From our 30 August LDESP Africa News Update.
This month’s Africa update will focus on Ghana. The West African country presents a unique case as it is both incredibly resource rich but also one of the region’s more stable countries with a relatively regular transfer of power from one leader to the next since a military coup in 1981. The most recent issue within Ghana’s politics surrounds the dispute over President John Mahama’s election victory in December 2012. In late August, Reuters reported “Ghana’s Supreme Court Rejects Opposition to 2012 Vote”:
“Ghana’s Supreme Court on 29 August rejected an opposition challenge to President John Mahama’s victory in presidential elections, a ruling that should ease political uncertainty in the booming African oil- and cocoa-exporting country.
Mahama narrowly clinched December’s vote with 50.7 percent of the ballot but the opposition New Patriotic Party (NPP) had alleged fraud ranging from inflated tallies to the participation of unregistered voters.
Justice William Atuguba, president of the nine-member panel, told a packed courthouse in downtown Accra that the tribunal had dismissed the opposition appeal – a ruling broadcast live to the transfixed West African nation.
“The overall effect is that the first respondent (Mahama) was validly elected,” Atuguba said.
Supporters of the ruling National Democratic Congress (NDC) broke into song when the ruling was announced. Opposition leader Nana Akufo-Addo expressed disappointment but said his party would abide by the court ruling.
“Our reaction to this judgment will be watched keenly in Africa and beyond and will set a precedent for generations to follow,” he told reporters. “It is now up to all Ghanaians to put the disputes behind us and come together.”
Many in Ghana hope the court’s detailed ruling – broadcast live across the nation of 25 million people – will set a precedent on a continent where election challenges are often swept under the carpet.
Legal experts had expected the court to dismiss the opposition case, saying it had failed to conclusively prove a level of fraud that would have changed the election result.
“Let peace rein. This is a victory for Ghana’s democracy,” Mahama said via his Twitter feed.
Most shops in central Accra were shuttered and the streets quiet as many Ghanaians watched the verdict at home. Police had sealed off main streets leading to the court, where helicopters hovered overhead, part of a deployment of 30,000 officers nationwide in case of any violence.
The ruling should settle the political scene in Ghana – Africa’s number two gold miner and the world’s second-largest cocoa producer. It has built a reputation for political stability in turbulent West Africa.
Ghana’s $39 billion economy has been powering ahead, growing 8 percent last year, after oil production began at Tullow’s Jubilee field in 2010.
“We expect this confidence to calm the foreign exchange market,” said economist Joe Abbey of Accra-based CEPA. The Ghanaian cedi has slipped more than 10 percent against the dollar so far this year.
However, some analysts said investors’ attention would now shift back to the government’s efforts to trim a budget deficit which climbed to more than 12 percent of GDP last year.
“Although an important element of uncertainty has been removed with the court verdict, it is unlikely that we will see a significant market impact,” said Razia Khan, Africa analyst at Standard Chartered bank. “Investors will pay careful attention to any measures aimed at achieving fiscal consolidation.” (Reuters)
Often described as an example in African democracy, the recent news out of Ghana only bolsters its reputation, as Accra and other cities seemed to maintain their relative calm following the Supreme Court decision. For more information on Ghana’s political history, the BBC provides a useful background on the underreported country:
“Ghana was the first place in sub-Saharan Africa where Europeans arrived to trade – first in gold, later in slaves.
It was also the first black African nation in the region to achieve independence from a colonial power, in this instance Britain.
Despite being rich in mineral resources, and endowed with a good education system and efficient civil service, Ghana fell victim to corruption and mismanagement soon after independence in 1957.
In 1966 its first president and pan-African hero, Kwame Nkrumah, was deposed in a coup, heralding years of mostly-military rule. In 1981 Flight Lieutenant Jerry Rawlings staged his second coup. The country began to move towards economic stability and democracy.
In April 1992 a constitution allowing for a multi-party system was approved in a referendum, ushering in a period of democracy.
A well-administered country by regional standards, Ghana is often seen as a model for political and economic reform in Africa.
Cocoa exports are an essential part of the economy; Ghana is the world’s second-largest producer.
The discovery of major offshore oil reserves was announced in June 2007, encouraging expectations of a major economic boost.
Production officially began at the end of 2010, but some analysts expressed concern over the country’s ability to manage its new industry, as laws governing the oil sector had not yet been passed.
In July 2009, Ghana secured a 600 million dollar three-year loan from the International Monetary Fund (IMF), amid concerns about the impact of the global recession on poorer countries. The IMF said the Ghanaian economy had proved to be relatively resilient because of the high prices of cocoa and gold.
Ghana has a high-profile peacekeeping role; troops have been deployed in Ivory Coast, Liberia, Sierra Leone and DR Congo.
Although Ghana has largely escaped the civil strife that has plagued other West African countries, in 1994-95 land disputes in the north erupted into ethnic violence, resulting in the deaths of 1,000 people and the displacement of a further 150,000.” (BBC)
Another interesting element of Ghanaian society, especially within Africa, is its growing middle class. The site How We Made it in Africa provides insight into business in Africa and offered the following recent report: Defining Africa’s Middle Class: A Ghanaian Perspective
“A recent BBC Africa Debate saw a number of Ghanaian entrepreneurs, leaders and members of the public discuss the definition of the middle class in the country.
According to the African Development Bank (AfDB), 46% of Ghanaians are now classified as middle class compared to a continent-wide average of 34.3%.
The debate, titled Africa Rising – Can the Middle Class Drive Growth? and held at the Accra Mall in the country’s capital, heard most of those participating in the discussion disagree with the AfDB’s definition of the middle class as those who spend US$2-$20 a day.
“I want to be very clear from the outset; there is no consensus on the definition of middle class. It is a decision we made in April 2011,” said Marie-Laure Akin-Olugbade, country representative of the AfDB in Ghana.
She added that the definition was based on a study published in 2011 where the AfDB chose to classify the middle class as the population that spends between $2 and $20 a day. “So it is a per capita consumption per day,” she said. “We have looked at the spending bracket between $2 and $4 – we call it the floating class. In Ghana we consider that it is about 27% and we know that it is a very fragile class. It is a class that is always at risk of falling below the poverty line.”
In response, a member of the audience said the spending of between $2 and $20 – equivalent to about four to 40 Ghanaian cedis (GHS) – was a very wide bracket. “And even spending GHS 4 a day doesn’t really feel middle class,” she said. “GHS 4 is not enough, in most cases, to get you through to the end of the day.”
She added that she spends between $2 and $20 a day but does not feel middle class. “I feel lower class, because that money is just enough to cover my basics. It doesn’t cover more than my basic necessities.”
A discussion panel member – Robert Eghan Asiedu, a cashier at a forex bureau – shared the sentiment. “As a family man, I really, really am scraping through… I have five kids.”
One of the BBC moderators said the typical middle class family usually has about two children. “You see our society has a different way of looking at the number of children,” Asiedu pointed out. “We wanted four kids. The last one became twins so I had to deal with it. [But] how do you get by?”
As his children are all in school, Asiedu said he spends around GHS 40 a day on transport alone. “[With] these amounts we are only scraping through,” he said, adding that he has no opportunity to save money.
Another member of the audience, a home loan officer, said he considers home ownership to be a tool to defining the middle class.
“If you own property of any nature, by my definition, I think you are there. You might not feel rich, you might not feel middle class, but you are on your way. And what does it mean to own property here in Accra… in Ghana today? Some rough numbers: if you want a two bedroom semi-detached property, say on a 40 ft by 70 ft plot – and that is normally the starting point – it is going to cost you about $30,000. On a 100% mortgage, which means you don’t have to make a deposit, you have to earn about $900 dollars or GHS 1,900 a month.”
When asked if he is seeing an increase in the number of home owners, the home loan officer said: “Absolutely, and we see them every day hitting our office. We see a growing number and it’s actually very encouraging. Now they might not feel very rich, they might not feel they have joined the middle class, but by owning their own property, they are on their way and the potential and access to credit that gives them is the hope we hold for the future.”
Kofi Bentil, vice president of think tank IMANI Ghana, shared his thoughts. “For our work we have three ways [of defining middle class] – the cultural middle class, the economic middle class and I think the third one is what we call the educated middle class. And it really has to do with who is the first generation out of poverty,” he explained.
“Cultural middle class: usually your parents got out of poverty. You may not be cash rich but your parents were educated – they could have been in the middle class by virtue of being in the civil services. The educated middle class is usually first generation out of poverty. You may have come from a village, got into certain schools, [and] became a lawyer. And then the economic middle class, we are talking about spare parts dealers… people who don’t even consider themselves rich but could give you $100,000 cash if you really shook them down.
“Our definition of the middle class does not have to do with disposable income or comfort,” continued Bentil. “It has to do with the ability to mask poverty… many of the people who are [considered] middle class sometimes in the month have a problem feeding [themselves]… but the thing is [they] can get through the month without looking dirty or poor. Some of them have cars and there are days when they can fuel their car… So someone who is middle class here would be lower class in a developed country.” (How We Made it in Africa)
Ghana News Headlines
Military Pledges to Maintain Peace
Chief of Defence Staff, Vice Admiral Mathew Quashie, on 23 August assured Ghanaians of the military’s commitment to maintaining peace and tranquility in the country after the Supreme Court’s verdict on the 2012 election petition. He said there was no cause for alarm since the military and other security agencies were prepared to sacrifice for the protection and stability of the country even at the peril of their lives. Vice Admiral Quashie gave the assurance during his maiden visit to the Second Garrison Command in the Western Region in Takoradi. He was accompanied by a team of high ranking military officers that toured all the units under the Second Garrison Command. Vice Admiral Quarshie pledged the military’s commitment to curb illegal small-scale mining popularly known as galamsey in the Region. The Commanding Officer of the Second Battalion of Infantry, Lieutenant Colonel George Tawiah Sam, suggested reforms in the country’s land tenure system to reduce the frequent land litigations, which threatened the security of the country. The Western Regional Minister, Mr. Ebenezer Kwadow Teye Addo, commended the military and other security agencies for their contribution towards clamping down on illegal mining activities in the Region and appealed to the military to step up security operations on the country’s water bodies to halt the galamsey activities that are polluting them. Earlier in a courtesy on the Paramount Chief of the Essikado Traditional Area, Nana Kobina Nketsia V, appealed to all well-meaning Ghanaians to sustain the peace prevailing in the country to accelerate national development. (Ghana Business News)
Ghana Armed Forces Deny Reports on Chinese Tanks
The Ghana Armed Forces (GAF) has refuted allegations by some sections of the media regarding the arrival of Chinese Military personnel in the country with ‘tanks’ in anticipation of the Supreme Court’s verdict on 29 August. It has stated that the acquisition of the Armoured Personnel Carriers (APCs) and the Chinese sales representatives accompanying GAF personnel on test drives has nothing to do with the expected verdict on the election petition. A statement issued and signed by the Director of Police Relations of GAF, Colonel M’bwawine Atindande said, a publication carried in the Wednesday, August 21, 2013, edition of the ‘Daily Searchlight’ with the headline, “Ahead of Judgement Day – Chinese Military in Town,” had created an erroneous impression in the minds of the public ahead of the judgement day. It emphasized that the APCs were acquired from China; therefore, there was the need to have representatives of the manufactures to aid in the technology transfer and ensure that both GAF and manufactures are certain that the carriers meet the required specifications. (Ghana Web)
Ghana: Over Taxation Killing Economy
Imani Ghana, a local economic think tank, has warned the government to have a second look at its tax policies to save the economy from collapse. According to the think tank, the industrial sector in Ghana has for many years withstood many shocks and survived many hard times, but in recent years, a combination of very adverse conditions have made things very difficult for industries in Ghana. “Over the past few years, some companies like PZ and BAT have closed down their manufacturing plants and moved to Nigeria, choosing rather to import their finished goods into Ghana. Others are considering moving out too. “Those who believe a change is in the distant offing have their fate sealed; taking extremely risky measures to survive in order not to lay poor Ghanaian workers off,” the President of Imani, Franklin Cudjoe, noted in a statement and follow up interview with The Chronicle. According to the Imani President, who recently met with industry players to discuss the impact of the economy on their businesses, the constant increase of taxes without consultation was impacting negatively on business concerns in the country. He alleged that one of the local district assemblies recently increased taxes paid by a telecommunications company by 500%, explaining that the company was the only one in that district. According to him, the local authorities are also treating cell sites as business operating premises, instead of infrastructure and taxing them. The John Dramani Mahama government recently introduced a series of taxes to help plug the hole in the economy. In 2011, Ghana’s economy was adjudged one of the fastest growing economies in the world, after recording a growth rate of 14%. The success story could, however, not be sustained in 2012, resulting in a budget deficit of $8.8 billion. The government, however, attributed the development to the full implementation of the Single Spine Salary Structure, which shot the public sector wage bill paid to less than 500,000 workers, from GH¢1.4 billion in 2007 to a staggering GH¢8.8 billion last year. The figure represents 73% of the total revenue that accrued to the government in a fiscal year. (All Africa, The Ghanaian Chronicle)
World Bank Committed to Strengthening Partnership with Ghana
The World Bank says it is committed to strengthening its partnership with Ghana. According to the Bank, the architectural work of its new office in Accra, underscores its determination to continue with its pursuit of openness and accountability in its dealings with Ghana. These assurances were given by Yusupha Crookes, World Bank Resident Representative in Ghana, during the commissioning of the Bank’s new office, located off the Independence Avenue, Accra. “I see the new building as a partial materialization of the Bank’s commitment to work as one institution and as a strong statement of dedication to our partnership with Ghana. The transparent glass exterior should be seen as our invitation to our clients, government and the general public to expect not only more efficient, one-stop service, but also to expect a more open, frank and accountable World Bank Group.” (…) Speaking at the ceremony, Vice President Amissah-Arthur noted that the new office would enhance the support for Small Medium Scale Industries (SMSI). He commended the efforts of those who were involved in the establishment of the office, whose location, he said, he was pleased with. Ms Moyo, expressed her excitement at the new office, believing that it would facilitate operations between the World Bank and its business partners as the Bank’s old office had a rather limited space. Mr Prosper observed that the office represented the fact that time was right for the renewed energy between IFC and the World Bank in Ghana. He recalled that Ghana was the African nation that was at the forefront of the struggle for colonial independence more than half a century ago, and the performance of Africa in general is turning heads around the world. He commended Ghana for achieving an enviable an average growth rate of more than 6 percent over the last few years. He also noted that the World Bank had provided more than $8 billion in funding to help the Government of Ghana to deliver services and build institutions. Similarly, the IFC had provided private sector investment of more than $2 billion within the past two fiscal years. He said the World Bank Group (WBG) is committed to a new cause with clear goals: ending extreme poverty and promoting shared prosperity. Mr Prosper lauded government of Ghana’s support to the World Bank Group to make the new building a reality and added that the central location of the building sent a signal that WBG is in Ghana to stay and engage the country in its future activities relevant to the Bank. (Ghana Web)
Our Forest Reserve is in Danger – Forestry Commission
The Forestry Commission (FC) has warned that the country is on the brink of losing its forestry reserve in the next twenty-three years if best management practices are not adopted. According to the FC, the country’s forest reserve currently stands at 1.6 million hectares, from a record 8.2 million hectares a century ago. In 2009, the BBC reported that 90% of Ghana’s forest had been degraded since it attained independence in 1957, leaving only 10%, which is also under pressure by the local people. To the FC, encroachment was a major hindrance and attributed the decline to the over reliance on the country’s natural forest reserve. To arrest the trend, the FC advocated the adoption of plantation forest, a management system where the country would earn billions of dollars from the sale of forest products, while protecting its natural forest reserve. “The country must adopt a strategy where we will leave our natural forest to play the environmental role, whilst we depend on the plantation forest for economic and other environmental factors,” noted Samuel Afari Dartey, Chief Executive Officer of the FC. Officials of the FC made these observations in August when they appeared before the Public Accounts Committee (PAC) of Parliament to answer to questions raised by the Auditor-General in relation to the 2011 audit report of the Commission.
Their response was in connection to a question posed by Hon. Isaac Asiamah, MP for Atwima-Mponua, who wanted to know the status and size of the country’s forest reserve. The twenty-five member PAC, chaired by Hon. Kwaku Agyemang-Manu, MP for Dorma Central, had met to consider reports of the Auditor-General on public accounts of Ghana (public boards, corporations and other statutory institutions) for the years ended December 31, 2010 and 2011. The adoption of the above mentioned strategy, Mr. Dartey noted, would see the country planting and selling trees to the international market similar to what countries like Brazil, Chile, France, Germany and Malaysia were doing. This, he said, would help improve on the 250 million Euros the country makes from its natural and plantation resources per annum. “Mr. Chairman, for instance, Brazil makes about 6 billion dollars per annum from its plantation resources. Malaysia makes about 5 billion dollars from its plantation resources. Chile makes about 3 billion dollars, France makes about 14 billion dollars and Germany makes about 19 billion dollars per annum from their plantation resources. Unfortunately, in Ghana, in total, we are making about 250million Euros from both natural and plantation resources. Therefore, there is the need for us to shift emphasis or reliance on the natural forest to plantation forest because it does not make economic sense for us to continue depending on the natural forest for our industrial needs just because in the plantation you can have a growth rate of about up to 30 cubic meters per hectare per annum while you can just have a maximum of 1 cubic meter per hectare per annum in the natural forest,” he explained. (All Africa)