By Dr Raziel Obeng-Okon, Lecturer &Investment Advisor
THE COLONIAL GOVERNMENT
British colonial government, while authoritarian and centralized, nonetheless permitted Ghanaians a role in governing the colony.
This was true not only of central governing bodies such as the Legislative Council and later the Executive Council, but of local and regional administration as well.
The British policy of indirect rule meant that chiefs or other local leaders became agents of the colonial administration. This system of rule gave Ghanaians experience with modern, representative government to a degree unparalleled elsewhere in sub-Saharan Africa
During the colonial period, the Gold Coast began to develop economically. Roads, railroads, and a harbor at Takoradi were constructed. In 1878 a Ghanaian brought cacao pods into the country, introducing what eventually became the country’s major cash crop.
Large-scale commercial gold mining began, and Western-style education was introduced, culminating in the founding of University College of the Gold Coast (now the University of Ghana) in 1948.
The education system trained a class of Ghanaians that found employment in the colonial administration. In the twentieth century, this same class increasingly sought economic, political, and social improvements as well as self-government, and, eventually, independence for Ghanaians
Ghana achieved independence from colonial domination in 1957, the first country in sub-Saharan Africa to do so, it enjoyed economic and political advantages unrivaled elsewhere in tropical Africa.
The economy was solidly based on the production and export of cocoa, of which Ghana was the world’s leading producer; minerals, particularly gold; and timber. It had a well-developed transportation network, relatively high per capita income, low national debt, and sizable foreign currency reserves. Its education system was relatively advanced, and its people were heirs to a tradition of parliamentary government. Ghana’s future looked promising, and it seemed destined to be a leader in Africa.
THE CONVENTION PEOPLES PARTY: (Nkrumah’s Govt: 1957-66)
Ghana’s first independent administration was inaugurated on March 6, 1957, with Kwame Nkrumah as prime minister. On July 1, 1960, Ghana was declared a republic with Kwame Nkrumah as its president.
Earlier, parliament had passed the Preventive Detention Act of 1958, which granted authority to the head of state to detain without trial those who were considered a threat to the nation. By means of such measures, Nkrumah and his party intimidated leading members of the opposition.
Some opponents were co-opted; others were either exiled or jailed. As leader of Ghana at the time of the Cold War, Nkrumah forged alliances that increasingly placed him in the camp of the Eastern Bloc. Western governments understood Nkrumah’s agenda to be socialist and worried about his influence on other African leaders. Some observers believed that Nkrumah’s obsession with what he called the “total liberation of Africa” compelled him to create an authoritarian political system in Ghana.
Critics of the regime accused Nkrumah of introducing patterns of oppression into Ghanaian politics and of tolerating widespread corruption among party leaders. The regime paid too much attention to urban problems at the expense of the more productive rural sector, they felt, and it embraced unrealistic economic and foreign assistance policies that led the nation to accrue huge foreign debts.
Nkrumah saw Ghana as the “Star of Black Africa.” He believed that Ghana should lead the effort to free Africa from the shackles of Western colonialism and envisioned a union of independent African states that would command respect in the world.
Nkrumah also helped found the Non-Aligned Movement, a grouping of world states that attempted to pursue policies independent of East and West. His ideas about African unity proved immensely appealing in the late 1950s and early 1960s; indeed, the Pan-Africanist dream still resonates across Africa.
Nkrumah’s pursuit of pan-Africanism proved expensive and ultimately futile, and it partially accounted for the economic problems that Ghana encountered during the early 1960s. More important, however, were Nkrumah’s domestic policies. He believed in centralization, both political and economic.
Constitutional safeguards against authoritarianism were abolished, political opposition was stifled, and, shortly after the 1960 elections, Nkrumah was declared president for life. By the mid-1960s, Ghana had become a one-party state under a powerful president.
Nkrumah also believed in a rapid transformation of the Ghanaian economy along socialist lines. He channeled investment into new industrial enterprises and agricultural projects, nationalized foreign-owned enterprises, and wherever possible “Ghanaianized” the public and private sectors.
State-sponsored enterprises such as the Akosombo Dam and the Volta Aluminum Company were undertaken, roads were built, and schools and health services were expanded. The former Northern Territories, the northernmost third of the country which had been neglected by the British, received special attention in an attempt to address the imbalance in infrastructure and social services between North and South.
Ghana, however, lacked sufficient resources to finance the public-sector projects that Nkrumah envisioned. When foreign currency reserves were exhausted, the government resorted to deficit financing and foreign borrowing to pay for essential imports. Trained manpower to allocate resources and to operate old and new state enterprises was equally in short supply, and internal financial controls necessary to implement development led almost naturally to corruption.
Despite obvious gains from investment in roads, schools, health services, and import-substituting industries, by the mid-1960s Ghana was a nation ensnared in debt, rising inflation, and economic mismanagement, the result of Nkrumah’s ill-conceived development policies. An overvalued currency discouraged exports, corruption was increasingly a fact of life, and the political system was intolerant of dissent and authoritarian in practice.
THE NATIONAL LIBERATION COUNCIL AND THE PROGRSS PARTY:
(Busia’s Govt: 1966-71)
The Overthrow of Nkrumah and Politics
In 1966 Nkrumah was overthrown and a military government assumed power. The leaders of the coup that overthrew Nkrumah immediately opened the country’s borders and its prison gates to allow the return from exile or release from preventive detention of all opponents of Nkrumah.
The National Liberation Council (NLC), composed of four army officers and four police officers, assumed executive power. It appointed a cabinet of civil servants and promised to restore democratic government as quickly as possible. The ban on the formation of political parties remained in force until late 1968, but activity by individual figures began much earlier with the appointment of a succession of committees composed of civil servants and politicians as the first step in the return to civilian and representative rule.
These moves culminated in the appointment of a representative assembly to draft a constitution for the Second Republic of Ghana. Political party activity was allowed to commence with the opening of the assembly. By election time in August 1969, the first competitive nationwide political contest since 1956, five parties had been organized.
The major contenders were the Progress Party (PP), headed by Dr. Kofi A. Busia, and the National Alliance of Liberals (NAL), led by Komla A. Gbedemah. Critics associated these two leading parties with the political divisions of the early Nkrumah years.
The PP found much of its support among the old opponents of Nkrumah’s CPP – the educated middle class and traditionalists of Ashanti Region and the North. This link was strengthened by the fact that Busia had headed the NLM and its successor, the UP, before fleeing the country to oppose Nkrumah from exile. Similarly, the NAL was seen as the successor of the CPP’s right wing, which Gbedemah had headed until he was ousted by Nkrumah in 1961.
The elections demonstrated an interesting voting pattern. For example, the PP carried all the seats among the Asante and the Brong. All seats in the northern regions of the country were closely contested.
In the Volta Region, the PP won some Ewe seats, while the NAL won all seats in the non-Ewe northern section. Overall, the PP gained 59 percent of the popular vote and 74 percent of the seats in the National Assembly. The PP’s victories demonstrated some support among nearly all the ethnic groups. An estimated 60 percent of the electorate voted.
Busia, the PP leader in both parliament and the nation, became prime minister when the National Assembly met in September 1969. An interim three-member presidential commission, composed of Major Afrifa, Police Inspector General Harlley of the NLC, and the chief of defense staff, Major General A.K. Ocran, served in place of an elected president for the first year and a half of civilian rule.
The commission dissolved itself in August 1970. Before stepping down, Afrifa criticized the constitution, particularly provisions that served more as a bar to the rise of a dictator than as a blueprint for an effective, decisive government. The electoral college chose as president Chief Justice Edward Akufo Addo, one of the leading nationalist politicians of the UGCC era and one of the judges dismissed by Nkrumah in 1964.
The Economy Under the Busia Govt.
Two early measures initiated by the Busia government were the expulsion of large numbers of noncitizens from the country and a companion measure to limit foreign involvement in small businesses.
The moves were aimed at relieving the unemployment created by the country’s precarious economic situation. The policies were popular because they forced out of the retail sector of the economy those foreigners, especially Lebanese, Asians, and Nigerians, who were perceived as unfairly monopolizing trade to the disadvantage of Ghanaians.
Many other Busia moves, however, were not popular. Busia’s decision to introduce a loan program for university students, who had hitherto received free education, was challenged because it was interpreted as introducing a class system into the country’s highest institutions of learning.
Some observers even saw Busia’s devaluation of the national currency and his encouragement of foreign investment in the industrial sector of the economy as conservative ideas that could undermine Ghana’s sovereignty.
Despite broad popular support garnered at its inception and strong foreign connections, the Busia government fell victim to an army coup within twenty-seven months. Neither ethnic nor class differences played a role in the overthrow of the PP government.
The crucial causes were the country’s continuing economic difficulties, both those stemming from the high foreign debts incurred by Nkrumah and those resulting from internal problems. The PP government had inherited US$580 million in medium and long-term debts, an amount equal to 25 percent of the gross domestic product of 1969.
By 1971 the US$580 million had been further inflated by US$72 million in accrued interest payments and US$296 million in short-term commercial credits. Within the country, an even larger internal debt fueled inflation.
Ghana’s economy remained largely dependent upon the often difficult cultivation of and market for cocoa. Ghana’s income from cocoa exports continued to fall dramatically.
Austerity measures imposed by the Busia administration, although wise in the long run, alienated influential farmers, who until then had been PP supporters. These measures were part of Busia’s economic structural adjustment efforts to put the country on a sounder financial base.
The austerity programs had been recommended by the International Monetary Fund. The recovery measures also severely affected the middle class and the salaried work force, both of which faced wage freezes, tax increases, currency devaluations, and rising import prices.
These measures precipitated protests from the Trade Union Congress. In response, the government sent the army to occupy the trade union headquarters and to block strike actions, a situation that some perceived as negating the government’s claim to be operating democratically.
The army troops and officers upon whom Busia relied for support were themselves affected, both in their personal lives and in the tightening of the defense budget, by these same austerity measures. As the leader of the anti-Busia coup declared on January 13, 1972, even those amenities enjoyed by the army during the Nkrumah regime were no longer available.
Knowing that austerity had alienated the officers, the Busia government began to change the leadership of the army’s combat elements. This, however, was the last straw. Lieutenant Colonel Ignatius Kutu Acheampong, temporarily commanding the First Brigade around Accra, led a bloodless coup that ended the Second Republic
THE NATIONAL REDEMPTION COUNCIL (NRC) and SUPREME MILITARY COUNCIL (SMC): (Acheampong’s Govt: 1972-78 and Akuffo’s Govt: 1978-79)
The inability of the PP government to satisfy diverse interest groups that ostensibly gave Acheampong an excuse for the January 13 takeover. Acheampong’s National Redemption Council (NRC) claimed that it had to act to remove the ill effects of the currency devaluation of the previous government and thereby, at least in the short run, to improve living conditions for individual Ghanaians.
Under the circumstances, the NRC was compelled to take immediate measures. Although committed to the reversal of the fiscal policies of the PP government, the NRC, by comparison, adopted policies that appeared painless and, therefore, popular. But unlike the coup leaders of the NLC, members of the NRC did not outline any plan for the return of the nation to democratic rule. Some observers accused the NRC of acting simply to rectify their own grievances.
To justify their takeover, coup leaders leveled charges of corruption against Busia and his ministers. In its first years, the NRC drew support from a public pleased by the reversal of Busia’s austerity measures. The Ghanaian currency was revalued upward, and two moves were announced to lessen the burden of existing foreign debts: the repudiation of US$90 million of Nkrumah’s debts to British companies, and the unilateral rescheduling of the rest of the country’s debts for payment over fifty years.
Later, the NRC nationalized all large foreign-owned companies. But these measures, while instantly popular in the streets, did nothing to solve the country’s real problems. If anything, they aggravated the problem of capital flow.
Unlike the NLC of 1966, the NRC sought to create a truly military government; hence, in October 1975, the ruling council was reorganized into the Supreme Military Council (SMC), and its membership was restricted to a few senior military officers.
The intent was to consolidate the military’s hold over government administration and to address occasional disagreements, conflicts, and suspicions within the armed forces. Little input from the civilian sector was allowed, and no offers were made to return any part of the government to civilian control during the SMC’s first five years in power. SMC members believed that the country’s problems were caused by a lack of organization, which could be remedied by applying military organization and thinking.
This was the extent of the SMC philosophy. Officers were put in charge of all ministries and state enterprises; junior officers and sergeants were assigned leadership roles down to the local level in every government department and parastatal organization.
The Economy Under Acheampong’s Regime
Acheampong’s popularity continued into 1974 as the government successfully negotiated international loan agreements and rescheduled Ghana’s debts. The government also provided price supports for basic food imports, while seeking to encourage Ghanaians to become self-reliant in agriculture and the production of raw materials.
In the Operation Feed Yourself program, all Ghanians were encouraged to undertake some form of food production, with the goal of eventual food self-sufficiency for the country. The program enjoyed some initial success, but support for it gradually waned.
Whatever limited success the NRC had in these efforts, however, was overridden by other basic economic factors. Industry and transportation suffered greatly as world oil prices rose during and after 1974, and the lack of foreign exchange and credit left the country without fuel. Basic food production continued to decline even as the population grew, largely because of poor price management and urbanization.
When world cocoa prices rose again in the late 1970s, Ghana was unable to take advantage of the price rise because of the low productivity of its old orchards. Moreover, because of the low prices paid to cocoa farmers, some growers along the nation’s borders smuggled their produce to Togo or Côte d’Ivoire. Disillusionment with the government grew, particularly among the educated. Accusations of personal corruption among the rulers also began to surface.
The reorganization of the NRC into the SMC in 1975 may have been part of a face-saving attempt. Shortly after that time, the government sought to stifle opposition by issuing a decree forbidding the propagation of rumors and by banning a number of independent newspapers and detaining their journalists. Also, armed soldiers broke up student demonstrations, and the government repeatedly closed the universities, which had become important centers of opposition to NRC policies.
Despite these efforts, the SMC by 1977 found itself constrained by mounting nonviolent opposition. To be sure, discussions about the nation’s political future and its relationship to the SMC had begun in earnest. Although the various opposition groups (university students, lawyers, and other organized civilian groups) called for a return to civilian constitutional rule, Acheampong and the SMC favored a union government (a mixture of elected civilian and appointed military leaders) but one in which party politics would be abolished.
A national referendum was held in March 1978 to allow the people to accept or reject the union government concept. A rejection of the union government meant a continuation of military rule. Given this choice, it was surprising that so narrow a margin voted in favor of union government.
Opponents of the idea organized demonstrations against the government, arguing that the referendum vote had not been free and fair. The Acheampong government reacted by banning several organizations and by jailing as many as 300 of its opponents.
The agenda for change in the union government referendum called for the drafting of a new constitution by an SMC-appointed commission, the selection of a constituent assembly by November 1978, and general elections in June 1979. The ad hoc committee had recommended a nonparty election, an elected executive president, and a cabinet whose members would be drawn from outside a single-house National Assembly. The military council would then step down, although its members could run for office as individuals.
The Akuffo’s Government
In July 1978, in a sudden move, the other SMC officers forced Acheampong to resign, replacing him with Lieutenant General Frederick W.K. Akuffo. The SMC apparently acted in response to continuing pressure to find a solution to the country’s economic dilemma. Inflation was estimated to be as high as 300 percent that year.
There were shortages of basic commodities, and cocoa production fell to half its 1964 peak. The council was also motivated by Acheampong’s failure to dampen rising political pressure for changes. Akuffo, the new SMC chairman, promised publicly to hand over political power to a new government to be elected by July 1, 1979.
Despite Akuffo’s assurances, opposition to the SMC persisted. The call for the formation of political parties intensified. In an effort to gain support in the face of continuing strikes over economic and political issues, the Akuffo government at length announced that the formation of political parties would be allowed after January 1979.
Akuffo also granted amnesty to former members of both Nkrumah’s CPP and Busia’s PP, as well as to all those convicted of subversion under Acheampong. The decree lifting the ban on party politics went into effect on January 1, 1979, as planned. The constitutional assembly that had been working on a new constitution presented an approved draft and adjourned in May.
All appeared set for a new attempt at constitutional government in July, when a group of young army officers overthrew the SMC government in June 1979.
THE ARMED FORCES REVOLUTIONARY COUNCIL (AFRC):
(The Rawlings’ Govt I: 1979)
On May 15, 1979, less than five weeks before constitutional elections were to be held, a group of junior officers led by Flight Lieutenant Jerry John Rawlings attempted a coup. Initially unsuccessful, the coup leaders were jailed and held for courtmartial . On June 4, however, sympathetic military officers overthrew the Akuffo regime and released Rawlings and his cohorts from prison fourteen days before the scheduled election.
Although the SMC’s pledge to return political power to civilian hands addressed the concerns of those who wanted civilian government, the young officers who had staged the June 4 coup insisted that issues critical to the image of the army and important for the stability of national politics had been ignored.
According to political analysts, unlike the initial SMC II [the Akuffo period, 1978-1979] rehabilitation effort which focused on the power elite, this second attempt at reconstruction from a situation of disintegration was propelled by growing alienation.
In retrospect the most irreversible outcome of this phase was the systematic eradication of the SMC leadership. Their executions signaled not only the termination of the already fallacious myth of the nonviolence of Ghanaian politics, but, more to the point, the deadly serious determination of the new government to wipe the political slate clean.
Rawlings and the young officers formed the Armed Forces Revolutionary Council (AFRC). The armed forces were purged of senior officers accused of corrupting the image of the military. In carrying out its goal, however, the AFRC was caught between two groups with conflicting interests, the “soldier-supporters of the AFRC who were happy to lash out at all manifestations of the old regimes; and the organized political parties who decried the undue violence and advocated change with restraint.
Despite the coup and the subsequent executions of former heads of military governments (Afrifa of the NLC; Acheampong and some of his associates of the NRC; and Akuffo and leading members of the SMC), the planned elections took place, and Ghana had returned to constitutional rule by the end of September 1979.
Before power was granted to the elected government, however, the AFRC sent the unambiguous message that “people dealing with the public, in whatever capacity, are subject to popular supervision, must abide by fundamental notions of probity and accountability, and must have an obligation to put the good of the community above personal objective.” The AFRC position was that the nation’s political leaders, at least those from within the military, had not been accountable to the people.
THE PEOPLES NATIONAL PARTY: (Limann’s Govt: 1979-81)
The administration of Dr. Hilla Limann, inaugurated on September 24, 1979, at the beginning of the Third Republic, was thus expected to measure up to the new standard advocated by the AFRC.
Limann’s People’s National Party (PNP) began the Third Republic with control of only seventy-one of the 140 legislative seats. The opposition Popular Front Party (PFP) won forty-two seats, while twenty-six elective positions were distributed among three lesser parties.
The percentage of the electorate that voted had fallen to 40 percent. Unlike the country’s previous elected leaders, Limann was a former diplomat and a noncharismatic figure with no personal following. As Limann himself observed, the ruling PNP included people of conflicting ideological orientations. They sometimes disagreed strongly among themselves on national policies. Many observers, therefore, wondered whether the new government was equal to the task confronting the state.
The most immediate threat to the Limann administration, however, was the AFRC, especially those officers who organized themselves into the “June 4 Movement” to monitor the civilian administration.
In an effort to keep the AFRC from looking over its shoulder, the government ordered Rawlings and several other army and police officers associated with the AFRC into retirement; nevertheless, Rawlings and his associates remained a latent threat, particularly as the economy continued its decline.
The first Limann budget, for fiscal year 1981, estimated the Ghanaian inflation rate at 70 percent for that year, with a budget deficit equal to 30 percent of the gross national product. The Trade Union Congress claimed that its workers were no longer earning enough to pay for food, let alone anything else.
A rash of strikes, many considered illegal by the government, resulted, each one lowering productivity and therefore national income. In September the government announced that all striking public workers would be dismissed. These factors rapidly eroded the limited support the Limann government enjoyed among civilians and soldiers. The government fell on December 31, 1981, in another Rawlings-led coup.
THE PROVISIONAL NATIONAL DEFENCE COUNCIL (PNDC):
(The Rawlings’ Govt I: 1981-1992)
In a radio broadcast on January 5, 1982, Rawlings presented a detailed statement explaining the factors that had necessitated termination of the Third Republic. The PNDC chairman assured the people that he had no intention of imposing himself on Ghanaians.
Rather, he “wanted a chance for the people, farmers, workers, soldiers, the rich and the poor, to be part of the decision-making process.” He described the two years since the AFRC had handed over power to a civilian government as a period of regression during which political parties attempted to divide the people in order to rule them.
The ultimate purpose for the return of Rawlings was, therefore, to “restore human dignity to Ghanaians.” In the chairman’s words, the dedication of the PNDC to achieving its goals was different from any the country had ever known.
It was for that reason that the takeover was not a military coup, but rather a “holy war” that would involve the people in the transformation of the socioeconomic structure of the society. The PNDC also served notice to friends and foes alike that any interference in the PNDC agenda would be “fiercely resisted.”
Opposition to the PNDC administration developed nonetheless in different sectors of the political spectrum. The most obvious groups opposing the government were former PNP and PFP members.
They argued that the Third Republic had not been given time to prove itself and that the PNDC administration was unconstitutional. Further opposition came from the Ghana Bar Association (GBA), which criticized the government’s use of people’s tribunals in the administration of justice.
Members of the Trade Union Congress were also angered when the PNDC ordered them to withdraw demands for increased wages. The National Union of Ghanaian Students (NUGS) went even further, calling on the government to hand over power to the attorney general, who would supervise new elections.
By the end of June 1982, an attempted coup had been discovered, and those implicated had been executed. Many who disagreed with the PNDC administration were driven into exile, where they began organizing their opposition. They accused the government of human rights abuses and political intimidation, which forced the country, especially the press, into a “culture of silence.”
In keeping with Rawlings’s commitment to populism as a political principle, the PNDC began to form governing coalitions and institutions that would incorporate the populace at large into the machinery of the national government.
Workers’ Defence Committees (WDCs), People’s Defence Committees (PDCs), Citizens’ Vetting Committees (CVCs), Regional Defence Committees (RDCs), and National Defence Committees (NDCs) were all created to ensure that those at the bottom of society were given the opportunity to participate in the decision-making process.
These committees were to be involved in community projects and community decisions, and individual members were expected to expose corruption and “anti- social activities.” Public tribunals, which were established outside the normal legal system, were also created to try those accused of antigovernment acts.
And a four-week workshop aimed at making these cadres morally and intellectually prepared for their part in the revolution was completed at the University of Ghana, Legon, in July and August 1983.
The country had indeed suffered from the excessive expenditures of the Nkrumah regime. The degree of decline under the NRC and the SMC had also been devastating. By December 1981, when the PNDC came to power, the inflation rate topped 200 percent, while real GDP had declined by 3 percent per annum for seven years.
Not only cocoa production but even diamonds and timber exports had dropped dramatically. Gold production had also fallen to half its preindependence level. Ghana’s economic condition, according to the PNDC, had resulted in part from the absence of good political leadership.
In fact, as early as the AFRC administration in 1979, Rawlings and his associates had accused three former military leaders (Generals Afrifa, Acheampong, and Akuffo) of corruption and greed and of thereby contributing to the national crisis and had executed them on the basis of this accusation.
In other words, the AFRC in 1979 attributed the national crisis to internal, primarily political, causes. The overthrow of the Limann administration by the PNDC in 1981 was an attempt to prevent another inept administration from aggravating an already bad economic situation. By implication, the way to resolve some of the problems was to stabilize the political situation and to improve the economic conditions of the nation radically.
The PNDC recognized that it could not depend on friendly nations such as Libya to address the economic problems of Ghana. The magnitude of the crisis was made worse by widespread bush fires that devastated crop production in 1983-84 and by the return of more than one million Ghanaians who had been expelled from Nigeria in 1983, which had intensified the unemployment situation and this called for monetary assistance from institutions with bigger financial chests.
Phase One of the ERP began in 1983 to ensure economic stability. In broad terms, the government wanted to reduce inflation and to create confidence in the nation’s ability to recover. By 1987 progress was clearly evident.
The rate of inflation had dropped to 20 percent, and between 1983 and 1987, Ghana’s economy reportedly grew at 6 percent per year. Official assistance from donor countries to Ghana’s recovery program averaged US$430 million in 1987, more than double that of the preceding years.
The PNDC administration also made a remarkable payment of more than US$500 million in loan arrears dating to before 1966. In recognition of these achievements, international agencies had pledged more than US$575 million to the country’s future programs by May 1987.
With these accomplishments in place, the PNDC inaugurated Phase Two of the ERP, which envisioned privatization of state-owned assets, currency devaluation, and increased savings and investment, and which was to continue until 1990.
The ERP succeeded in reversing the downward trend in production and exports, especially in the cocoa, mining, and timber industries. During the 1980s, gross national product grew at annual rates of 5 percent or more a year, per capita income slowly began to rise, and inflation abated. In the early 1990s, economic growth slowed, but trends in the economy remained positive.
Notwithstanding, Ghana incurred new debts to finance its Economic Recovery Program, unemployment rose, and new fees for basic services such as education and health care were added to the burdens of ordinary citizens. Indeed, for many Ghanaians, structural adjustment did not significantly improved their lives.
Additionally, per capita income, while continuing to rise was unevenly distributed throughout the population. Private overseas investment largely failed to materialize.
THE NATIONAL DEMOCRATIC CONGRESS (NDC):
(The Rawlings Govt. II: 1992-96)
Politics and Birth of the NDC
After initial reluctance to commit themselves to a multiparty political system, Rawlings and the PNDC yielded in the face of domestic and international pressures.
In April 1992, a new constitution that called for an elected national parliament received an overwhelming approval in a national referendum. This led to the lifting of the ban on Political parties since 1982 and which allowed the formation of new political parties.
Presidential elections were held in November 1992, followed in December by elections for the 200-member national parliament. After a heated campaign, Jerry Rawlings was elected president.
His party, the National Democratic Congress (NDC), won control of parliament. In January 1993, Rawlings and the new parliamentarians were sworn into office, thereby launching Ghana’s fourth attempt at republican government since independence.
The Media and Opposition Parties
The four opposition parties that had candidates running in the presidential race charged that fraud and voting irregularities accounted for Rawlings’s victory. When their demands for a revised voters register were rejected because of cost and time factors, they boycotted the parliamentary elections.
This stance by the opposition resulted in what is in effect a one-party republic, which imparted negatively on Ghana’s forward match at democratic government. In its campaign against the NDC government, the opposition, resorting to the courts, won several cases against the government in 1993 and early 1994.
Since 1993 a small but vigorous independent press had developed, which the opposition used to publicize its views. Despite publication of what at times have been sensational or even libelous charges against members of the NDC, including Rawlings, the government made no move to censor or suppress independent newspapers and magazines. Official spokesmen, however, have repeatedly denounced what they consider irresponsible reporting in the private press. Despite problems and shortcomings, the government of the Fourth Republic, the National Democratic Congress (NDC) which succeeded the PNDC in 1993, remained committed to the ERP.
In late 1994 and early 1995, controversy over the media continued unabated. The most contentious issue involved the attempt to establish a national radio station as an alternative to the official Ghana Broadcasting Corporation. Known as “Radio Eye” and dedicated to providing a wider range of political opinion and information than the government network, it began broadcasting in November 1994.
The government promptly shut it down and seized its equipment, charging that Radio Eye had not been licensed. The opposition parties protested that the government’s action was an affront to democratic procedures and turned once more to the courts, challenging the government’s licensing practices and the constitutionality of its actions.
By early 1995, the case was before the Supreme Court of Ghana. Eventually, this led to the emergence of numerous private media houses. Aside from freedom of the press and speech, other basic human rights also appeared to enjoy increased respect in mid-1995.
There were persistent reports of police abuse, especially in areas distant from Accra, as well as of unwarranted detentions, beatings, and similar infringements of rights, but, in general, the number and severity of human rights violations continued to decline.
The judiciary in particular showed clear evidence of preserving its independence, in keeping with Ghanaian tradition and the requirements of democratic governance.
The Economy Under NDC
The NDC Government continued with the ERP even though Ghana faced other major problems with its Economic Recovery Program in the mid-1990s. Tight fiscal controls in central and local government which accounted for an essential element in structural adjustment, had been relaxed as the 1992 elections approached, leading to an increase in the government deficit, inflation, and interest rates. Indications were that this situation had not been brought under control in mid-1995
However, preliminary data for the whole of 1994 showed that the country had achieved a budget surplus, with another anticipated for 1995, and that gross domestic product adjusted for inflation amounted to 3.8 percent, short of the target of 5 percent but still commendable.
Ghana’s trade deficit, however, amounted to US$200 million, with a similar figure projected for 1995. Total international debt for 1993 stood at US$4.6 billion; its rate of increase, however, showed signs of slowing. In January 1995, the government granted a 52 percent increase in the minimum wage under pressure from the Trade Union Congress.
On the whole, Ghana’s economy seemed to be headed in the right direction in the mid-1990s, even though a sustained economic recovery was not yet a reality after more than 10 years. The country continued to rely on cocoa, gold, and timber for most of its foreign currency earnings.
Nonetheless, in spite of real problems, Ghana was still the model for structural adjustment in Africa in the eyes of Western lending institutions.
Nonetheless, the ERP era witnessed a number of challenges and these included the progressive fall in the value of the cedi; a high rate of inflation (more than 30 percent in mid-1995); the lack of private-sector investment, especially in manufacturing; and rising levels of unemployment as a result of international competition, domestic factory closings, and downsizing of parastatals and the government bureaucracy.
Added to these problems were the difficulty of reconciling the rigors of free-market economic reforms with popular demands for improved public services and living standards, and a population growing by well over 3 percent a year
The fragility of the economic and political transition underway in Ghana in the mid-1990s was evident from events during 1995. On March 1, the government introduced a new value-added tax to replace the national sales tax.
Set at 17.5 percent of the price of many commodities and services, the new tax immediately resulted in rising prices and contributed to an already high rate of inflation. It thereby added to the deprivation many Ghanaians had been experiencing for more than a decade under the Economic Recovery Program.
For many, it was simply too much. Discontent among civil servants, teachers, and others led to street demonstrations and finally, on May 11, to the largest protest demonstration in Accra against government policies since Rawlings and the PNDC came to power.
Five people were killed and seventeen injured in clashes between supporters and opponents of the government. Demonstrators not only criticized what they considered harsh economic policies, but some also called openly for Rawlings to step down
The protests, organized by opposition parties, provided Rawlings’ opponents with a rallying cry. For the first time since 1992, the Rawlings government appeared politically vulnerable.
In the face of continued protests and increasing doubts about the viability of the value-added tax, the government in early June announced plans to replace it with a new national sales tax. In the meantime, one of the NDC’s partners in the Progressive Alliance, the National Convention Party, withdrew from the alliance in late May.
The party’s leaders claimed that it had not been allowed to participate in affairs of government as had been promised when the alliance was formed to contest the 1992 elections. The National Convention Party, therefore, would no longer be bound by the agreement, and it would feel free to associate with the opposition if it chose to do so.
THE NEW PATRIOTIC PARTY: (Kufour’s Govt: 2000-2008)
On April 20, 1996 Mr. John Agyekum Kufour was nominated by delegates of the New Patriotic Party (NPP) to run in the Presidential elections but was unsuccessful. He was renominated by the NPP again in the 2000 Presidential elections and won in the December 2000 election and was made President on January 7, 2001.
The NPP’s social-economic policy was anchored on unleashing the entreprenueral, creative and innovative potential of Ghanaians as a means of creating wealth and hence dealing with the social challenges facing Ghanaians.
The Government focused on five priority areas namely: pursuit of good governance; modernization of agriculture for rural development; private sector participation; enhanced social services and vigorous infrastructural development. President Kufour’s foreign policy was underpinned by “economic diplomacy” where he brokered a number of peace deals in Liberia, Sierra Leone, Cote d’Ivoire and the Guinea-Bissau among other African States.
Due to the successes he chalked, President Kufour had his second term (2004-2008) renewed to build on the foundations laid in the first four years.
The NPP inherited a difficult economy in 2000 as internal and external problems had culminated in a resurgence of domestic inflation, steep and an unprecedented depreciation of the Cedi against the major currencies and weak macroeconomic fundamentals. In addition, Government’s projected inflows of project grants turned out to be too optimistic.
Provisional figures show that the inflows of project grants was about a third of what was estimated. The continued depression of the price of primary commodities on the world market constrained the country’s foreign exchange earning capacity. This led to acute shortage of foreign currency, resulting in the Cedi depreciating massively against the major currencies at the Central Bank.
Foreign currency deposits with the commercial banks increased by 95.8 percent between 1999 and 2000 mainly as a result of the ailing cedi. Gross Domestic Product for 2000 indicated a growth rate of 3.7 per cent which is 1.3 percentage points below the targeted growth rate of 5 per cent for the year and 0.7 percentage points lower than the growth performance achieved in 1999.
Similar to the pattern of growth over the last three years. Interest rates were high with the 91- day Treasury Bill discount rate rose from 31.49 per cent in December 1999 to 40.60 per cent in July.
The NPP government implemented its economic policies using the Ghana Poverty Reduction Strategy I & II. Under the Kufour’s government, Ghana was the first country to open up to the Peer Review under NEPAD’s Africa Peer Review Mechanism.
The good governance also led to Ghana obtaining USD500 million grant from the US Millennium Challenge Account for the economic development. The country enjoyed unprecedented, rapid and sustained economic growth with GDP averaging about 5 percent per annum during 2000-2006.
The Real GDP growth rate in September, 2006 was 6.2 per cent, slightly above the target of 6.0 per cent. This was mainly driven by the significant growth experienced in industry and services sectors. The projected growth rate of 6.2 per cent in 2006 was the sixth consecutive year that the nation had experienced increasing and sustained economic growth under the NPP regime.
Inflation and interest rates were at their lowest in about 15 years. There were increases in foreign direct investments, government revenues improved and expenditures were within reasonable levels.
The economic prosperity was made possible partly because the country enjoyed two major debt cancellations under the Heavily Indebtedness Poor Country (HIPC) initiative. Ghana also made significant and commendable progress in institutionalizing democracy and promoting good governance. Kufour’s government also introduced the National Health Insurance Schemes and found oil in commercial quantities before leaving office.
The overall fiscal deficit was reduced from 6.7 per cent of GDP in 2002 to 2.3 per cent of GDP in 2005. Total public debt declined substantially as a result of both fiscal prudence and debt relief under the enhanced Heavily-Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI) – from about 24 per cent of GDP in 2002 to about 10.8 per cent of GDP in 2005.
The fiscal consolidation resulted in a significant reduction in domestic debt service and allowed the “crowding-in” of private sector investment through a sharp drop in interest rates. It also created the needed fiscal space for increasing poverty-related spending from 4.7 per cent of GDP in 2001 to 8.5 per cent in 2005.
The ratio of Gross public debt to GDP declined from 142.6 per cent in 2001 to 41.4 per cent in 2006 under the dual impact of the Highly Indebted Poor Country (HIPC) initiative and the Multilateral Debt Relief Initiative (MDRI). Unfortunately, the ratio in 2007 rose to 52.1 per cent as result of renewed borrowing on non-concessional terms and mostly for economically unproductive projects.
Notwithstanding the political and economic gains in 2008 the government’s budget deficit was huge resulting from over-spending in an election year. inflation rate as at end of December 2008 was 18.1 per cent; average inflation for the year was 16.5 per cent; gross international reserves reduced to the equivalence of 1.8 months of import cover for goods and services; and the overall budget deficit excluding divestiture hit a high of GH¢2,557.6 million, equivalent to 14.9 of GDP. Adding divestiture receipts, however, reduced the deficit to GH¢1,982.9 million, equivalent to 11.5 per cent of GDP.
THE NATIONAL DEMOCRATIC CONGRESS (NDC II):
(Prof. Mill’s Govt: 2008-2012)
The NDC II Government was given the mandate to manage the affairs of the country in January 2009, based on “A Better Ghana‟ manifesto anchored on transparent and accountable governance, a strong economy for real jobs, investing in people, and expanding infrastructure.
The economic policy used was based on the Ghana Shared Growth and Development Agenda (GSGDA) which focused on structural transformation of Ghana’s economy through industrialization, modernized agriculture and natural resource development. The overarching economic goal for the medium–to-long term was to ensure rapid and sustained economic growth and development.
The NDC II inherited a high budget deficit from the NPP government together with double digits inflation, and gross international reserves equivalent 1.8 months but with oil in commercial quantities. The Mills’ government witnessed a significant growth in real GDP from 4.0 per cent in 2009, to 7.7 per cent in 2010 and about 13.6 per cent in 2011, making Ghana one of the fastest growing economies in the world in 2011.
Under the able leadership of His Excellency, Prof John Evans Atta Mills, coupled with the hard work of cocoa farmers and other stakeholders, Ghana attained the 1.0 million metric tonnes of cocoa production for the first time in our history ahead of 2012.
At the end of 2008, the fiscal deficit on cash basis was 8.5 per cent of GDP (14.5 percent of GDP – old series). As at the end of September 2011, it had been reduced significantly to 2.0 percent of GDP; Inflation which was 18.1 per cent at the end of 2008 stood at 8.40 per cent in September, 2011.
This single digit inflation was realized and sustained for the longest period from June 2010 to 2012. Interest rates continuously declined since 2009 to 2012 evidenced by the significant reduction in the yield of the 91-day money market instrument from 24.67 per cent in 2008 to 9.1 per cent in September 2011, making it the lowest recorded money market rate in decades.
Gross International Reserves of US$4.98 billion recorded in October 2011 exceeded 3.0 months of import cover of goods and services, compared to reserves of US$2.0 billion at the end of December 2008, which could barely cover 2 months of imports. The gross international reserves realized in October 2011 was also the highest ever recorded in Ghana’s history.
For the first time since the West Africa Monetary Zone (WAMZ) programme commenced in 2001, Ghana met all the four primary convergence criteria as at end-June 2011. Significant progress was made in improving the well-being of the vulnerable through social intervention such as removal of Schools under Trees, provision of free uniforms and text books, up-scaling of the school feeding programme and the Local Enterprises and Skills Development Programme (LESDEP).
Real GDP growth was rebased and revision of the national accounts saw the country’s national income expanding by more than 60 percent, moving the country into a lower middle-income status. The total public debt increased from US$11.2 billion in September 2010 (representing 37.8 percent of GDP) to US$14.8 billion (representing 39.0 percent GDP) in September 2011.
THE NATIONAL DEMOCRATIC CONGRESS (NDC III):
(Mahama’s Govt: 2012 to Date)
The macroeconomic stability achieved during the Mills’ administration was expected to provide the appropriate platform for accelerated growth. The priority of government over the medium term was to find a solution to the infrastructure deficit that has hampered the country’s accelerated development over the past decades.
From January 2009 to December 2012, the NDC government implemented cogent policies and programmes and pursued activities that were based on the strategic goals of the Ghana Shared Growth and Development Agenda (GSGDA) policy document. President Mahama who succeeded Prof. Mills vowed to build a prosperous and equitable society in pursuance of the common and cherished goal of advancing the Better Ghana Agenda for all.
The economy expanded by 7.4 percent in 2013 and 7.9 percent in 2012 compared with the actual outturn of 14.4 percent in 2011 when the GDP first reflected the impact of crude oil production in commercial quantities.
It is important to note that provisional data for 2012 showed that growth in the oil sector was negative, implying that the growth of 7.1 percent was robust despite the slack in the oil and gas sector. The overall fiscal deficit was equivalent to 11.8 percent of GDP in 2012 to 9.0 percent of GDP in 2013.
In the interest of social and industrial harmony the government proceeded with the roll-out of single-spine salary structure. Government was mindful of the need to stop the continuing exodus of quality staff, improve salary levels and attract critical skill to enhance productivity.
The demands and pressures that came in the wake of the implementation of the scheme compelled government to shorten the 5 year implementation stretch. This created the situation where compensation to public sector workers grew overnight to 72.3 percent of tax revenue (including oil) as at end December 2012.
Headline inflation went up marginally from 8.6 percent in 2011 to 8.8 percent in 2012, continuing the record of single digit inflation for more than two years. In 2013, inflation moved up to 13.1 percent in October 2013. The year-on-year inflation measured by the consumer price index CPI) inched up to 16.9 percent in October 2014.
Interest rates on 91-day and 182-day bills went up from 10.7 and 11.3 to 22.9 and 22.88 percent, respectively, in December 2011 and December 2012. In 2013, the 91-day Treasury bill rate was 23.1 percent and the 182-day bill was 22.9 percent. Interest rates continue to trend upwards to 25.8 percent in 2014.
In 2013, the Ghana Cedi depreciated by 4.12 percent against the US dollar, compared with depreciations of 17.9 percent over the same period in 2012. The depreciation was massive in 2014 ending at 31.2 percent in October 2014.
Ghana’s domestic debt stock rose to GH¢34.6 billion (30.5% of GDP) at the end of 2014, up from GH¢26.7 billion (28.4% of GDP) in 2013 while its external debt also rose to US$13billion (36.6% of GDP) at the end 2014, up from US$11.5 billion (26.9% of GDP) in 2013. This brought the total public debt to GH¢76.1 billion (67.1% of GDP), up from GH¢51.9 billion (55.3% of GDP) in 2013.
The Mahama’s administration has witnessed quite a number of protests leading to mass demonstrations by civil societies, trade unions, politicians, etc. The huge wage bill has crowded out the fiscal space for spending on critical social intervention and other infrastructural programs.
The high public debt has resulted in high interest payments and the Ghanaian currency has undergone significant depreciation of about 40% in the forex market during 2014 alone.
The other challenges for Government include: fighting corruption especially in blocking all the loopholes within the public sector; totally removing subsidies from essential services; restructuring the public sector to enhance productivity; improving fiscal balance by not over-spending, channeling loans into the productive sectors of the economy, etc. Under the circumstances, the NDC III government is in the process of finalizing a stabilization and balance of payment support package from the International Monetary Fund (IMF).
CONCLUSION
During the colonial period, the Gold Coast witness significant economic and social developments. Roads, railroads, and a harbor at Takoradi were constructed. Large-scale cocoa production and commercial gold mining began, Western- style education was introduced, culminating in the founding of University College of the Gold Coast (now the University of Ghana) in 1948.
The education system trained a class of Ghanaians that found employment in the colonial administration. Korle Bu Teaching Hospital was also built by the colonial government and many other social projects.
Ghana achieved independence from colonial domination in 1957, the first country in sub-Saharan Africa to do so. The country enjoyed economic and political advantages over its rival countries in tropical Africa.
The economy was significantly based on the production and export of cocoa, of which Ghana was the world’s leading producer; minerals, particularly gold; and timber. Relative to its population, Ghana had a well-developed transportation network, relatively high per capita income, low national debt, and sizable foreign currency reserves. Ghana’s future looked promising, and it seemed destined to be a leader in Africa.
Since independence, Ghana has experienced both military and civilian regimes and it is clear from the fore-coming analysis that the civilian regimes have out-performed their military counterparts in terms of economic gains and good governance but neither military nor civilian governments have been successful in taking Ghana out of the woods yet.
In terms of economic policies, both the radical left and the conservative right had failed. Notwithstanding, the structure of the economy has changed from the over-reliance on cocoa, gold and timber with a significant shift to the services sector as the largest contributor to GDP as opposed to agriculture in the past. There is also the production of oil in commercial quantities with new discoveries underway. Below shows the summary of reasons assigned to the ousting or voting out of various regimes:
- Nkrumah was ousted in 1966 in a coup due to the following reasons assigned for his removal: autocratic regime; depletion of reserves arising from over spending; corruption by politicians; high public debt; rising inflation and economic mismanagement.
- Busia was also ousted in 1972 by the military due to continuing economic difficulties including those stemming from the high foreign debts incurred by Nkrumah and those resulting from internal problems. These include larger internal debt which fueled inflation; volatile cocoa prices; wage freezes, tax increases, currency devaluations, and rising import prices.
- Acheampong was made to resign due to continuing pressure to find a solution to the country’s economic dilemma. Inflation was estimated to be as high as 300 percent that year. There were shortages of basic commodities, and cocoa production fell to half its 1964 peak. The SMC was also motivated by Acheampong’s failure to dampen rising political pressure for changes.
- The NDC I government appeared politically vulnerable in the late 1990s. In the face of continued protests and increasing doubts about the viability of the value-added tax. The NDC I was rejected in 2000 by Ghanaians due to the following: people had simply become fed up with the NDC government and need a change; harsh economic policies led to discontent among civil servants, teachers and others which led to street demonstrations; high inflation; unprecedented depreciation of the currency; sluggish growth in productivity; high interest rate which crowded out the private sector;
- The NPP government was rejected in 2008 due to lack of internal cohesion and effective succession plan; high budget deficit resulting from over-spending; double digits inflation, and a decreased in gross international reserves equivalent 1.8 months.
In conclusion, it is worthy to note that similar reasons and sentiments have been assigned economically on why various regimes are either ousted by the military or voted out of power. Politicians need to learn from history and must not take the people who voted them into power for granted.
