happy clappy optimism flies out the window and is replaced by cold hard facts.

Here is the description of Ghana from Forbes article:

"GDP per capita: $671
Inflation rate: 16%

Bauxite, the world's largest manmade lake, a 1-gigawatt hydroelectric plant and now offshore oil. Ghana's got it all, except a functioning economy. Persistent electricity shortages have sidelined the massive Valco aluminum smelter and the government of Ghana must privatize several money-losing state-owned enterprises to reduce its budget deficits, which run close to 10% of GDP. Oil revenues are expected to flow next year from offshore fields, being developed by Anadarko Petroleum and others. Perhaps the government will use the money to stabilize its finances instead of launching another spending binge."




Ghana is accompanied by countries like Liberia and Sierra Leone, ravaged by decades long civil wars, and Zimbabwe - a country crippled under the world's most evil dictator. 9 out of the 10 countries are African.

I was surprised to see Ghana on such a list. Afterall, we've had decades of peaceful leadership, numerous democratic elections, natural resources in abundance - from bauxite to gold and now oil... What is Ghana's excuse?

The overwhelming message from this report to Ghana is simple mismanagement. The problems, it states, are mostly homegrown. We can't blame the world for our troubles Ghana - this embarassing state of affairs must be dealt with and faced. Otherwise, next year's oil payload will most definitely lead to more greed and mismanagement, and Ghana may slip further instead of shining as it should - as the star of this floundering continent...

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13 comments:

Adjoa said...
This comment has been removed by the author.
Adjoa said...

I am surprised it took Forbes to point this out as I am sure the majority of Ghanaians already know all of this and the rest who claim not to know are drinking the development community and politicians Kool-Aid while being heavily subsidize by remittances from abroad.

As for not blaming the world for our problems well I will borrow from facebook and say “it’s complicated” – Try insisting that manufacturing or pre-processing of natural resources be done in the country and see how fast the country will be labeled communist and the leader a dictator.

My Grandma, Afua Appiaa, use to say “unless we learn to live within our means and our poverty we will always be a 3rd world country regardless of resources or shinny roads, cars and buildings” May her soul rest in peace

Expat mum said...

I met with the Ghana's ambassador to the US last month(not by myself), and lovely man that he is, he painted a much rosier picture than this, and was very optimistic about the future for Ghana's oil production. It's all rather worrying isn't it?

grahamghana said...

Hmmmm...So Forbes believes Ghana must privatise state industries and stop 'spending sprees'. What 'spending sprees' are they referring to? That sounds suspiciously like a code word for stop social spending. I thought these IMF type policies have been proved to have failed everywhere in the world? And yet Forbes is advocating more of the same. Is Ghana in the worst economies because it's refusing to privatise i.e. hand over its industries to foreign corporations?
So is Ghana is refusing to play the whole game? Could that be why is doesn’t fit the foreign elite’s yardstick for ‘success’?

Maya Mame said...

Good point, Holli. They "discourage private investments" - google the Wall Street Journal Article 'Why Africa is poor' and it describes part of the reason why private investors are scared away. Yes, we do have those lovely other things, democracy, natural resources, etc. But unless the mismanagement and politics is taken out of the country's economy, I do not see anything positive about the oil monies that are coming our way.

Ms. Cleland said...

Forbes may know a lot about the way economies work in the West. They have no idea nor is it their place to determine how the Ghanaian economy ought to function.

My point is that in order to measure, you have to have a yardstick which you create. So by their yardstick, I can accept their findings. However I reject the legitimacy of the "signs" or yardstick they are using for our part of the world. They can't know how to measure it because our economy runs so differently from theirs. I hate using words like economy anyway. It means nothing to ordinary people.

I'm not entirely happy with our economy -that word again- however I know it cannot be one of the worst in the world. C'mon. As one of my readers once asked, what kind of expired weed are they smoking over there? Any institution who wants to make the argument that Ghana's economy is amongst the worst in the world will have to make stronger arguments than they're making. I don't buy it. Sorry.

Ms. Cleland said...

Here's a Ghanaian economist's perspective:http://news.myjoyonline.com/business/201006/47900.asp

Andrew Dunkle said...

Hi Holli,

I tried to email you, but the address you provided on the left-hand sidebar didn't seem to work.. Anyway, I am trying to contact you in regards to featuring your blog on our site at www.gooverseas.com. If you are interested, please follow up with me at andrew@gooverseas.com.

Cheers,
Andrew

Anonymous said...

Not all bloggers "embrace and adore" Ghana. madinghana.wordpress.com is forever exploring and exposing the sorry arbitrary state of local governance in Kumasi and the tourism sector

The pale observer said...

Thanks everyone for the insightful comments - I agree that it seems bizarre Ghana should be listed, above Haiti, Chad, Niger etc. as one of the world's worst economies, but having said that, I think that it could be doing so much better with the resources and foundations it has!!!

Anonymous said...

Ghana definitely has a ways to go in terms of the economy. But as much as we advocate critical thinking towards solving our problems we must sometimes apply the same critical thought to the West and their proposed 'salvation' agenda.

Since noone mentioned it, I shall. Read up on what is going on with Exxon Mobil, Kosmos Energy and Ghana's oil. Educate yourself about the West and its dealings with Africa. I ordinary really enjoy reading your blog Holli, but I was none to pleased with this entry.

Ghana is on her way...

Suggshvtk said...

I am surprised it took Forbes to point this out as I am sure the majority of Ghanaians already know all of this and the rest who claim not to know are drinking the development community and politicians Kool-Aid while being heavily subsidize by remittances from abroad. As for not blaming the world for our problems well I will borrow from facebook and say “it’s complicated” – Try insisting that manufacturing or pre-processing of natural resources be done in the country and see how fast the country will be labeled communist and the leader a dictator. My Grandma, Afua Appiaa, use to say “unless we learn to live within our means and our poverty we will always be a 3rd world country regardless of resources or shinny roads, cars and buildings” May her soul rest in peace

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