strategic partnerships with the EU and China benefit the political and economic development in Ghana?
Do strategic partnerships with the European Union and China benefit the political and economic development in Ghana?
Main agenda of the international development strategy for Ghana since the 1970s
This chapter deals with the historical background of the relationship between Ghana and major international donors since the 1970s. The period is important particularly because it represented the time when, on the one hand, the international community started to address the issue of development for the African countries and on the other hand, it provided the prolific timeline in Ghana’s history, as a result of the general decolonization process. The focus of the chapter is on several key aspects. Firstly, it is important to considered previous engagements of developed donor countries. Secondly, the effectiveness of these engagements are essential in order to assess the impact previous development programs had on the Ghana society and government. This assessment is based on the UN’s HDI (Human Development Index). Thirdly, despite the general positive trend of development programs in Ghana, there have been initiatives that failed to ensure the programmatic outcome. Therefore, it is important to view not only the underling elements that encourage donor countries to assist Ghana in these last four decades, but also some downfalls of this assistance.
1.1. Short history of the foreign aid programs launched by the economically developed donor countries
Ghana is largely seen as a success story in terms of the way in which it managed to use the donors; financial assistance to its benefit. However, this was not the case in the 70s when the issue of donors and development was relatively unchartered ground. For Ghana this was important largely due to the fact that in that period the political scene in the country did not resembled the current one. More precisely, there was a clear lack of democratic structure in the country, with deep-rooted political misconduct. However, the fact that Ghana had previously been a British colony helped the state organization to eventually regroup.
The beginnings of foreign aid in Ghana started, as stated above, in the 70s. However, at the time, scholars argue that the issue of foreign aid resembled more to clear cut welfare. More precisely, “foreign aid became part of Ghana’s development complexities in the 1970s and 1980s. Critics describe aid prior to 1983 as almost welfare. This means essentially, foreign ODA inflows to Ghana began with the inception of the SAPs in 1983 under the PNDC government.” (Andrews, 2010) This is an important aspect because it reveals on the one hand that at the time, the political scene in Ghana was not prepared for the change of mentality the development aid implied and, on the other hand, the development perspective and the philosophy of donor-based development aid was in its beginnings, despite previous experience with other countries. This is suggested by the fact that in the beginning, foreign aid was provided with clear reference on the political situation in the country. Indeed, even to this day it is rather difficult to organize donor conferences without a clear focus on the political aspects in those countries.
The history of donor aid is marked by the way in which the internal political structure changed in time from stability to coup d’etat to democracy. In this sense, there was little activity in the 60s and 70s when the political instability characterized the country. By the 80s the situation changed and “starting in 1985, however, a clear and sustained increase in aid flows occurred as donors perceived greater commitment by government to better economic management and economic reform. Indeed, between 1985 and 1995 total aid flows to Ghana increased threefold from U.S.$150.7 million to U.S.$450.8 million. For the past decade, aid flows to Ghana have provided an average of $570 in project and programme support” (Sowa, n.d.). Therefore, it can be pointed out that the intent to assist Ghana before the 1990s clearly depended on the political environment at the time.
Perhaps the first and most important donor or aid initiator during the 80s and the 90s was the World Bank and the International Monetary Fund. According to Andrews, “there is no consensus on whether the reform was worthwhile but at least it removed the hand of the state from the economy and made the country more economically stable than it was before.” (Andrews, What foreign aid can and can’t do in Africa, 2010) in general the interventions of the IMF and the World Bank are not perceived in good terms especially from the point-of-view of the population. Most often the measures undertaken to lift a country from an economic crisis or financial instability are seen as unpopular because they stress the need for cost reductions, taxes, among others. However, for the 1980s, the intervention of the IMF in Ghana represented a wakeup call for the economic environment that was still kept in the socialist state run system.
Since the 70s there have been numerous donors that supported the Ghana government to emerge from poverty and eventually reach the development goal of becoming a medium economy by 2020.
Canada has been an essential donor for Ghana. According to Canada International Development Agency, “in 2004-2005, Canada’s official development assistance to Ghana totaled $67 million” (Canada International Agency for Development, 2011). The major lines of development have been those related to poverty reduction, to the increase in the government capacity, and women empowerment.
Another important donor is China that started its more in depth relations with the African continent since the Cold War. In this sense, before the 1990s China had been a small but constant presence in Africa. Thus, “since 1960 China has provided development assistance under bilateral diplomatic relations mainly in the form of grants, loans and technical assistance. However, the amount was relatively small. For example, between 1960 and 1970 total Chinese aid to Ghana amounted to U.S.$43 million” (Mohan, 2010). Although the financial interventions were not very significant in terms of value, it was an important message to advocate as it was considered at the time that “the poor helped the poor” (Mohan, 2010).
Even so, the interests of China were not altruistic but rather strategic. In this sense, in the context of the Cold War, the grants and assistance provided by communist China to Africa represented in fact investments in strategic points on the globe. More precisely, the confrontations between the East and the West did not include directly China. However, China had been in great distress with the U.S.S.R. At the time due to the reinterpretation of the communist precepts China decided to make, in order to adjust to its natural and national specificity. Whereas the U.S.S.R. clearly refused such a change from the doctrine, the United States as well as other countries considered it an opportunity to gain ground in the Cold War. On the other hand, China, through its investments and development assistance, considered an extension of the area of influence.
Among other donors, Denmark, other European countries, tried to help Ghana achieve a better standard of living.
The goals of the donor countries were at the official level, similar. In this sense, it reflects the desire to improve the standard of life, assist the economy and its population. China for instance, offered loans and non-refundable financial resources for constructions, telecommunication networks, and transportation. Denmark has been assisting Ghana in programs related to governance or human rights.
1.2. Analysis of the effectiveness of the previously introduced developmental programs on the basis of the HDI data
It is rather hard to address the issue of effectiveness of development programs especially in countries such as Ghana. This is largely due to the fact that it is only in recent years that Ghana has taken a truly democratic path marked by subsequent free and democratic elections. Before this period, even the positive effects of the programs underwent by donor countries or assisting institutions did not represent added value for the population at hand. In this sense it is argued “the West spent $2.3 trillion on foreign aid in the last five years and still had not managed to get twelve- cent medicines to children to prevent half of all malaria deaths. The west spent $2.3 trillion and still had not managed to get four-dollar bed nets to poor families.” (Easterly, 2006) This aspect comes to point out a grim situation on the actual results delivered by the West in their attempts to fight poverty and scarcity of resources and development.
There are several reasons considered for this general failure in Africa. One is more theoretical but it points out to a rather particular issue: that of development philosophy. More precisely, according to Easterly there are several development strategies. These include the “planners” and the “searchers.” In his opinion, “searchers look for any opportunity to relieve suffering — e.g. The cash for school program — and don’t get stuck on infeasible objectives (â€¦) the planners (â€¦) keep pouring resources into a fixed objective, despite many previous failures at reaching that objective, despite a track record that suggests the objective is infeasible or the plan unworkable” (Easterly, 2006)
This aspect can be identified through statistics as well. In this sense, it is not simply a matter of theoretical approach, but also one that is accompanied by data. More precisely, for instance, in the 1960s, when, as stated previously, the afflux of the development aid had not been significant, the real GDP per capita was $1,049. Compared to the 1990s when the development aid was more consistent, the real GDP per capita fell to $1,016 and in 1991 to even $970 (Andrews, What foreign aid can and can’t do in Africa, 2010). This can be interpreted as being the result of a series of development strategies that did not improve the condition of the society. Also, this period was indeed characterized by increased political distress that only contributed to the way in which development programs were constructed, managed, and implemented.
In later years, through the United Nations programs, the increased donor contributions, the GDP per capita increased substantially, having an almost double value. Yet, even so, the HDI remained more or less unchanged, oscillating in the bottom half of the tables. As well, a poor management of funds, politics, and programming can only justify this.
1.3 the explicit and implicit motives of the donor countries to launch the strategic partnership programs for Ghana in the last four decades
Donors worldwide have implicit and explicit reasons for launching strategic programs all over the world. Officially, they provide a boost for development and for improving living conditions. China however, explicitly stated its reasons in the context of the Cold War. Also, as the world is no longer isolated from one another, donor countries also expect to benefit from a developing country by transforming it into a consumer market. However, this cannot be achieved without a development of the society.
However, even so, the official goals of donor countries are always in the spirit of the United Nations Charter. Still, this type of development has had its downfalls in creating inequality and thus a lack of absorption of development results.
An important tool for measuring the inequality in the development of countries throughout the world is represented by the Gini coefficient. The Gini coefficient “the coefficient measures the percentage of area under a Lorenz curve of perfect equality that lies between it and the actual Lorenz curve of a society, with higher Gini coefficients indicating greater inequality” (UN Habitat, 2003)
According to the United Nations, the Gini coefficient has dramatically increased in the last decades, from the 1950s onwards. There are several means through which the inequality can be measured worldwide. According to UN Habitat, there is the possibility of comparing countries if the situation in which the countries are viewed as individual homogeneous items (with an even income, for instance) or by comparing several factors such as household surveys as conducted in recent decades when information and the possibility of conducting surveys is more available (UN Habitat, 2003) Still, for the second option which is commonly used because it provides more accurate and reliable information, the results clearly point out that at a global level, the “mean per capita between 1988 and 1993
increased by 5.7% in real terms. The increase — and more- went to the top income groups. Because of distribution change, the median income fell by 3%” (UN Habitat, 2003). It clearly appears that the issue of inequality has spurred since the beginning of development. This is not necessarily a matter of Africa, but rather of the world.
The situation is Africa in terms of inequality has also been considered as a cause of the ongoing civil unrests in most African countries. In this sense, the access to development resources for only a certain number of people and groups determine a different perspective in terms of influence and political leverage. In turn, these may fuel peace or war, but in any circumstance, it provides the resource for inequality.
The issue of inequality clearly affects Ghana as part of the African continent and influences in a negative manner the results provided by the development partnerships. In this sense, there are certain connections that are made at the level of human development. More precisely, the Gini coefficient points out the degree of inequality in a country. In its turn, combined with the value of the HDI (Human Development Index), the Gini coefficient and the HDI provide a view on the “quantity” of human development that is lost through inequality. This is justified through the way in which both indexes are calculated: while the first notes the income inequality, the second presents the practical results of this inequality, quantified through the parameters that are taken into account when computing the HDI: education, life expectancy, health expenses, literacy, and others.
With particular reference to Ghana, the HDR of 2010 provides data to suggest that the inequality in the country clearly affects the resources provided by the development partnerships underway. In this sense, it is considered that “countries with less human development have more multidimensional inequality — and thus larger losses in human development (â€¦) for instance, among the low HDI countries, Mozambique loses more than 45% of its HDI value whereas Ghana loses 25%” (United Nations Development Program, 2010). Ghana is 130 on the HDI list, in front of Mozambique or Myanmar. However, countries such as the Congo where there is a constant hostile situation in terms of internal disputes and unrest. Ghana by comparison is viewed as a relatively viable democracy. Still, the inequality is translated in the physical reduction of the impact strategic partnerships have on Ghana, as 25% of these results are reduced by the lack of equality in terms of income distribution.
This loss is not only seen in the reports and figures. There have been clear examples of the lack of efficiency of the state run system of education for instance. In this sense, as an example, “sixth graders in Ghana had an average score of 25% on a multiple-choice test — no different from what they would score by choosing answers randomly” (United Nations Development Program, 2010). Therefore, it can be argued that the educational programs undergone in Ghana in certain regions of the country are not efficient enough to impact the community or to increase the HDI.
Chapter 2 Analysis of the political situation in Ghana: political corruption and lack of economic transparency
2.1. Short political history of Ghana
Ghana is often considered to be a role model for the democratic breakthrough it achieved in the early 1990s after having suffered decade long struggles to fight corruption and military rule (Calvocoressi, 2008). However, in 1992, Ghana held its first free elections in decades and since then has experienced several electoral changes without any incidents to be reported to the international scene. However, despite its eventual turn to democracy with President Rawlings being elected in 1996, the international context as well as the lack of a strong viable vision for the next decades left the country to struggle deep into the rooted poverty.
There have been several points in history that defined the start of Ghana on the path of democracy and economic development. These included the status of former British colony which in a sense provided a much better situation for Ghana at the moment of independence and on the other hand the grip of the socialist communist rule in the 70s and 80s. This final aspect translated into economic chaos, which eventually led to Ghana being among the poorest countries in the world by the beginning of the 1990s.
The political scene was marked by the need and desires to regroup towards a development oriented society after gaining independence. Thus, according to Andrews (2010), “from 195 — 1966 Nkrumah began the first phase of Ghana’s post independence development. The second phase commenced after his overthrow in 1966 to 1982 — a period of gross political and economic instability. The third phase (1983-2000) is the period of the SAPs implementation and the final phase (2001- present day) is a continuation of the second wave of SAPs, the period of the Poverty Reduction Strategy Papers involving Growth and Poverty Reduction Strategies I and II” (Andrews, What foreign aid can and can’t do in Africa, 2010). Therefore there have been several initiatives aimed at providing a more comprehensive approach to development in Ghana. However, the international context as well as the political environment in the country denied Ghana the opportunity to build on the potential acknowledged by many analysts after the independence from the British Crown.
Overall, in terms of historical background, Ghana has been both fortunate and not fortunate. More precisely, it was unfortunate for having been a colony but fortunate for being a British colony as the British Empire had a particular system of colonialism that allowed its colonies to develop harmoniously inside the Empire. A worthy example in this sense is India. However, despite the fact that after its independence Ghana was viewed as being indeed the “Gold Coast” for its natural resources and potential, it failed to benefit from the potential such resources provided and instead followed the trend of the moment which included the historical confrontation between the West and the East, the capitalist vs. The socialist politics. This in turn determined a historical orientation towards socialism and eventually to a donor-based development attempt. This was never completely overcome because it transformed into a specific national pattern that takes generations to adjust. Therefore, at the moment, despite the immense potential Ghana possesses its development and growing statistics depend to a very large extent to the foreign aid or donors willing to provide the financial assistance for development.
2.2. Corruption on the political level
Corruption played a crucial role in determining the development trend of the country. Given its historical legacy and its political situation, Ghana had to struggle with a difficult state apparatus especially considering the role the state played for decades is socialist countries. This legacy influenced the way in which resource allocation was done and the results of development programs.
There have been problems however to suggest a clear issue related to the corruption and the particular relation between the government and private companies. In a study conducted in 2003 on the way in which the government and the private sector react to corporate governance, it is pointed out that “Corruption has been a nuisance for socio-economic and political growth and has been the cause and consequence of structural decay bequeathed by decades of rent-seeking politics of the post-colonial state in Ghana. It has defied years of economic and political reforms and has continued to grow and undermine efforts to improve the living standards of Ghanaians and to foster democratic governance” (Sam Mensah et al., 2003). Therefore, the issue of corruption has imperiled the capacity of the country to benefit from development partnerships in terms of the programs providing the added value needed for the country to prosper. From this discrepancy and misbehavior, the issue of inequality, the HDI and the Gini coefficient result into a relatively grim situation of the Ghana society.
2.3 the consequences of the improper resources allocation
One of the most important consequences of the improper resources allocation and of corruption is the inequality in the living standard. An aspect that is important to note not necessarily from the perspective of the political side, but as a general remark concerning the situation in the country is the discrepancies between the North and South side of the country. More precisely, “Ghana is confronted with a serious socio-economic and political developmental divide between its Northern and Southern regions. In terms of political representation, the ‘Southerners’ have persistently controlled most of the ministerial positions in Ghana and have actually, under various post-independent regimes, been somewhat overrepresented in proportion to their relative demographic size” (Gafaru, 2009). This comes to point out a clear inequality and lack of representativeness in the country, also influencing the economic disparities and human rights abuses.
Another important result of lack of proper allocation of funds is the eventual increase in the number of poor people. In this sense, if before the 1990s there were poor people in their majority in rural areas, after the beginning of the implementation of development programs, there was an increase in the number of poor people in the cities as well. Statistics have pointed out, especially the HDR 2010 that the management and implementation of development programs does not necessarily translate into improvement of way of life. These funds are eventually transferred through different to the higher parts of the society, most often involved in state politics.
This discrepancy between the rich and the poor, between regions, and the invested financial capital and the results can be considered as worrisome at least from one point-of-view. In this sense, the correlation between the Gini coefficient and the HDI indicator may read as follows: the Gini indicator points out to the discrepancy between the different strata of the society, whereas the HDI quantifies the human development. However, if there is an important discrepancy between the rich and the poor, yet the development is taking place, it can be suggested that indeed the effects of the development process only reach certain areas of the society. This in turn only increases the gap between the high society and the poor population. According to this simple judgment, it can be pointed out that in fact, on a general note, development can actually have negative effects on the poor.
Once the 1992 Constitution was adopted, there was a clear emphasis on the need to respect human rights and dignities, to address past abuses, and to include in the national biding legislation the rights of individuals, of mothers bearing children, of the elderly. For a former military regime, the steps undertaken at this level and in these areas of expertise are important because they pointed out a clear and strong commitment to change and such a commitment would eventually be rewarded by an increased appeal in front of donor countries. However, given the wide corruption in the system as well as the lack of fund allocation control, the statistics from the HDR 2010 at Gender are relatively negative. Some examples include the maternal mortality ration at 560, the gender inequality index at 0.729 with almost no female representation in the Parliament (United Nations Development Program, 2010). In this sense, it can be argued that not only did the ODA programs failed to address the major issues, but, even if these were addressed, the funds and the state structure were not used sufficiently.
The lack of funds allocated for all the population in Ghana is considered to be the result of the lack of “good governance” labeled system. More precisely, while donor countries such as Denmark offer increased assistance for the establishment of a state of law, this money is given to a state that is in it accused of corruption (Andrews, What foreign aid can and can’t do in Africa, 2010). In this case, there is a vicious circle that provides assistance only to the more important members of the society, leaving aside the vulnerable groups. This cycle provides the necessary means for the inequality to grow even further.
The problem of corruption is not new and is common knowledge for both donors and the country. However, the result of corruption, the allocation of funds for special political clients, provides a serious problem in terms of the results to be obtained in the future. Still, donors and international organizations fail to take into account a different path of helping Ghana develop. Therefore, it can be said that indeed, there is a two way perspective on development issues, where countries tend to repeat the option of eventually supporting a corrupt government.
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Sowa, N.K. (n.d.). Reflections on Aid and Debt Management in Ghana. Retrieved March 23, 2011, from Centre for Policy Analysis (CEPA): http://www.cepa.org.gh/researchpapers/Reflections%20on%20Aid%20and%20Debt%20Management%20in%20Ghana58.pdf
Recorded in 2006.
The period considered to be the most important for development strategies throughout the world