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Introduction:
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Formed from the merger of the British colony of the Gold Coast and the Togoland trust territory, Ghana in 1957 became the first sub-Saharan country in colonial Africa to gain its independence. A long series of coups resulted in the suspension of Ghana's third constitution in 1981 and a ban on political parties. A new constitution, restoring multiparty politics, was approved in 1992. Lt. Jerry RAWLINGS, head of state since 1981, won presidential elections in 1992 and 1996, but was constitutionally prevented from running for a third term in 2000. John KUFUOR, who defeated former Vice President John ATTA-MILLS in a free and fair election, succeeded him. |
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Geography
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Climate
The tables below display average monthly climate indicators in major cities
based on 8 years of historical weather readings.
Temperature by: Centigrade
ACCRA 5 60 N, 0 16 W, 226 feet (69 meters) above sea level.
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KUMASI 6 71 N, 1 60 W, 961 feet (293 meters) above sea level.
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TAKORADI 4 88 N, 1 76 W, 29 feet (9 meters) above sea level.
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PEOPLE
Ghana's population is concentrated along the coast and in the principal cities
of Accra and Kumasi. Most Ghanaians descended from migrating tribes that
probably came down the Volta River valley at the beginning of the 13th century.
Ethnically, Ghana is divided into small groups speaking more than 50 languages
and dialects. Among the more important linguistic groups are the Akans, which
include the Fantis along the coast and the Ashantis in the forest region north
of the coast; the Guans, on the plains of the Volta River; the Ga- and
Ewe-speaking peoples of the south and southeast; and the Moshi-Dagomba-speaking
tribes of the northern and upper regions. English, the official and commercial
language, is taught in all the schools.
Education
Primary and junior secondary school education is tuition-free and mandatory. The
Government of Ghana's support for basic education is unequivocal. Article 39 of
the constitution mandates the major tenets of the free, compulsory, universal
basic education (FCUBE) initiative. Launched in 1996, it is one of the most
ambitious pre-tertiary education programs in West Africa. Since the early 1980s,
Government of Ghana expenditures on education have risen from 1.5% to over 5% of
GDP. Since 1987, the share of basic education in total education spending has
averaged around 67%. The units of the Ministry of Education, Youth and Sports
(MOEYS) responsible for education are: the Ghana Education Service (GES), which
administers pre-university education; the National Council on Tertiary
Education; the National Accreditation Board; and the National Board for
Professional and Technician Examinations (NABPTEX). The West African
Examinations Council (WAEC), a consortium of five Anglophone West African
Countries (Ghana, Nigeria, Sierra Leone, Gambia, and Liberia) is responsible for
developing, administering, and grading school-leaving examinations at the
secondary level.
Since 1986, pre-tertiary education in Ghana includes six years of primary
education, three years at the junior secondary school level and three years at
the senior secondary school level. Successful completion of senior secondary
school leads to admission eligibility at training colleges, polytechnics, and
universities. In 2002 there were approximately 3.7 million students attending
schools at these three levels: 70% at the primary level, 24% at the junior
secondary level and 6% at the senior secondary level. There are over five
hundred public senior secondary schools in Ghana that graduated a total of
90,000 students in 2004, representing a huge expansion over the old system
(which was transformed in 1987), which consisted of three hundred institutions
graduating 27,000 students a year. However, access to each successive level of
education remains severely limited by lack of facilities. Only about 30% of
junior secondary school graduates are able to gain admission to senior secondary
schools, and only about 35% of senior secondary school graduates are able to
gain admission to universities and polytechnics, plus another 10-20% to
diploma-level postsecondary education. Private secondary schools play a very
small role in Ghana, with only a handful of institutions offering international
curricula such as the British-based A-levels, International Baccalaureate, and
U.S. high school. Combined, they graduate fewer than 200 students a year.
Entrance to one of the five Ghanaian public universities is by examination
following completion of senior secondary school. There are now five public and
nine private degree-granting universities in Ghana, along with ten public
polytechnics offering the British Higher National Diploma (HND), a three-year
tertiary system in applied fields of study. Ghana?s first private Catholic
university opened in 2003 in Sunyani. The polytechnics also offer vocational,
non-tertiary diploma programs. In addition, there are approximately forty
teacher-training colleges and fifteen nurses? training colleges. Private
tertiary education is a recent but rapid development in Ghana, meticulously
regulated by the National Accreditation Board. Over 5,000 undergraduates are now
enrolled in secular degree-granting programs in nine private institutions.
In 2003-2004, new enrollments in public universities totaled 18,149; new
enrollments in private universities totaled 1,380; and new enrollments in
polytechnics totaled 8,688, representing an increase of 30% over theprevious
five years. Total enrollment in tertiary education surpassed 100,000 for the
first time in Ghana's history.
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HISTORY
The history of the Gold Coast before the last quarter of the 15th century is
derived primarily from oral tradition that refers to migrations from the ancient
kingdoms of the western Soudan (the area of Mauritania and Mali). The Gold Coast
was renamed Ghana upon independence in 1957 because of indications that
present-day inhabitants descended from migrants who moved south from the ancient
kingdom of Ghana. The first contact between Europe and the Gold Coast dates from
1470, when a party of Portuguese landed. In 1482, the Portuguese built Elmina
Castle as a permanent trading base. Thomas Windham made the first recorded
English trading voyage to the coast in 1553. During the next three centuries,
the English, Danes, Dutch, Germans, and Portuguese controlled various parts of
the coastal areas.
In 1821, the British Government took control of the British trading forts on the
Gold Coast. In 1844, Fanti chiefs in the area signed an agreement with the
British that became the legal steppingstone to colonial status for the coastal
area.
From 1826 to 1900, the British fought a series of campaigns against the
Ashantis, whose kingdom was located inland. In 1902, they succeeded in
establishing firm control over the Ashanti region and making the northern
territories a protectorate. British Togoland, the fourth territorial element
eventually to form the nation, was part of a former German colony administered
by the United Kingdom from Accra as a League of Nations mandate after 1922. In
December 1946, British Togoland became a UN Trust Territory, and in 1957,
following a 1956 plebiscite, the United Nations agreed that the territory would
become part of Ghana when the Gold Coast achieved independence.
The four territorial divisions were administered separately until 1946, when the
British Government ruled them as a single unit. In 1951, a constitution was
promulgated that called for a greatly enlarged legislature composed principally
of members elected by popular vote directly or indirectly. An executive council
was responsible for formulating policy, with most African members drawn from the
legislature and including three ex officio members appointed by the governor. A
new constitution, approved on April 29, 1954, established a cabinet comprising
African ministers drawn from an all-African legislature chosen by direct
election. In the elections that followed, the Convention People's Party (CPP),
led by Kwame Nkrumah, won the majority of seats in the new Legislative Assembly.
In May 1956, Prime Minister Nkrumah's Gold Coast government issued a white paper
containing proposals for Gold Coast independence. The British Government stated
it would agree to a firm date for independence if a reasonable majority for such
a step were obtained in the Gold Coast Legislative Assembly after a general
election. This election, held in 1956, returned the CPP to power with 71 of the
104 seats in the Legislative Assembly. Ghana became an independent state on
March 6, 1957, when the United Kingdom relinquished its control over the Colony
of the Gold Coast and Ashanti, the Northern Territories Protectorate, and
British Togoland.
In subsequent reorganizations, the country was divided into 10 regions, which
currently are subdivided into 138 districts. The original Gold Coast Colony now
comprises the Western, Central, Eastern, and Greater Accra Regions, with a small
portion at the mouth of the Volta River assigned to the Volta Region; the
Ashanti area was divided into the Ashanti and Brong-Ahafo Regions; the Northern
Territories into the Northern, Upper East, and Upper West Regions; and British
Togoland essentially is the same area as the Volta Region.
Post-Independence Politics
After independence, the CPP government under Nkrumah sought to develop Ghana as
a modern, semi-industrialized, unitary socialist state. The government
emphasized political and economic organization, endeavoring to increase
stability and productivity through labor, youth, farmers, cooperatives, and
other organizations integrated with the CPP. The government, according to
Nkrumah, acted only as 'the agent of the CPP' in seeking to accomplish these
goals.
The CPP's control was challenged and criticized, and Prime Minister Nkrumah used
the Preventive Detention Act (1958), which provided for detention without trial
for up to 5 years (later extended to 10 years). On July 1, 1960, a new
constitution was adopted, changing Ghana from a parliamentary system with a
prime minister to a republican form of government headed by a powerful
president. In August 1960, Nkrumah was given authority to scrutinize newspapers
and other publications before publication. This political evolution continued
into early 1964, when a constitutional referendum changed the country to a
one-party state. On February 24, 1966, the Ghanaian Army and police overthrew
Nkrumah's regime. Nkrumah and all his ministers were dismissed, the CPP and
National Assembly were dissolved, and the constitution was suspended. The new
regime cited Nkrumah's flagrant abuse of individual rights and liberties, his
regime's corrupt, oppressive, and dictatorial practices, and the rapidly
deteriorating economy as the principal reasons for its action.
Post-Nkrumah Politics
The leaders of the February 24, 1966 coup established the new government around
the National Liberation Council (NLC) and pledged an early return to a duly
constituted civilian government. Members of the judiciary and civil service
remained at their posts and committees of civil servants were established to
handle the administration of the country. Ghana's government returned to
civilian authority under the Second Republic in October 1969 after a
parliamentary election in which the Progress Party, led by Kofi A. Busia, won
105 of the 140 seats. Until mid-1970, a presidential commission led by Brigadier
A.A. Afrifa held the powers of the chief of state. In a special election on
August 31, 1970, former Chief Justice Edward Akufo-Addo was chosen President,
and Dr. Busia became Prime Minister.
Faced with mounting economic problems, Prime Minister Busia's government
undertook a drastic devaluation of the currency in December 1971. The
government's inability to control the subsequent inflationary pressures
stimulated further discontent, and military officers seized power in a bloodless
coup on January 13, 1972.
The coup leaders, led by Col. I.K. Acheampong, formed the National Redemption
Council (NRC) to which they admitted other officers, the head of the police, and
one civilian. The NRC promised improvements in the quality of life for all
Ghanaians and based its programs on nationalism, economic development, and
self-reliance. In 1975, government reorganization resulted in the NRC's
replacement by the Supreme Military Council (SMC), also headed by now-General
Acheampong.
Unable to deliver on its promises, the NRC/SMC became increasingly marked by
mismanagement and rampant corruption. In 1977, General Acheampong brought
forward the concept of union government (UNIGOV), which would make Ghana a
non-party state. Perceiving this as a ploy by Acheampong to retain power,
professional groups and students launched strikes and demonstrations against the
government in 1977 and 1978. The steady erosion in Acheampong's power led to his
arrest in July 1978 by his chief of staff, Lt. Gen. Frederick Akuffo, who
replaced him as head of state and leader of what became known as the SMC-2.
Akuffo abandoned UNIGOV and established a plan to return to constitutional and
democratic government. A Constitutional Assembly was established, and political
party activity was revived. Akuffo was unable to solve Ghana's economic
problems, however, or to reduce the rampant corruption in which senior military
officers played a major role. On June 4, 1979, his government was deposed in a
violent coup by a group of junior and noncommissioned officers--Armed Forces
Revolutionary Council (AFRC)--with Flt. Lt. Jerry John Rawlings as its chairman.
The AFRC executed eight senior military officers, including former chiefs of
state Acheampong and Akuffo; established Special Tribunals that, secretly and
without due process, tried dozens of military officers, other government
officials, and private individuals for corruption, sentencing them to long
prison terms and confiscating their property; and, through a combination of
force and exhortation, attempted to rid Ghanaian society of corruption and
profiteering. At the same time, the AFRC accepted, with a few amendments, the
draft constitution that had been submitted; permitted the scheduled presidential
and parliamentary elections to take place in June and July; promulgated the
constitution; and handed over power to the newly elected President and
Parliament of the Third Republic on September 24, 1979.
The 1979 constitution was modeled on those of Western democracies. It provided
for the separation of powers between an elected president and a unicameral
Parliament, an independent judiciary headed by a Supreme Court, which protected
individual rights, and other autonomous institutions, such as the Electoral
Commissioner and the Ombudsman. The new President, Dr. Hilla Limann, was a
career diplomat from the north and the candidate of the People's National Party
(PNP), the political heir of Nkrumah's CPP. Of the 140 members of Parliament, 71
were PNP. The PNP government established the constitutional institutions and
generally respected democracy and individual human rights. It failed, however,
to halt the continuing decline in the economy; corruption flourished, and the
gap between rich and poor widened. On December 31, 1981, Flight Lt. Rawlings and
a small group of enlisted and former soldiers launched a coup that succeeded
against little opposition in toppling President Limann.
The PNDC Era
Rawlings and his colleagues suspended the 1979 constitution, dismissed the
President and his cabinet, dissolved the Parliament, and proscribed existing
political parties. They established the Provisional National Defense Council
(PNDC), initially composed of seven members with Rawlings as chairman, to
exercise executive and legislative powers. The existing judicial system was
preserved, but alongside it the PNDC created the National Investigation
Committee to root out corruption and other economic offenses; the anonymous
Citizens' Vetting Committee to punish tax evasion; and the Public Tribunals to
try various crimes. The PNDC proclaimed its intent to allow the people to
exercise political power through defense committees to be established in
communities, workplaces, and in units of the armed forces and police. Under the
PNDC, Ghana remained a unitary government.
In December 1982, the PNDC announced a plan to decentralize government from
Accra to the regions, the districts, and local communities, but it maintained
overall control by appointing regional and district secretaries who exercised
executive powers and also chaired regional and district councils. Local
councils, however, were expected progressively to take over the payment of
salaries, with regions and districts assuming more powers from the national
government. In 1984, the PNDC created a National Appeals Tribunal to hear
appeals from the public tribunals; changed the Citizens' Vetting Committee into
the Office of Revenue Collection; and replaced the system of defense committees
with Committees for the Defense of the Revolution.
In 1984, the PNDC also created a National Commission on Democracy to study ways
to establish participatory democracy in Ghana. The commission issued a 'Blue
Book' in July 1987 outlining modalities for district-level elections, which were
held in late 1988 and early 1989, for newly created district assemblies. The
government appointed one-third of the assembly members.
The Fourth Republic
Under international and domestic pressure for a return to democracy, the PNDC
allowed the establishment of a 258-member Consultative Assembly made up of
members representing geographic districts as well as established civic or
business organizations. The assembly was charged to draw up a draft constitution
to establish a Fourth Republic, using PNDC proposals. The PNDC accepted the
final product without revision, and it was put to a national referendum on April
28, 1992, in which it received 92% approval. On May 18, 1992, the ban on party
politics was lifted in preparation for multi-party elections. The PNDC and its
supporters formed a new party, the National Democratic Congress (NDC), to
contest the elections. Presidential elections were held on November 3 and
parliamentary elections on December 29, 1992. Members of the opposition
boycotted the parliamentary elections, however, which resulted in a 200-seat
Parliament with only 17 opposition party members and two independents.
The constitution entered into force on January 7, 1993, to found the Fourth
Republic. On that day, Flt. Lt. Jerry John Rawlings was inaugurated as President
and members of Parliament swore their oaths of office. In 1996, the opposition
fully contested the presidential and parliamentary elections, which were
described as peaceful, free, and transparent by domestic and international
observers. In that election, President Rawlings was re-elected with 57% of the
popular vote. In addition, Rawlings' NDC party won 133 of the Parliament's 200
seats, just one seat short of the two-thirds majority needed to amend the
constitution, although the election returns of two parliamentary seats faced
legal challenges.
The December 2000 elections ushered in the first democratic presidential change
of power in Ghana's history when John A. Kufuor of the New Patriotic Party (NPP)
defeated the NDC's John Atta Mills--who was Rawling's Vice President and
hand-picked successor. Kufuor defeated Mills by winning 56.73% of the vote,
while the NPP picked up 100 of 200 seats in Parliament. The elections were
declared free and fair by a large contingent of domestic and international
monitors. After several by-elections were held to fill vacated seats, the NPP
majority stood at 103 of the 200 seats in Parliament, while the NDC held 89 and
independent and small party members held eight.
In December 2004, eight political parties contested parliamentary elections and
four parties, including the NPP and NDC, contested presidential elections. This
election was reported to have a remarkable turnout of 85.12% according to the
Election Commission. Despite a few incidents of intimidation and minor
irregularities, domestic and international observers judged the elections
generally free and fair. There were several isolated incidents of
election-related violence, but the election was generally peaceful in most of
Ghana. John Agyekum Kufuor was re-elected president with 52.45% of the vote
against three other presidential candidates, including former Vice-President
John Atta Mills of the NDC. Thirty constituencies were created in the period
between the 2000 and 2004 elections, resulting in a 230-member Parliament.
On March 6, 2007, Ghana celebrated its 50th anniversary since becoming
independent. As the first African nation to win its struggle for independence,
Ghana hosted delegations from around the world during its year-long Jubilee
event.
GOVERNMENT AND POLITICAL CONDITIONS
The 1993 constitution that established the Fourth Republic provided a basic
charter for the republican democratic government. It declares Ghana to be a
unitary republic with sovereignty residing in the Ghanaian people. Intended to
prevent future coups, dictatorial government, and one-party states, it is
designed to establish the concept of power sharing. The document reflects
lessons learned from the abrogated constitutions of 1957, 1960, 1969, and 1979,
and incorporates provisions and institutions drawn from British and American
constitutional models. One controversial provision of the constitution
indemnifies members and appointees of the PNDC from liability for any official
act or omission during the years of PNDC rule. The constitution calls for a
system of checks and balances, with power shared between a president, a
unicameral parliament, an advisory Council of State, and an independent
judiciary.
Executive authority is established in the Office of the Presidency, together
with his Council of State. The president is head of state, head of government,
and commander in chief of the armed forces. He also appoints the vice president.
According to the constitution, more than half of the presidential-appointed
ministers of state must be appointed from among members of Parliament.
Legislative functions are vested in Parliament, which consists of a unicameral
230-member body plus the Speaker. To become law, legislation must have the
assent of the president, who has a qualified veto over all bills except those to
which a vote of urgency is attached. Members of Parliament are popularly elected
by universal adult suffrage for terms of 4 years, except in wartime, when terms
may be extended for not more than 12 months at a time beyond the 4 years.
The structure and the power of the judiciary are independent of the two other
branches of government. The Supreme Court has broad powers of judicial review.
It is authorized by the constitution to rule on the constitutionality of any
legislation or executive action at the request of any aggrieved citizen. The
hierarchy of courts derives largely from British juridical forms. The hierarchy,
called the Superior Court of Judicature, is composed of the Supreme Court of
Ghana, the Court of Appeal, the High Court of Justice, regional tribunals, and
such lower courts or tribunals as Parliament may establish. The courts have
jurisdiction over all civil and criminal matters.
The government of John A. Kufuor appears to enjoy broad support among the
Ghanaian population as it pursues a domestic political agenda based upon public
commitment to the rule of law, basic human rights, and free market initiatives.
So far, the government has taken steps to strengthen freedoms of expression by
repealing colonial-era criminal libel laws, dropping a number of libel suits
against journalists, abolishing sometimes abusive community tribunals, and
introducing legislation to establish a juvenile justice system. As part of its
anti-corruption efforts the Kufuor government has pursued some high-profile
cases, including the prosecution of its Minister of Youth and Sports and several
former high-level government officials. On September 3, 2002, Ghana inaugurated
its National Reconciliation Commission, a South Africa-style commission
established to investigate human rights abuses under Ghana's former military
regimes. The National Reconciliation Commission completed its hearings in July
2004 and submitted its final report with recommendations in October 2004. The
government responded with a White Paper in April 2005, accepting the
recommendation to establish a Reparation and Rehabilitation Fund for victims of
abuse, as well as directing security forces to study carefully the various
recommendations on recruitment, training and deployment.
Principal Government Officials
President--John Agyekum Kufuor
Vice President--Alhaji Mahama Aliu
Senior Minister--Joseph Henry (J.H.) Mensah
Minister of Foreign Affairs--Nana Akufo-Addo
Minister of Defense--Kwame Addo-Kufuor
Minister of Finance and Economic Planning--Kwadwo Baah-Wiredu
Minister of Trade & Industry--Alan Kyerematen
Minister of Justice and Attorney General--Joe Gartey
Minister of Interior--Kan Dapaah
Chief Justice of the Supreme Court--Justice George Acquah
Speaker of Parliament--Ebenezer Begyina Sekyi Hughes
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ECONOMY
By West African standards, Ghana has a diverse and rich resource base. The
country is mainly agricultural, however, with a majority of its workers engaged
in farming. Cash crops consist primarily of cocoa and cocoa products, which
typically provide about two-thirds of export revenue, timber products, coconuts
and other palm products, shea nuts (which produce an edible fat), and coffee.
Ghana also has established a successful program of nontraditional agricultural
products for export including pineapples, cashews, and pepper. Cassava, yams,
plantains, corn, rice, peanuts, millet, and sorghum are the basic foodstuffs.
Fish, poultry, and meat also are important dietary staples.
Minerals--principally gold, diamonds, manganese ore, and bauxite--are produced
and exported. Exploration for oil and gas resources is ongoing.
Ghana's industrial base is relatively advanced compared to many other African
countries. Industries include textiles, steel (using scrap), tires, oil
refining, flour milling, beverages, tobacco, simple consumer goods, and car,
truck, and bus assembly. Tourism has become one of Ghana's largest foreign
income earners (ranking third in 2003 at $600 million), and the Ghanaian
Government has placed great emphasis on further tourism support and development.
Economic Development
At independence, Ghana had a substantial physical and social infrastructure and
$481 million in foreign reserves. The Nkrumah government further developed the
infrastructure and made important public investments in the industrial sector.
With assistance from the United States, the World Bank, and the United Kingdom,
construction of the Akosombo Dam was completed on the Volta River in 1966. Two
U.S. companies built Valco, Africa's largest aluminum smelter, to use power
generated at the dam. Aluminum exports from Valco used to be a major source of
foreign exchange for Ghana. The plant, which closed for production in May 2003,
was sold to the Government of Ghana in October 2004, and subsequently reopened
on a reduced scale in September 2005.
Many Nkrumah-era investments were monumental public works projects and poorly
conceived, badly managed agricultural and industrial schemes. With cocoa prices
falling and the country's foreign exchange reserves fast disappearing, the
government resorted to supplier credits to finance many projects. By the
mid-1960s, Ghana's reserves were gone, and the country could not meet repayment
schedules. The National Liberation Council responded by abandoning unprofitable
projects and selling some inefficient state-owned enterprises to private
investors. On three occasions, Ghana's creditors agreed to reschedule repayments
due on Nkrumah-era supplier credits. Led by the United States, foreign donors
provided import loans to enable the foreign exchange-strapped government to
import essential commodities.
Prime Minister Busia's government (1969-72) liberalized controls to attract
foreign investment and to encourage domestic entrepreneurship. Investors were
cautious, however, and cocoa prices declined again while imports surged,
precipitating a serious trade deficit. Despite considerable foreign assistance
and some debt relief, the Busia regime also was unable to overcome the inherited
restraints on growth posed by the debt burden, balance-of-payments imbalances,
foreign exchange shortages, and mismanagement.
Although foreign aid helped prevent economic collapse and was responsible for
subsequent improvements in many sectors, the economy stagnated in the 10-year
period preceding the NRC takeover in 1972. Population growth offset the modest
increase in gross domestic product, and real earnings declined for many
Ghanaians.
To restructure the economy, the NRC, under General Acheampong (1972-78),
undertook an austerity program that emphasized self-reliance, particularly in
food production. These plans were not realized, however, primarily because of
post-1973 oil price increases and a drought in 1975-77 that particularly
affected northern Ghana. The NRC, which had inherited foreign debts of almost $1
billion, abrogated existing rescheduling arrangements for some debts and
rejected other repayments. After creditors objected to this unilateral action, a
1974 agreement rescheduled the medium-term debt on liberal terms. The NRC also
imposed the Investment Policy Decree of 1975--effective on January 1977--that
required 51% Ghanaian equity participation in most foreign firms, but the
government took 40% in specified industries. Many shares were sold directly to
the public.
Continued mismanagement of the economy, record inflation (more than 100% in
1977), and increasing corruption, notably at the highest political levels, led
to growing dissatisfaction. The post-July 1978 military regime led by General
Akuffo attempted to deal with Ghana's economic problems by making small changes
in the overvalued cedi and by restraining government spending and monetary
growth. Under a one-year standby agreement with the International Monetary Fund
(IMF) in January 1979, the government promised to undertake economic reforms,
including a reduction of the budget deficit, in return for a $68 million IMF
support program and $27 million in IMF Trust Fund loans. The agreement became
inoperative, however, after the June 4 coup that brought Flight Lieutenant
Rawlings and the AFRC to power for 4 months.
In September 1979, the civilian government of Hilla Limann inherited declining
per capita income, stagnant industrial and agricultural production due to
inadequate imported supplies, shortages of imported and locally produced goods,
a sizable budget deficit (almost 40% of expenditures in 1979), high inflation,
'moderating' to 54% in 1979, an increasingly overvalued cedi, flourishing
smuggling and other black-market activities, high unemployment, particularly
among urban youth, deterioration in the transport network, and continued foreign
exchange constraints.
Limann's PNP government announced yet another (2-year) reconstruction program,
emphasizing increased food production, exports, and transport improvements.
Import austerity was imposed and external payments arrears cut. However, cocoa
production and prices fell, while oil prices soared. No effective measures were
taken to reduce rampant corruption and black marketing.
When Rawlings again seized power at the end of 1981, cocoa output had fallen to
half the 1970-71 level and its world price to one-third the 1975 level. By 1982,
oil would constitute half of Ghana's imports, while overall trade contracted
greatly. Internal transport had slowed to a crawl, and inflation remained high.
During Rawlings' first year, the economy was stagnant. Industry ran at about 10%
of capacity due to the chronic shortage of foreign exchange to cover the
importation of required raw materials and replacement parts. Economic conditions
deteriorated further in early 1983 when Nigeria expelled an estimated 1 million
Ghanaians who had to be absorbed by Ghana.
In April 1983, in coordination with the IMF, the PNDC launched an economic
recovery program, perhaps the most stringent and consistent of its day in
Africa, aimed at reopening infrastructure bottlenecks and reviving moribund
productive sectors--agriculture, mining, and timber. The largely distorted
exchange rate and prices were realigned to encourage production and exports. The
government imposed fiscal and monetary discipline to curb inflation. Through
November 1987, the cedi was devalued by more than 6,300%, and widespread direct
price controls were substantially reduced.
The economy's response to these reforms was initially hampered by the absorption
of 1 million returnees from Nigeria, compounded by the decline of foreign aid
and the onset of the worst drought since independence, which brought on
widespread bushfires and forced closure of the aluminum smelter and severe power
cuts for industry. In 1985, the country absorbed an additional 100,000 expellees
from Nigeria. In 1987, cocoa prices declined again; however, infrastructure
repairs, improved weather, and producer incentives and support revived output.
During 1984-88 the economy experienced solid growth for the first time since
1978. Renewed exports, aid inflows, and a foreign exchange auction eased hard
currency constraints.
Since an initial August 1983 IMF standby agreement, the economic recovery
program has been supported by three IMF standbys and two other credits totaling
$611 million, as well as $1.1 billion from the World Bank, and hundreds of
millions of dollars more from other donors. In November 1987, the IMF approved a
$318-million, 3-year extended fund facility. The second phase (1987-90) of the
recovery program concentrated on economic restructuring and revitalizing social
services. The third phase (which began in March 1998) focused on financial
transparency and macroeconomic stability.
Ghana opted to seek debt relief under the Heavily Indebted Poor Country (HIPC)
program in March 2001 and reached decision point in February 2002. Ghana, the
International Monetary Fund (IMF), and the World Bank Group's International
Development Association (IDA) agreed in February 2002 to support a comprehensive
debt reduction package for Ghana under the enhanced HIPC Initiative. Ghana
reached HIPC completion point in July 2004 and total relief from all of Ghana's
creditors will be approximately $3.5 billion over 20 years. The Government of
Ghana, working with multilateral lending institutions, developed a detailed plan
to use funds made available through debt relief under the enhanced HIPC
Initiative for increased expenditures on education and health programs to
improve services and infrastructure in the rural sector, and improved
governance. A portion of the relief will be used to further reduce the heavy
burden of domestic public debt. As part of the agreed-upon plan, Ghana in 2002
and 2003 raised electricity, fuel, and municipal water rates to market prices,
and took additional revenue-enhancing measures (i.e., more taxes) to stabilize
its fiscal position. Ghana again raised pump prices for gasoline, kerosene, and
diesel in February 2005. A key goal for the government remains oil sector
deregulation.
In August 2006, Chief Executive Officer of the Millennium Challenge Corporation
(MCC) Ambassador John Danilovich and Ghanaian Minister for Public Sector Reform
Papa Kwesi Nduom signed a $547 million Compact, or agreement, between MCC and
the Republic of Ghana. The five-year, $547 million anti-poverty grant, the
largest to date for the agency, is expected to benefit more than one million
Ghanaians and aims to improve the lives of the rural poor by raising farmer
incomes through private sector-led, agribusiness development.
Ghana?s stated goals are to accelerate economic growth, improve the quality of
life for all Ghanaians, and reduce poverty through macroeconomic stability,
higher private investment, broad-based social and rural development, as well as
direct poverty-alleviation efforts. These plans are fully supported by the
international donor community. Privatization of state-owned enterprises
continues, with over 300 of about 350 parastatal enterprises sold to private
owners. Other reforms adopted under the government's structural adjustment
program include the elimination of exchange rate controls and the lifting of
virtually all restrictions on imports. The establishment of an interbank foreign
exchange market has greatly expanded access to foreign exchange.
The government repealed a 17% value-added tax (VAT) shortly after its
introduction in 1995 because of widespread public protests. The government
reverted to several previously imposed taxes, including a sales tax, and
reintroduced a 10% VAT in 1998 after an extensive public education campaign. The
VAT was raised to 12.5% in 2000. The government added a 2.5% National Health
Insurance levy on top of the VAT in August 2004.
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