The economy of Ghana is one of the worst in the world right now. Last year the nation’s gross domestic product per capital fell 9%, ranking it 154th out of 184 countries tracked by the International Monetary Fund (IMF), which was below resource impoverished Haiti (Boateng 2010). The nation had a $3 Billion trade deficit last year and $4.9 billion in external debt, and struggles to pay its debtors despite being a country rich in natural resources (Boateng 2010). Ghana has some of the world’s largest reserves of gold and bauxite, plenty of untapped oil resources, and a landscape capable of becoming a large exporter of agricultural goods (Boateng 2010). The nation has plenty of tools to work with in terms of getting the ball rolling and boasting an economy, and competitive on the global stage, but right now it is an example of one of the poorest managed economies in the world. This terribly managed political economy has gotten Ghana into the bottom rankings of world economies and it is undoubtedly going to be a struggle to lift them from the current mess they have on their hands.
Since gaining independence, Ghana has unfortunately suffered from mediocre and even bad political leaders and planners. Poor leaders and planning in the economy many years ago still plagues Ghana’s economy today. Some of these leaders had very little understanding of how to run a government, in part due to their poor education (Boateng 2010). Many of the leaders in power have had only military training-not sufficient enough to run a modern economy. Many of the policies adapted were complete failures. “Not even Kwame Nkrumah, a highly educated man could provide the vision and strategic leadership” the country needed to transform Ghana into a world-class developed nation with a economic viable economy, ready to compete on the global market (Boateng 2010).
Another problem, a direct consequence of poor leadership is the lack of development of human capital in Ghana. “Countries like Japan, Korea, Singapore, Taiwan, Malaysia, India and Brazil are thousands of years ahead of Ghana in terms of economic development because they placed serious emphasis on developing their human capital to meet their national needs” according to P.K. Boateng (2010), a consultant on corporate and strategic management (Boateng 2010). The need for commerce, industry, technology and innovation are directly linked with the education system. Through a sound education system, countries such as Korea has been able to develop home-grown companies such as Samsung and KIA and are marketing these well in the world market (Boateng 2010). It is hard for a country to obtain and maintain success without a literate population. It is estimated that half of Ghana is illiterate. This must change if they want to grow and eventually emerge as a sustainable and viable world economy.
Other examples of poor development of human capital affect other aspects of Ghana’s economy such as social welfare programs. Widespread diseases in Ghana force the nation to spend tons of money and resources to help out its population. Poor social programs for children and mothers kill thousands of people every year. With such disgusting social programs it is hard for Ghana to attract investors or skilled workers from abroad. The lack of production by the education system of doctors, scientists, and highly educated personnel is a consequence of this lack of availability and structure of successful social programs in healthcare. Even the few personnel that are produced in Ghana are subject to leaving or do not end up in the field of research and development for the Ghanaian people (Boateng 2010).
Ghana, as a result of their poor education and social development, has not developed capable leaders. In the “misfortune of being ruled by small-minded military opportunists, who saw academic achievement as source of irritation or threat to their regimes”, new ideas or integration of new policies were not welcomed (Boateng 2010).
Another cause of the nation’s poverty and underdevelopment is the poor national planning. The development of society, towns, roads, infrastructure, transportation and various other areas of development had been abandoned and for the most part, still are (Boateng 2010). Will the current cities, roads, and infrastructure be able to support Ghana’s growing population? The lack of development in these areas is not appealing to investors or industries looking for a place to start up. There are various issues that need to be addressed for the country to being its path towards obtaining a developed economy.
Will the current state of Ghana’s political and social development be able to push their economy towards being a highly developed and modernized economy that can both bring their population out of poverty and become a global competitor? The political and social development and modernization is critical, and directly related to the development of their economy. This paper will attempt to point to solutions and steps Ghana should take to help reach that goal.
Some good news is Ghana that is taking some steps to improve the lives of its people and liberate much of its population from poverty. In 2000 Ghana joined about 189 other countries in adopting the UN Millennium Declaration, which lays out eight development goals that have come to be known as the Millennium Development Goals (MDGs) and accepted as a common development framework (Appiah-Kubi 2010). These are mainly “socio-economic development objectives that have influenced the determination of the country’s strategic priorities for national development” (Appiah-Kubi 2010). These development issues require a need of focus on behalf of the government to ensure achievement.
The first goal is to eliminate extreme hunger and poverty which Ghana seems to have made progress with extreme poverty rates falling from 51.7% in 1991/92 to 26.5% in 2008. (Appiah-Kubi 2o1o). Still, a rate of one out of every person living in poverty signals a struggling economy with more progress needed. The next goal is to increase the efforts to achieve universal education. Goal #3 entails the quest to eliminate gender inequality in education and participation in government. Goals 5-7 deal with the improvement of health care and social welfare programs, and the final goal seeks to strengthen the nation’s relationships with international organizations and non-governmental organizations. The success of these goals is vital in gaining a more developed economy and reducing the nation’s poverty level (Appiah-Kubi 2o1o). Structure and leadership on the part of the government will ultimately determine if these are accomplished. If Ghana can achieve these goals in a timely manner it will be huge in gaining legitimacy and trust from a population living in the dark. These goals are but a small step towards social modernization and the development of an adequate and capable citizenry ready to contribute to a developing economy.
Social development, as stated earlier, is tied directly to economic development. Modernization is the theory that less developed countries should develop like the West. Developing nations should adopt social, cultural, political, and economic institutions similar to the ones of the West and they will be on the right track in achieving success. By becoming a democratic nation and formatting a political structure similar to Western democracies, Ghana has shown its willingness to become modernized. The adoption of the Millennium development Goals is another area they have recognized their need for social modernization. The development of the society has a lot to do with how well the economy will ultimately strive. ” Mr Kwasi Jonah, Head of the Political Science Department of the University of Ghana, Legon, has said that Ghana could provide a viable route to economic and social development if it should turn to a Social Marketing Economy (SME)” (GNA 2010). Sometimes, Jonah added, countries, with the aid of International organizations, focus too much on getting prices right within the economy and forget about the social aspects involved as well. The role of SME, he said, “was to provide the incentives for the production of new goods and services while the state was only to be an enabler and a regulator but not a provider of goods and services” (GNA 2010). This social market economy mixes state and private ownership and might be productive in its early stages, but it is important not to let too much government control take over. With the growing population and high demands for social welfare programs, too much intervention could reduce competition or lead to more inefficiencies or debt.
Additional avenues to socially modernize that will have an immediate effect on the economy are the investment in human capital. “Growth, development and innovation are ultimately by people, for people. That means investing in people. In the recent growth literature on Africa, low levels of investment in human capital have been identified as major impediments to growth” (Amoako 2010). To invest in productivity, you must invest in the people doing the producing. A skilled or educated population is better equipped to handle a shift to modernization.
Education is a good place to start and is the most basic means of developing a skillful population to participate in the marketplace. Nearly half of all Ghanaians are illiterate, and a majority of those are women (Amoako 2010). According to UNDP, one in four children are out of school (Amoako 2010). The schools and universities are underdeveloped and underequipped. There needs to be an emphasis placed on education. Since our public schools are plagued by underfunding from a relatively poor government, an increase in involvement from the private sector on education is needed (Amoako 2010). Most of the funding for pre-school and 1st and 2nd cycle levels, but after that the public sector covers most of the funding at teacher training colleges and tertiary levels according to a Ghanadistricts.com website studying various districts and problems associated with the education system. But still there are numerous problems facing the education systems such as inadequate facilities, untrained staff, problems in logistics, and high levels of insecurity in parents sending their children to school (Ghanadistricts.com 2010). An educated workforce-from farmers and workers who can read instructions to trained skillful professionals-contributes to a higher labor productivity (Handelman 2009).
There are not just needs of technology and innovations in the education system but also in also in society. Technology reduces costs of operating a business, makes it easier, efficient, and opens more opportunities to expand. Of course, going back to the previous point, Ghana must have a skilled and literate population in order to operate or attract such technology to their country. This leads to the unattractiveness of Ghana as an investment destination. Ghana may be able to attract some mining and oil companies but they cannot attract world-class companies with the skill set the majority of Ghana’s population currently has (Boateng 2010).
Another point on which Ghana should invest in is in the public health sector. The weak state of the health sector is underscored by the fact that 60-70 percent of the country’s health problems are communicable and preventable diseases that also include epidemics (Amoako 2010). As Callisto Madavo, the World Bank Vice President for Africa told a recent conference on HIV/ AIDS in Lusaka, “HIV is now the single greatest threat to future economic development in Africa” (Amoako 2010). These preventable diseases are not only hurting the current population, but diminishing from its future. The treatment costs for these diseases undoubtedly negatively affect the economy. In some African nations, AIDS treatment cost account for nearly one-third of the government health spending (Amoako 2010). If Ghana can reverse the “brain drain” and develop internal remedies for the rising health care costs, and put healthy people to work, they will see positive impacts on the economy.
It is going to be difficult for Ghana to develop and modernize its economy without a developed or stabilized political governance to adequately control its resources. The need for a strong and capable government is a prerequisite for carrying out developed, efficient, and successful economic functions. “With political development there must be development in the greater capacity in the political system to manage public affairs, control controversy or cope with popular demand” (Lamptey 2010). Being politically stable or modernized can attract industry from outsiders to promote growth. Strong and capable governments all have similar things in common: “a sharp focus on the needs of the poor; powerful watchdogs; the rule of law; intolerance of corruption; transparency and accountability in the management of public affairs; respect for human rights; participation by all citizens in the decisions that affect their lives; as well as the creation of an enabling environment for the private sector and civil society” (Amoako 2010). The focus on, and the efficient use of the country’s resources is crucial to the state and the policies that govern these are vastly important (Lamptey 2010). In relation to human rights and the population as a whole, political development is critical. The political institutions need to take into account the populations needs and wants when enacting policies (Lamptey 2010). This not only helps the nation’s legitimacy, but also helps improve participation and open forum debate over issues that could lead to more transparency and fairness within government. Corruption in the political process will do nothing but hinder the economy and society. “Corruption is one of the cancers that have preyed on Africa’s misfortunes, driving us even further into economic mismanagement and despair” says P.K. Amoako (Amoako 2010). Ghana is not a poor nation in terms of resources, but the problems of leadership and corruption have affected its development, according to the Deputy Eastern Regional Minister, Mr Mohammed Baba-Jamal. (GNA 2010). There needs to be an emphasis on politicians to focus not on themselves, but the people of Ghana and how they can improve the harsh living conditions.
The key to transforming the economy of is for Ghanaians to elect a visionary, disciplined and well-educated leader (Boateng 2010). “The next leader of Ghana must not be afraid to call in some Ghana’s best brains that are leading and managing complex organizations in other countries to help”. The problems facing Ghana are not insurmountable. With the right leader, Ghana could be on the right track to becoming a highly developed and successful economic nation, ready to compete globally (Boateng 2010).
Ghana is poised to lift itself from extreme poverty if it can develop its economy. The social and political development and modernization will vastly help. But the leaders need to make informed and smart decisions about where the economy is headed. Economic modernization is a step towards achieving success in the global market and establishing itself as a competitor on the world market. One step Ghana could take is focus on its industrialization and export diversification. Ghana’s tourism industry is one area they have and should continue to flourish in, however, much of these areas of the economy are under developed and not utilized to the fullest (Amoako 2010). Industrialization has thrived in developing areas, such as Southeast Asia, where governments took an active role in promoting industrialization, regulating and intervening where appropriate and providing incentives for companies (Amoako 2010).
Next, the government should focus on regional integration to promote export diversification. Here, Ghana should try and work with regional neighbors in achieving trade agreements and developing foreign markets. Ghana is by far the leader in Sub Sahara Africa in development and they could use this to diffuse conflicts with other nations. There is no doubt this could be a struggle but it could not only help their economy, but also those of their neighbors and possible create a strong “regional bloc” such as those in Europe, Asia, North America and Latin America (Amoako 2010).
The private sector is another area the nation should focus on boosting. Ghana could help reduce some of their debt by looking to internal generated domestic savings or indigenous private entrepreneurs. The reoccurring theme to help Ghana develop is to reverse the “brain drain”. Up to two million Ghanaians live outside the country (Amaoko 2010). One way to address this could be to repair the relations between the government and local entrepreneurs. Some modernization solutions that could address this problem are to loosen up the monetary policies, and provide more political certainty to these private sector industries (Amoako 2010). There needs to be more trust between the government and private sector. The Ghana government needs to make for an increase transparency in privatization. The capital market based privatization provides for improved chances for fair, competitive pricing and helps de-politicize enterprises (Amoako 2010). Ghana also needs to lean towards the diversity of ownership of their assets. Ghana is rich in natural resources, and many of them are yet to be tapped (Amoako 2010). Policies that provide protective measures to help the local economies, establishing domestic friendly tariffs, subsidies, tax breaks, and incentives are some examples advocated by modernization theorists.
The culture of bribe-taking in Ghana is also a disadvantage on the growth of business and on foreign investment. Nearly every public service in Ghana requires a bribe. Everywhere employees expect to be paid something extra for the services they render (Boateng 2010). “People who come into the country to do genuine business find such practice unacceptable and nauseating” (Boateng 2010). This practice is one that will only change as the economy and nation develops further. Corruption in nearly every phase of government has trickled down to society and everyday business.
Another area Ghana has been open to, and needs to continue, is investment in infrastructure (Amoako 2010). To attract commerce and industry, not to mention keep the educated population here, Ghana will need to continue to address its needs of poor infrastructure and civil planning. Any progress Ghana has made in the last decade is” threatened by deplorable and unacceptable town and country planning policies and practices, or lack of them. Without effective urban planning and management in Ghana, the Millennium Development Goals will be mirage and not be attained” (Fordjour 2009). Only one of Ghana’s 24 universities has programs in planning (Fordjour 2009).
Finally, Ghana should look to build a trade surplus with one or some of its many natural resources. Then they could move on to import substitution industrialization. With government spending only at targeted areas, and less government regulation and ownership, they could be successful at this market based approach. This could prove difficult as they would face global competition, but as the infrastructure and education develops, they could have the necessary advantages.
The modernization of Ghana in these three important phases-social, political and economical- will help the nation face its problem of poverty and underdevelopment. Through these measures Ghana will be able to facilitate growth and spread of resources, making wider parts of society capable to initiate and join and sustain in the nation’s economy. Widespread resources made available through good governance and social programs extend the population’s increasing utility of democratic freedoms. Social improvements will help mobilize mass support and help both frame and achieve their goals. With the government enjoying legitimacy and trust of the society, participation in politics will extend to broader parts of society. Ultimately by addressing the various problems laid out above, Ghana will be able to create a middle class. A strong middle class will be able to achieve things that Ghana or any other West African nation has experienced.