Advertisement
 

Ghana Leaves Many Behind on Road to Startling Economic Comeback : Third World: Benefits of African nation's restructuring haven't filtered down. Western investors remain wary. : head

December 25, 1989|MICHAEL A. HILTZIK | TIMES STAFF WRITER

ACCRA, Ghana — "Clandestine attempts by malefactors to sabotage the labor redeployment effort will be dealt with severely."

If this stern warning posted in the lobby of the Ministry of Finance here has the tone of a wartime stricture, that is no mistake. Ghana's anti-patronage campaign, which is designed to pare 100,000 excess workers from the civil service, has all the purposefulness of a military operation and the desperation of a last-ditch defense.

So far the defense is holding, even prevailing. For over the last five years Ghana has become, to use an increasingly common term, the "star pupil" of the World Bank and International Monetary Fund, the two multinational agencies whose difficult financial prescriptions for developing economies have been imposed on dozens of poor nations in Africa and Latin America.

The agencies' programs generally require subject nations to sharply devalue their (admittedly overvalued) currencies, cut back their characteristically bloated civil service rolls and liberalize import restrictions.

Not more than a handful of developing countries have ever managed to stick the programs out long enough to see if they actually work because their short-term impact is almost always high inflation, high urban food prices, a surge in unemployment and, consequently, political instability.

Ghana comes closest in all Africa to showing that good marks in the IMF and World Bank books can translate into economic growth--in its case, gross domestic product expansion of 5% a year since 1985.

Still, the country is now beginning to show some of the familiar stresses and strains that have provoked nations like Zambia and Nigeria from time to time to abandon their IMF programs. With inflation having soared as high as 120% before settling down to about 30% last year, the lot of the poorly-paid Ghanaian worker has gotten worse.

Foreign investors wary of Africa's endemic political instability and economic ineptitude have yet to acknowledge with new investments that Ghana has made a distinctive accomplishment--meaning that its recent growth is likely to slow sharply in the next few years.

And all this is coming as the 8-year-old government of Flight Lt. Jerry J. Rawlings faces increasing challenges over its legitimacy. Rawlings' Provisional Military Defense Council still rules largely by fiat, and without a constitution. It has never discussed in earnest a return to civilian rule beyond establishing some local elected administrative boards. Recently there have been signs of unrest in the military.

Economic observers still back the government, reasoning that Rawlings' display of personal rectitude and the council's relative lack of corruption and extravagance are what have inspired the Ghanaians to support the recovery program so far, despite its harshness. But they fear time is running out.

"The window of opportunity can't be much more than the next couple of years," observes a prominent international banker here.

In some ways, Ghana's program is a testament to the determination of people who have scraped bottom, like alcoholics who reform after finding themselves face down in the gutter.

For this country, the bottom came in 1984. Nearly 20 years of quasi-socialism, including the nationalization of scores of enterprises, had run the economy into the ground when a severe two-year drought struck in 1983.

Incredulity at how far the country has come since the early and mid-1980s is still the standard reaction from Ghanaians and outsiders alike.

"There was no food and no petrol, and two years of drought," recalls a British businessman who has spent more than a decade in Ghana. "How these people survived and kept smiling was unbelievable."

Not a few other African countries have seemingly scraped bottom and gone on, against all odds, to sink even lower, sticking to increasingly tired and useless prescriptions of "African socialism" and so on. Ghana was different.

"The self-evident failure of the former system was hard to argue with," says G.K. Agama, the governor of the Bank of Ghana.

The result was an economic recovery program almost radical in its scope. Not only did Ghana devalue its currency roughly 100-fold, from 2.75 cedis per $1 to roughly 275, but it has tied the cedi to the open market by legalizing what in many other African countries is an illicit black market in foreign cash.

The devaluation itself demonstrated tremendous political courage. An earlier regime that tried a devaluation in 1971 was ousted within weeks of that step, and the lesson was not ignored for a decade. During that period the cedi stayed pegged at 2.75 to the dollar. Prices were so distorted that a one-carat diamond mined in Ghana and sold abroad netted just enough cedis to buy a half-dozen eggs in Accra, the capital.

In Ghana, almost uniquely in Africa, one can walk today into any of several hundred "forex" (for foreign exchange) bureaus and buy and sell as many dollars, pounds, or francs as one wishes.

Advertisement
Los Angeles Times Articles
|
|
|