Kufour's balance sheet

New African, Dec 2001 by Boateng, Osei

Around Africa

GHANA

January marks exactly one year since President John Agyekum Kufuor came into office, ending President Jerry Rawlings' 19 years at the head of the country. And despite Kufuor's best efforts over the past year, the debit side of the balance sheet still out-- weighs the credit side. He would, in fact, be a magician if the balance sheet showed otherwise, given the broken economy and infrastructure he inherited from Rawlings.

On the credit side, Ghanaians have enjoyed much more personal freedoms under Kufuor, the police and military now know their places in society, and the media have been in fine fettle (not as much in quality as in quantity).

The business climate has generally been good though the expected boom and foreign investments have not materialised. The construction industry, however, is still buoyant as in the last years of Rawlings (as more Ghanaians abroad and at home continue to build or buy their own homes).

The real problem facing Kufuor is the health of the national currency, the Cedi. It is back to its yo-yoing days. No currency in the world has suffered such massive depreciation in the last 20 years as the cedi. In April 1983, when Rawlings finally succumbed to the seductions of the IMF and World Bank and devalued the cedi as part of the structural adjustment programme (SAP), the exchange rate at the time was five cedis to one pound sterling (5:1).

By the time Rawlings left office 18 years later, the exchange rate was 10,500 cedis to one pound (10,500:1). And throughout this free fall, the IMF kept telling Ghanaians that the country was doing very fine, it was even "a star pupil".

The first few months of Kufuor saw the cedi's calamitous slide slow to a halt. It even rallied a teeny bit, crawling back to 10,000:1 and staying there for most of this year. At the time of writing, it was back yo-yoing, hitting 10,500:1 and nobody knowing its future.

The debit side

Top on the debit side is the perception that Kufuor is "following in the disastrous footsteps of Rawlings" regarding public appointments. Rawlings was accused of appointing too many of his Ewe compatriots into government and the public service.

Kufuor appears not to have learned any lessons from the tensions that this Rawlings policy created in the country. If a list published by a Ga group in Accra five months ago is to be believed, Kufuor has appointed 19 "close" family members into government and the public service.

"It is an Asante government", his opponents charge, and they have reason. At one point, in June, when Kufuor was tackled over the issue, he issued the remarkable explanation that there was nobody from the Upper West Region qualified to be a minister. The region had nobody in government at the time.

Yet, three months later, Kufuor was able to find Professor Kasim Katanga from the same Upper West Region qualified enough to be appointed lands and forestry minister, when he reshuffled his government in September. Ghanaians agree that the president will have to be more sensitive to ethnic balance in his appointments before more harm is done.

That he had to reshuffle his government at all, after only nine months in office, gave the impression that not much thought went into selecting his team in the first place.

Perhaps the most disturbing thing about Kufuor's government is its "uncritical acceptance" of IMF and World Bank dictation. Rawlings now openly says that the IMF and World Bank compounded his problems in office and were responsible for some of the economic and other difficulties facing the country today.

Yet, within weeks of coming into office, Kufuor's government was seen in bed with the IMF and World Bank, agreeing to take Ghana into what the BBC's John Kampfner calls, "the ignominious club of highly indebted poor countries" (HIPC).

The sharp slide from an IMF "star pupil" to an IMF "highly indebted poor country" so shocked the Ghanaian people that the government had to apologise for not consulting them before accepting the HIPC status.

HIPC is supposed to offer debt relief in the short term, but the conditions attached - such as privatisation of utilities, and the removal of subsidies - are unlikely to benefit Ghana in the long term.

The Guardian (London) reported on 6 November that Britain's Department of International Development had "told Ghana that aid money for a water project will be conditional on the country's privatisation of its water industry.

"Without consulting its own people, the government of Ghana has been forced to start raising the price of water by between two and three times, to prepare the industry for sale to British, French or US companies."

HIPC, like the SAPs before it, appears to have the main aim of making it possible for recipients to pay their foreign debt at the expense of the provision of domestic social services.

According to Saskia Sassen (The Guardian, London, 12 Sept 2001), "the IMF asks certain countries [in Africa and elsewhere in the developing world] to pay 20-25% of their export earnings towards debt service. By contrast, in 1953 the Allies cancelled 80% of Germany's war debt and only insisted on 3-5% of export earnings debt service. These are also the terms asked [today] from Central Europe after communism."