Ghana - International University of Japan · Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151,

COUNTRY PROFILE

GhanaOur quarterly Country Report on Ghana analysescurrent trends. This annual Country Profile providesbackground economic and political information.

1997-98The Economist Intelligence Unit15 Regent Street, London SW1Y 4LRUnited Kingdom

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Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK

ISSN 0269-4549

November 30th 1997 Contents

2 Basic data

3 Political background3 Historical background7 Constitution and institutions7 Political forces9 International relations and defence

9 The economy9 Economic structure

10 Economic policy12 Economic performance14 Regional trends

15 Resources15 Population16 Education17 Health17 Natural resources and the environment

18 Economic infrastructure18 Transport and communications19 Energy provision20 Financial services

21 Production21 Manufacturing22 Mining and semi-processing26 Agriculture and forestry

28 The external sector28 Merchandise trade30 Invisibles and the current account31 Capital flows and foreign debt33 Foreign reserves and the exchange rate

35 Appendices35 Regional organisations38 Sources of information39 Reference tables

1

EIU Country Profile 1997-98 © The Economist Intelligence Unit Limited 1997

Ghana

Basic data

Land area 238,537 sq km

Population 17.1 m (mid-1995 World Bank estimate)

Main towns Population in ’000 (1988, national estimates)

Accra 972Tema 440Kumasi 206

Climate Tropical

Weather in Accra(altitude 27 metres)

Hottest months, March, April, 23-31°C; coldest month, August, 22-27°C; driestmonth, January, 15 mm average rainfall; wettest month, June, 178 mm averagerainfall

Languages English (official), Ewe, Fante, Ga, Hausa, Twi

Measures Metric system

Currency Cedi (C)=100 pesewas. Average exchange rate in 1996 C1,637:$1; in lateNovember 1997 C2,240:$1

Time GMT

2 Ghana: Basic data


Political background

Historical background

Early history Ghana’s history is relatively better documented than that of most countries insub-Saharan Africa, because of the area’s early importance in regional and inter-continental trading networks. The Akan, the largest ethnic group in present-dayGhana, have predominated since at least 1400, when chiefs based in the centralforest supplied kola nuts and gold to the trans-Saharan caravan trade to thenorth. By 1700, several chiefs from the forest had subdued their rivals with gunsbartered from European coastal traders and established the Ashanti kingdom.They built a highly organised hierarchical political system of remarkable mili-tary strength, which extended Ashanti control over all forest routes to the coast,and with it the supply of slaves and gold.

The coast, named the Gold Coast by Portuguese gold traders a century earlier,was dominated by a different Akan subgroup of Fante-speaking peoples. Anestimated 1m people were channelled into the slave trade, a regional traditionthat was internationalised by Dutch traders but brought to its zenith by theBritish in the 18th century.

The 19th century The British came as traders. However, in the late 19th century, Anglo-Frenchrivalry brought a shift in favour of territorial acquisition. During the scramblefor Africa, Britain invaded the Ashanti kingdom in 1874 and declared the GoldCoast a British colony, which, after a struggle, it controlled by 1901.

The early 20th century The British opted for a colonial economy based on peasant cash-crop prod-uction, mainly of cocoa, and on gold mining, controlled by foreign interests.Farmers’ initiatives and local familiarity with international trade brought rela-tive prosperity. The Gold Coast became one of Africa’s most successful colonialeconomies.

The earliest political movements were dominated by lawyers and other edu-cated elites who had been excluded from power and office by the colonial state.After the Second World War they broadened to include more social groups. Thenewer recruits wanted more jobs in the administration and business opportun-ities in the colonial system. By 1949 nationalists split into moderates andradicals, the latter supporting Kwame Nkrumah’s Convention People’s Party(CPP). Backed mainly by young people and poorer sections of the middle class,the CPP won elections and in 1957 made Ghana the first country to gainpost-colonial independence in sub-Saharan African.

The causes ofpost-independence

instability

Ghana experienced nine changes of government including four military coupsbetween 1957 and 1983, but has escaped the violence that afflicted many otherAfrican countries. For the most part, economic management and the distrib-ution of resources between interest groups have been the commonest sourcesof dissatisfaction. In contrast to much of Africa, ethnicity has played a rela-tively minor role in mainstream political conflicts.

Ghana: Historical background 3


Socialist CPP The CPP government was ostensibly socialist. Its mainly southern, urban-basedconstituents favoured an expanded state sector, rapid industrialisation and eco-nomic self-sufficiency. The CPP laid much of the basis of Ghana’s present indus-trial infrastructure but failed to manage the economy within its means, in theprocess alienating cocoa farmers and influential private-sector business. It intro-duced a one-party state in 1964 and became corrupt and intolerant of criticism.

NLC and PP—attempts atstructural adjustment

In 1966 an economic crisis and rumours of cuts in the military’s resourcesprompted Ghana’s first (bloodless) military coup, by conservative generals,who formed the National Liberation Council (NLC). The NLC raised cocoaproducer prices, devalued the currency and sought to clear up corruption,before holding elections and handing over to the laisser-faire Progress Party(PP) after elections in 1969. The PP continued the NLC’s economic reforms.However, a fresh economic crisis—and PP efforts to rectify it with a toughbudget and devaluation—brought another military coup in January 1972.

NRC: a descent intokleptocracy

The younger left-wing colonels of the National Redemption Council (NRC), ledby Ignatius Acheampong, reversed the PP’s policies in favour of socialist pro-grammes that initially favoured rural communities and state-sector employees.Although popular and constructive at first, the NRC’s policies dragged theeconomy to new lows and raised corruption to unprecedented levels. In thelate 1970s Mr Acheampong was removed by other defence chiefs who favoureda return to civilian rule.

The 1979 and 1981Rawlings coups

Before elections could be held, younger officers and other ranks staged a freshcoup after forming the Armed Forces Revolutionary Council (AFRC), led by theinstantly popular 28-year-old Flight-lieutenant Jerry Rawlings. The left-leaningAFRC set itself the limited mission of “housecleaning” (flushing out corrup-tion) and handing over to civilian rule, which it duly did in September, 1979,to the People’s National Party (PNP) under the Third Republic. When the PNPfailed to deliver either a better economy or clean government, however, thesoldiers who had once led the AFRC staged a further coup, in December 1981,and this time remained in power for ten years.

PNDC: a militarytechnocratic regime

The new Provisional National Defence Council (PNDC) government was in-itially radical and socialist in complexion. It was supported by students, work-ers and many more groups of Ghanaians sickened by corruption and economicmismanagement. At first the PNDC was ruthless in silencing dissent and forthe rest of the 1980s tolerated no party-based opposition. Dismissing party-based politics as corrupt and divisive, it launched a military technocratic re-gime, under which Mr Rawlings and other military figures focused on domesticsecurity and on rooting out corruption, while “experts” ran the economy. Italso introduced Committees for Defence of the Revolution, which became partof the PNDC’s political machinery.

Socialist rhetoric andfree-market reform

The regime had been in power only a few years when Ghana suffered severedrought. Desperate for hard currency, and recognising the failure of nationaleconomic policy, some PNDC members sought a deal with the IMF. This set offan internal struggle won by the pro-reformers, and the radicals went into silent

4 Ghana: Historical background


opposition. While continuing to espouse socialist and anti-imperialist rhetoric,the PNDC went on to implement one of Africa’s first and longest-sustainedstructural adjustment programmes (SAPs). This stabilised the economy andbrought several years of growth but inevitably alienated the PNDC’s erstwhileallies. In their silent dissent they joined other, mainly middle-class groupsresentful of the PNDC’s early excesses.

After 1985 the PNDC identified a fresh constituency: Ghana’s impoverishedrural areas, which had been neglected by all previous governments. Althoughthe government’s concern was genuine, its new focus also coincided withchanges in donor priorities, which emphasised revival of the agricultural sec-tor, the removal of urban and industrial subsidies and, on the political front, areturn to multiparty democracy.

In the late 1980s Mr Rawlings launched a new democratic experiment reflect-ing his conviction that parties were incapable of looking holistically at thecountry’s interests. “Partyless” elections were held for a new system of localgovernment, under which candidates were elected on the basis of personalityand service to the community. This was intended to pave the way for a nat-ional system of partyless democracy. However, before the structure could bethought through, bilateral donors began linking aid to multiparty reform, aspart of the changes implemented at the end of the cold war.

The 1992 elections In November 1992 the PNDC held Ghana’s first multiparty elections for morethan a decade. Five candidates stood for president, while six parties entered theparliamentary elections, including the National Democratic Congress (NDC),the metamorphosed PNDC. On the whole, the elections were free and fair, andwere endorsed by international observers. However, the opposition did sufferdisadvantages, as the late registration of parties had deprived them of time toorganise.

The NDC saw its main and most vulnerable rivals in the Nkrumahists, whocarried key support in urban areas. To divide them it set up its own Nkrumahistparty: the National Convention Party (NCP). The movement split further whenthe former president, Hilla Limann, set up his version: the People’s NationalConvention (PNC). The NDC’s other strategy focused on marginal urban areas,where it gave pay rises to public-sector workers. Disenchanted with the frag-mented Nkrumahists, union leaders delivered their support.

Mr Rawlings won the presidential race, with 58% of the vote, against 30% forhis nearest rival, Professor Adu Boahen of the New Patriotic Party (NPP). Theopposition claimed fraud and boycotted the December parliamentary elec-tions. However, analysts believe that Mr Rawlings won because he was able toclaim—with some justification—the credit for Ghana’s economic turnaround,and because he was more charismatic than Professor Adu Boahen. The latter’ssupport outside his home Ashanti region turned out to be low, unlike that ofMr Rawlings, who took more than 50% of the vote in most areas and morethan 60% in the Brong-Ahafo, Northern, Central, Western and Volta regions.

The results left the NDC with complete control of parliament, which rarelychallenged the executive. The opposition parties, excluded from the legislatureby their own boycott, tried to strengthen their influence through other chan-

Ghana: Historical background 5


nels. The NPP used its many lawyers in the judiciary to challenge the govern-ment on constitutional issues. Most of the opposition Nkrumahists regroupedinto the People’s Convention Party (PCP), in a bid to restore the movement’scredibility after the fractures during 1991-92. The PNC decided to go it alone,and the NCP’s pro-government Nkrumahists joined the NDC.

The 1996 elections The 1996 elections seemed to offer the prospect of a close contest. The NPP andPCP formed an alliance to field a single presidential candidate, John Kuffour,and a single candidate in each constituency, believing that this demonstrationof unity would be enough to unseat the government. The PNC fielded a thirdpresidential candidate, Edward Mahama.

However, the president and the NDC fought a well-organised campaign thatstressed the government’s track record on spending and infrastructural devel-opment, while capitalising on its control of the state-owned media and struc-tures of patronage. It also undermined the opposition by co-opting many PCPofficials and candidates to the NDC fold.

Ultimately, therefore, neither the opposition’s strategy nor the higher turnout(75% of eligible voters against 48% in 1992) made much material difference inthe presidential elections. Mr Rawlings won a majority in every region barAshanti—the NPP’s heartland. And in a near repeat of 1992, he gained 57.5%of the vote. Mr Kuffour received 39.5% and Mr Mahama 3%. On this occasion,the opposition accepted the legitimacy of Mr Rawlings’s victory, despite someirregularities witnessed during the elections.

Election results, 1992 and 1996

1992 1996 Votes % of Votes % of

Presidential election (’000) total (’000) total

Jerry Rawlings (NDC) 2,327 58.3 Jerry Rawlings (NDC) 4,092 57.5 Professor Albert Adu Boahen (NPP) 1,213 30.4 John Kuffour (NPP) 2,807 39.5 Hilla Limann (PNC) 267 6.7 Edward Mahama (PNC) 210 3.0 Kwabena Darko (National Independence Party) 114 2.9Emmanuel Erskine (People’s Heritage Party) 68 1.7Total 3,989 100.0 7,109 100.0

Legislative election No of seats No of seats

National Democratic Congress (NDC) 189 National Democratic Congress (NDC) 132National Convention Party (NCP) 8 New Patriotic Party (NPP) 61Independents 2 People’s Convention Party (PCP) 5Every Ghanaian Living Everywhere (EGLE) 1 People’s National Convention (PNC) 1Total 200 199a

a Includes a subsequent re-run in one constituency, and a by-election. Another by-election pending at time of writing.

Sources: Electoral Commission, Accra; Ghanaian Embassy, London.

In the legislative poll and subsequent run-offs, the opposition won 67 seats, asagainst 11 in 1992, but this still left the NDC with a workable majority. Thealliance made a strong showing in Ashanti and put on a respectable perform-ance in Eastern and Greater Accra regions. But the geographical base of itssupport reinforced its image as a southern-based party dominated by Ashanti

6 Ghana: Historical background


leaders. The results also reinforced the NDC’s position as the only groupingwith a national support base.

Important recent events

November 1992: Flight-lieutenant Jerry Rawlings (retired) is elected as president,comfortably defeating his main rival, Professor Adu Boahen. December 1992: The National Democratic Congress (NDC, Mr Rawlings’s politicalparty) takes 189 of 200 seats in parliament. Opposition parties boycott the poll.January 1994: Relations with neighbouring Togo deteriorate after Togoleseauthorities claim armed dissidents are working from Ghanaian territory.February 1994: Widespread Konkomba-Nanumba clashes in the north leave 500dead.November 1994: Opposition parties announce that they will field a commonpresidential candidate in the elections of November 1996. 1995-96: The NDC shows increasing signs of becoming factionalised. December 1996: The NDC loses 57 seats in parliament, mostly to the NewPatriotic Party (NPP).

Constitution and institutions

Constitutional changes Ghana’s first constitution at independence in 1957 was based on the UK sys-tem of multiparty parliamentary democracy. However, it was changed withinthree years when Ghana became a republic, with Kwame Nkrumah as pres-ident. In 1964 the CPP government instituted a one-party state and the 1960constitution was amended. Constitutional arrangements were further trans-formed under seven more changes of government.

The present constitution, which forms the basis for the Fourth Republic, wasestablished in 1992, when Ghana held its first multiparty elections since 1979.Much of it is based on the US system, vesting executive power in a presidentelected by universal suffrage every four years. Tenure is limited to two four-yearterms. The cabinet is appointed by the president, on approval by the legis-lature, a single-chamber parliament consisting of a minimum of 140 MPselected on a first-past-the-post basis. Candidates can be fielded by parties orstand as independents.

The absence of a real opposition and the inexperience of most NDC membersof parliament made for a rather compliant legislature during 1992-96. How-ever, parliament has livened up since the last elections, which gave the oppos-ition 67 seats—enough to scrutinise legislation, press for more transparency inexecutive business and raise the level of parliamentary debate.

Political forces

Mr Rawlings introduces athird force

Until Mr Rawlings came to dominate the political scene, Ghana had two polit-ical traditions, namely, the Nkrumahist strand representing the socialist poli-cies followed after independence, and the laisser-faire tradition that succeededMr Nkrumah. However, Mr Rawlings’s quest for broad-based development

Ghana: Constitution and institutions 7


introduced a third force into Ghanaian politics. The transition to democracyand the neutralisation of the military by Mr Rawlings have cemented theNDC’s position as the party associated with aid and economic reform.

Party allegiances andpolicies

The NDC’s policy of promoting broad-based development favouring rural ar-eas, is clear from the government’s record and the fundamental changes it hasbrought to the economy. The NDC’s support lies mainly in rural areas thathave benefited from increased investment and possibly among non-Ashantibusiness people aware of the regime’s growing commitment to expansion ofthe private sector. The 1996 election results confirmed the NDC as the onlyparty with a national base.

Although the two opposition parties are highly critical of the NDC’s shortcom-ings, neither has come up with a clear alternative. This reflects lack of coher-ence and, for the electorate, represents lack of real choice. If the aid associatedwith economic recovery is to continue, current policies and reforms need to besustained.

The People’s Convention Party (PCP) draws support from left-leaning groups,families and individuals and a core of people who are nostalgic aboutMr Nkrumah and the days when Ghana led Africa to independence. Suchgroups include trade unions, students, academics and other educated elites.The Nkrumahists’ agenda appears to favour urban interests, higher spendingon health and education and looser fiscal and monetary discipline.

Ashanti Region is the main support base of the NPP and its predecessors.Traditionally, leadership has been dominated by lawyers, business people andacademics, while its wider appeal derives from a coherent sense of local iden-tity consolidated by the region’s wealth and history. As the only party ofbusiness, the NPP has at times enjoyed broader appeal. However, because manyGhanaians believe it serves Ashanti business interests only, wider crossregionalsupport is not guaranteed. Since 1992 opportunism has taken the NPP leader-ship away from its traditional policy line. The party has exploited dissatisfac-tion with pay and value-added tax (VAT) to flirt with the trade unions and hasendeavoured to stir up nationalist sentiment against foreign investment bychallenging the sale of Ashanti Goldfields shares to foreigners.

Main political figures

Jerry Rawlings: head of state since seizing power in 1981, elected president in1992 and again in 1996 Nana Konadu Rawlings: the president’s wife and a powerful political figure in herown right, she been accused of factionalising the NDCJohn Kuffour: a lawyer, he stood as the Nkrumahist candidate for the December1996 electionsJoseph H Mensah: minority leader in parliamentProfessor Adu Boahen: Mr Rawlings’s main opponent in the 1992 polls, heremains a powerful force in the Ashanti heartlands of central Ghana

8 Ghana: Political forces


Local political analysts have criticised the NPP’s focus on internal rivalries andits preoccupation with constitutional issues since 1996. The NPP’s main con-tribution to the first parliamentary session in 1997 was to petition the SupremeCourt to declare many cabinet ministers unlawful, on the grounds that thepresident had reappointed prior-serving ministers without having them vettedby parliament’s Appointments Committee. The NPP also staged walk-outs onoccasions when a minister whom its MPs deemed illegal addressed parliament.

International relations and defence

Links with the east andwest

Shortly after it came to power in 1981 the PNDC’s left-leaning policies enabledit to strengthen contacts with former eastern bloc countries, namely the SovietUnion, Cuba and Libya. However, the PNDC quickly showed that it was willingto maintain and improve links with other developed countries from which itsought substantial financial and technical assistance, as well as with multilateralorganisations such as the IMF and the World Bank. Relations with the UnitedStates have had their ups and downs but have improved greatly in the 1990s.Mr Rawlings made his first official visit to the United States in early 1995.

Relations with Nigeria are ambiguous, not least because Mr Rawlings’s recordon economic and political reform has made the less successful Babangida andAbacha military governments feel insecure. For all that, there were signs thatthe relationship had moved on to a more positive footing in May 1997, whenMr Rawlings called on the Commonwealth to encourage and support Nigeriain its efforts to rejoin the organisation. More recently there have been indic-ations that Sani Abacha is preparing to follow Mr Rawlings’s example by stand-ing as a civilian candidate in Nigeria’s scheduled presidential elections.Relations with Côte d’Ivoire were uneasy throughout much of the 1980s, be-cause it played host to Ghanaian opposition movements, as did neighbouringTogo, which continues to associate the Ghanaian government with its owninternal problems. Relations with Burkina Faso to the north were excellentunder Thomas Sankara, a close personal friend of Mr Rawlings, who was killed.Ghana was at first distinctly cool towards his successor, Blaise Compaore,although there has since been a thaw, and indeed relations with many regionalneighbours have improved since Ghana’s transition to democracy.Mr Rawlings’s chairmanship of the Economic Community of West AfricanStates (ECOWAS, see Regional organisations) for the 12 months to July 1995further enhanced Ghana’s standing in the region.

The economy

Economic structure

Agriculture is themainstay of the economy

Agriculture continues to be the bedrock of Ghana’s economy, accounting for40-45% of GDP in 1991-95. Although cocoa is perhaps the country’s best-known crop, food crops are by far the most important contributor to agricul-tural output and alone make up around 30% of GDP. The other key sector is

Ghana: International relations and defence 9


services, largely trade and public services, which accounts for 45% of GDP.Industry’s contribution hovered at around 14% in 1991-95, led by manufac-turing with 8%. (Further details are given in Reference table 6.)

Main economic indicators, 1996

Real GDP growth (%) 5.2

Consumer price inflation (%) 34

Current-account balance ($ m) –253

Total external debt ($ m) 6,178

Average exchange rate (C:$) 1,637.23

Population (m) 17.97Sources: IMF, International Financial Statistics; EIU.

The National Democratic Congress (NDC) has tended to favour the rural eco-nomy more than any previous government, making a greater investment ininfrastructure and offering higher producer prices. However, the performanceof the agricultural sector—with the exception of cocoa—has been generallysluggish, though it has picked up since 1995, with around 4% growth annually.

Private consumption is estimated to account for around 77% of GDP by ex-penditure at current prices, compared with government consumption (17%)and capital formation (around 20%).(Historical data are provided in Referencetable 5.)

Comparative economic indicators, 1996

Côte SouthGhana d’Ivoire Nigeria Africa UK

GDP ($ bn) 8.0 11.0 26.6a 127.2 1,159.3

GDP per head ($) 446 743 262 3,354 19,716

Consumer price inflation (%) 34.0 4.5 29.3 7.4 2.7

Current-account balance ($ bn) –0.3 0.2 2.1 –2.0 –0.7 % of GDP –3.1 –1.9 8.0 –1.6 –0.1

Merchandise exports fob ($ bn) 1.5 4.4 15.4 29.3 259.8

Merchandise imports fob ($ bn) –1.8 –2.5 –7.6 –27.2 –279.5

External debt ($ bn) 4.8 19.6 34.7 33.9 n/a

Debt-service ratio, paid (%) 28.4 22.8 12.6 10.6 n/a

a Autonomous exchange rate used for conversion.

Source: EIU.

Economic policy

The economy had greatpotential

When Ghana became independent its economic prospects were extremelygood. It was the world’s largest producer of cocoa, it had healthy mining andtimber sectors, and also, by regional standards, a relatively well-developedmanufacturing sector. Kwame Nkrumah’s Convention People’s Party (CPP)government sought economic expansion through rapid industrialisation, di-rected and mainly funded by the state, using funds derived from the cocoasector. The programme succeeded in establishing what industrial capacityGhana has today, but implementation was made difficult by inadequate plan-

10 Ghana: Economic policy


ning and a precipitous collapse in the world price of cocoa. The governmentallowed the fiscal deficit to widen and failed to adjust the cedi to reflect grow-ing current-account deficits.

Recovery— The subsequent two decades were characterised by economic mismanagement,but in 1983 the government launched an Economic Recovery Programmedrawn up with guidance from the IMF and the World Bank. In 1983-86 policiesfocused on stabilising the economy by restoring fiscal discipline, restrainingcredit expansion and introducing realistic exchange rate management. Bettertax collection reversed a decade of decline in revenue, and by 1986 the govern-ment’s accounts went into surplus for the first time in many years. On the tradefront, import licences were abolished and the cedi was devalued. Improvedpolicies ensured a significant flow of foreign aid finance to cushion the impactof reform and improve infrastructure. A foreign exchange auction system wasestablished to decide the exchange rate alongside official central bank activities.

—and reform The second phase, 1987-88, brought the first efforts at structural reform. Whilefiscal and monetary discipline was broadly maintained, cuts were made in thecivil service and the Ghana Cocoa Board. New investment codes were drawn upfor mining and the rest of the economy. The foreign exchange auction systemwas unified with the official rate and one year later almost all goods becameeligible for auction funds.

From 1989 to mid-1992 the government implemented deeper structural andinstitutional reforms. Financial-sector adjustment cleared bad loans frombanks’ balance sheets and improved regulation by the Bank of Ghana (thecentral bank) as well as the general soundness of the system. In 1990 thegovernment set up the Accra stock exchange to lay the foundations for adomestic capital market. The foreign exchange system was gradually liberal-ised, with the establishment of bureaux de change, the removal of foreignexchange controls and eventually the closing of the auction and its replace-ment with an interbank market.

Deceleration and somebacktracking, 1992-95

However, since Ghana’s return to multiparty democracy in 1992, politicalpressures have forced the government from its course of relatively exemplaryperformance in 1986-91. Large public-sector pay rises in advance of the 1992elections turned five years of surplus into a large deficit that helped to fuelinflation and created a domestic debt that has proved difficult to clear insubsequent years. After approaching divestiture with more enthusiasm in 1991,the government had sold off some 64 enterprises by the end of 1993. There wasfurther progress in 1994, including the sale of part of the government’s stake inthe Ashanti Goldfields Corporation (AGC) and several other enterprises, butthis was not fast enough for donors, who suspended aid because of delays inprivatising banks.

The pressure was effective in accelerating government efforts, and 195 divest-ments were reported processed, if not completely settled, by the end of 1995.While some 45,000 workers at the former parastatals have lost their jobs, thedivestments have brought many benefits to Ghana’s fiscal position in the formof privatisation revenues and lower outlays on subsidies and loans to para-

Ghana: Economic policy 11


statals. Such outlays have fallen to around 13% of current expenditure, from19% in 1990.

Recent fiscal performance In 1994 government finances returned to surplus for the first time since 1991.(For historical data see Reference table 1.) There was, however, a clear lack ofsustainability in such a fiscal performance, as it was mainly achieved as a resultof exceptional tax revenue and one-off privatisation receipts, rather than byrestraints on expenditure, which remained above target.

In 1996, too, election pressures blew the government way off track. The annualbudget projected a surplus of C158bn but in February 1997 the finance min-ister reported a deficit of C142bn for the year. This was later revised upwards toC335bn, equivalent to more than 3% of GDP. The government financed thedeficit, together with a net foreign outflow of C70.7bn, by borrowing from thedomestic sector, mostly by the issuance of Treasury bills.

Tax revenue collection rose from 10% of GDP in 1990 to 15% of GDP in 1995,reflecting continued efforts in rationalising the fiscal system. The governmentintended to introduce value-added tax (VAT) in March 1995, in an attempt towiden the tax net and reduce excessive reliance on single-product tax revenues,such as cocoa export taxes and levies on petroleum products. It was projectedto yield C74.3bn ($594m) and C137.6bn in 1995 and 1996 respectively. How-ever, its introduction was thwarted by major public protests and was post-poned. The government intends to reintroduce the measure in 1998.

The 1997 budget outlined plans to put Ghana’s accounts back into the black,with a surplus of C191bn. But analysts doubt the government’s ability toachieve this ambitious turnaround. Although it has kept minimum wages inline with inflation in recent years, it has been less resolute in fending offregional pressures for public works projects and in getting on top of accountingprocedures that have long been chaotic.

Summary of government finances(C bn)

1996a 1997b

Revenue 2,268.5 2,944.3

Expenditure 2,410.5 2,753.1

Balance –142.0 191.2

a Official estimates. b Budget.

Source: Budget speech, February 1997.

Economic performance

Growth remainsdependent on the public

sector

The NDC government’s reform programme reversed the economy’s decline:having contracted by 14% in 1973-83, GDP grew by more than 50% in 1983-93(see Reference table 4 for historical data on GDP growth). The recovery wasmost marked in the main export subsectors. The restoration of incentives hasbrought fresh investment into mining, where output has more than quadru-pled since the mid-1980s, and led to a recovery in cocoa output. However,performance in Ghana’s key sector, agriculture, is very much at the mercy of

12 Ghana: Economic performance


the climate. When the weather is bad, lower agricultural output generally dragsoverall GDP growth down with it. Between 1992 and 1996, agricultural growthhas averaged 3.6%. Services, led by retail and wholesale trade, remain the maincontributor to GDP growth, with an annual growth rate ranging between 4.6%and 7.7%.

Gross domestic product(% real change)

Average1996 1992-96

GDP 5.2 4.3 Agriculture 4.0 3.6 Industry 4.2 4.1 Services 6.3 6.7

Regional comparisonsCôte d’Ivoire 6.8 4.8Nigeria 3.3 2.8Sources: Centre for Economic Policy Analysis, based on Ghana Statistical Service data; EIU.

Economic growth has traditionally been fuelled by public-sector investment,with a political, cultural and economic climate inhospitable to private busi-ness. Since the early 1990s, the government has eased regulations and tried togive business more influence in policy-making through the Private Sector Ad-visory Group. While a more positive environment is fostering some businessconfidence, the 42% decline in private investment as a result of the 1992election-related fiscal shock suggests that macroeconomic stability must be-come a reality before private-sector activity takes off.

With a very low level of domestic savings, combined with the governmentbudget deficit, the investment effort and hence the growth process cannot besustained without foreign capital inflows. Although the economy’s dependenceon aid for imports and capital projects continues to be a major concern, thisdependence is not as great as some analysts believe. At its peak, Ghana’s netforeign aid was less than 5% of GDP, compared with an average of 8% for therest of sub-Saharan Africa. Moreover, net aid inflows have not always compen-sated for losses resulting from declining terms of trade. (More detailed inform-ation on net official development assistance is shown in Reference table 19.)

Inflation remains aproblem

During 1972-82 inflation averaged 66% per year. A more sensible monetarypolicy brought the rate down to 10.1% in 1991, but since 1992 this downwardtrend has been reversed and inflation soared to a peak of over 70% in 1995,before falling back to 34% in 1996 (see Reference table 7).

Consumer prices(% change, year on year)

Average1996 1992-96

Consumer prices 34.0 33.6

Regional comparisonsCôte d’Ivoire 4.5 10.2Nigeria 29.3 52.2Sources: Bank of Ghana, Quarterly Statistical Bulletin; EIU.

Ghana: Economic performance 13


Estimates by the independent think-tank CEPA indicate that inflation inGhana is mostly affected by changes in output and money. With food account-ing for the largest weighting, 49%, in the consumer price index, any shortfallin agricultural production has a significant impact on inflation. This highlightsthe pivotal role played by weather conditions in explaining macroeconomicperformance, inflation and GDP growth alike.

Fluctuations in money are also a major factor contributing to inflation sinceGhana has a low level of monetisation, which makes prices sensitive to smallmonetary expansion. Government attempts to control the money supply havehad little success: in 1992, money supply (M1) rose by 53% amid massive payrises, a large budget deficit and a large increase in government borrowing. Thefollowing year it rose by 28% and in 1994 it increased again, by 50% (seeReference table 2). The then finance minister, Kwesi Botchwey, explained theoverrun in 1993 in terms of the government’s inability to reach its budgetarytargets, while the 1994 overrun took place because of “a higher than pro-grammed increase in credit”, mainly to public enterprises and institutions, theimpact of which carried over into 1995. Subsequent corrective measures hadbarely begun to take effect when purchases resulting from an unexpectedlylarge cocoa crop swelled the money supply again. In 1996 monetary expansion(M1) was 31%, more than six times the target of 5%, and, while the govern-ment attributed much of this to a significant increase in credit to the privatesector, such credits might in fact have been contracted on the government’sbehalf.

Regional trends

Before the 1980s governments tended to focus capital investment and projectson southern Ghana. This was partly an extension of colonial patterns and alsobecause Ghana’s elites have tended to have their homes and constituenciesthere. In addition, the bulk of Ghana’s most precious natural resources—gold,timber and cocoa—and its industry and commerce are in the Western, Central,Ashanti and Accra regions. The railway, which runs from Accra to Kumasi, thento Sekondi and the port of Takoradi, sums up the most important trade orient-ations. Roads link other regions.

Although one of the poorest in terms of infrastructure and income per head,Western region includes Takoradi port, Tarkwa, the former state gold mine,and the forests from which most of Ghana’s timber is drawn. Ashanti is therichest of the regions because it contains the bulk of gold resources—at AGC’sObuasi mine—and a good share of the country’s cocoa trees. Its people arereputed to be Ghana’s most entrepreneurial and are often (misleadingly)accused by other Ghanaians of dominating the economy (although othersallege the Ewes of Eastern Region dominate the government).

Northern Ghana—Upper West, Upper East and Northern regions—is a keystaple food-producing area. The whole of northern Ghana was heavily ne-glected until the PNDC came to power in 1983. The government has sinceinvested heavily in the area, partly out of a genuine desire to compensate forprevious governments’ neglect and partly because donors began to expect the

14 Ghana: Regional trends


pursuit of more even regional development. Since then, the NDC has recog-nised that investment in the area has paid off politically. Investments includeextension of the national electricity grid, significant rehabilitation of north-south roads and greater expenditure on education. During the past two yearsthe region has suffered from violent ethnic clashes between the Konkombasand the Nanumbas, Gonjas and Dagombas. The heart of the problem lies inpressure on land resulting from the influx of many groups across the Togo-Ghana border into Yendi, Tamale and surrounding villages. The Konkombas,one of these migrant groups, have been pressing for land ownership rightsagainst the wishes of the Nanumbas and other groups.

Resources

Population

Population survey, mid-1995 estimates

Total population (m) 17.1

Population growth rate (%; 1990-95 av) 2.8

Urban population (% of total) 31

Population age structure (% of total) 0-14 years 47 15-64 years 49 65 years & above 4

Mean age of the population (years) 21.7Sources: World Bank, Development Indicators; Ghana Statistical Service, Ghana Living Standards Survey.

Almost half thepopulation is under 14

years of age

The World Bank estimated Ghana’s total population at 17.1m in 1995 (seeReference table 8 for population trends). Nearly half of the population wasunder 14 years of age, and some 4% were over 65. Ghana thus has one of thehighest ratios of dependants to working people among low-income countries.The 1984 census showed the highest densities of dependants were in urbanareas, which accounted for 31% of the population, and in the cocoa farmingareas of the south and north-east. Ashanti was the most populated region, with2.1m inhabitants, and Upper West the least populous, with 438,000. It isdifficult to assess how economic recovery has affected these patterns, givenlack of data for the period after the economy began to pick up. However,official estimates put the urban population growth rate at 4% per year, whichis high although lower than the 5.8% average for sub-Saharan Africa as a whole.

The Ghana Living Standards Survey (1987) showed that 80% of people classifiedas poor (those living on less than two-thirds of the national average income)lived in rural areas, as did almost all those in absolute poverty. According to thegovernment, the poorest areas are the mid-coast, the Volta Basin and thenorthern savannah.

Ghana: Population 15


Education

Until the 1970s Ghana had one of the most highly developed education sys-tems in West Africa. It declined precipitously after 1975, along with the rest ofthe economy. The National Democratic Congress (NDC) is now improving itby restructuring the sector’s organisation and finances. Even so, in 1992, ex-perts estimated that some two-thirds of the population were functionally illit-erate. Budgetary allocations to education reached 3.8% of GDP in 1993—upfrom 1.4% a decade previously.

Reforms have included changing the structure of the educational system to sixyears of primary, three years of junior secondary, three years of senior secon-dary and four years of tertiary schooling. The curriculum has been reformed atboth primary and secondary levels and made more relevant. Most senior secon-dary schools offer vocational options in agriculture and technical subjects inaddition to general arts and sciences. Controversially, however, rationalisationof the system has included cuts in education service staff and the introductionof cost recovery.

The government has been working to reallocate resources towards basic educ-ation following the example of South-East Asian economies, where universalprimary education was perceived as a key factor in accelerated growth. In 1991it launched a massive drive to reduce illiteracy, by as many as 6m people, by2000. Although lack of data makes it difficult to measure expenditure, studiesshow that primary education took 44% of the Ministry of Education’s realrecurrent budget in 1993, compared with 38% in 1989. The government alsoaims to raise primary enrolments by 46% to a rate of more than 90% by the endof the century. In 1996 the government opened 100 new primary schools and200 junior secondary schools.

Some argue that enrolment rates have been recovering since 1986/87. How-ever, the World Bank’s Social Indicators of Development, 1996 suggested littleimprovement in primary school enrolment ratios during 1989-94 and a slightfall in those for secondary schools, although ratios may have improved since.Many children are dropping out because they are unable to pay fees introducedas part of cost recovery. Fees sanctioned by the Ministry of Education in 1993were C250-500 per year. However, district authorities and parent teacher asso-ciations, which now have more responsibility for education, impose their ownadditional charges.

Tertiary education

Ghana has several higher education institutions, the most important of which are theUniversity of Ghana, the University of Science and Technology, University of CapeCoast and the University of the North, which opened in 1992. There are also sixpolytechnics, seven diploma-awarding colleges and 38 teacher training colleges.Total university enrolments are projected to rise to 20,000 by 1997/98. The numberof private institutions offering computer and business studies has been rising since1991 but there is little available data on them.

16 Ghana: Education


Health

A mixed record As in other developing countries, Ghana’s health services are severely under-resourced. According to the World Bank’s Social Indicators of Development (SID),1996 edition, general access to healthcare declined from 64% during 1980-85to 25% in 1988-94. The data show that the population per physician has risenfrom 14,894 to 22,970 over the same period, while the population per hospitalbed has risen from 638 to 685. The government estimates that only 45% of therural population has access to health services. Given the complexity of thesubject, it is not clear to what extent these figures should be trusted. Some aidofficials contend that the quality of health services has improved during thepast decade, following the elimination of the parallel market in medicinesduring the 1980s, the expansion of primary healthcare and the introduction ofsome cost recovery which has put the system on a firmer economic footing.

Yet, while immunisations have risen, those for diphtheria, tetanus and whoop-ing cough and for measles during 1988-93 covering 43% and 39% of thepopulation respectively, they remain well below the average for sub-SaharanAfrica. In contrast, the rate of infant mortality stood at 74 per thousand livebirths in 1994, well below the regional average of 92, according to the SID. Thegovernment estimates child mortality at 143 per thousand, well below thesub-Saharan average of 172. The main causes of mortality are lack of protectionfrom preventable diseases and contaminated water. Also, some 35% of childrensuffer from malnutrition, a predominantly rural phenomenon, especially acutein the savannah zone.

HIV and AIDS Ghana’s AIDS control centre estimated that 150,000-300,000 people were in-fected with the HIV virus at the outset of 1996, and that some 30,000-40,000had full-blown AIDS. The majority of sufferers are women, and some 2-4% ofall pregnant women were HIV carriers in 1995, according to research cited bythe centre. However, the incidence of infection is beginning to change: in themid-1980s the ratio of female to male cases was 5:1, whereas by 1995 the ratiohad fallen to 1.5:1.

Natural resources and the environment

Ghana is well endowed with a broad range of natural resources including arableland, forests and sizeable mineral deposits of diamonds and gold, manganeseand bauxite. Several lakes offer considerable potential for additional hydro-electric power, much of which is currently serviced from the vast Lake Volta,and there are also oil and gas deposits, the extent of which have yet to beestablished. Ghana’s location on the west coast of Africa also permits extensivefishing from the Atlantic.

The climate is tropical, with variations between the northern savannah and thesouthern coastal areas. The hottest months are March and April, when thetemperature often reaches 31°C. The wettest month is June, when averagerainfall is estimated at 178 mm, after which the main food harvest comes. Thehigh forest in the south-west extends over 82,000 sq km and covers 34% of thecountry; it is Ghana’s main source of wood and timber exports. Gold is concen-

Ghana: Health 17


trated in the Ashanti and Western regions, although there are also sizeabledeposits in Central and Brong-Ahafo regions. Lake Volta, which supplies theAkosombo Dam, lies to the south-east in Volta Region but spreads north andnorth-west into Northern Region (see map). Much of the country’s food isproduced in the north, while cocoa, the main cash crop, grows in parts of allthe main regions below Northern Region.

Economic infrastructure

Transport and communications

The government has directed a significant part of the capital budget and donoraid to much-needed improvements in the country’s infrastructure. During the1970s the telephone system barely functioned and the transport system andports disintegrated severely, impeding exports, imports and internal trade. Infuture years, the government will focus on increasing private-sector partici-pation in infrastructure operations. (Historical transport statistics are given inReference table 9.)

Roads are beingimproved—

According to government statistics, road transport is the principal domesticcarrier, accounting for around 98% of freight moved. The network totals38,700 km, of which 14,700 km are trunk roads and 24,000 km gravel or earthfeeder roads. Roads have been upgraded in small sections each year since themid-1980s. In 1996 alone the Department of Feeder Roads rehabilitated1,080 km of feeder roads and regravelled 120 km.

—and so are the railways The railway system consists of a triangular network connecting Accra, Kumasiand Takoradi, and has recently benefited from rehabilitation. However, thestatistics, which fluctuate considerably, suggest that freight tonnage, mainlymanganese, bauxite, cocoa and timber, has not improved much since 1988.After rising from 638,800 tonnes in 1987 to 744,000 tonnes the year after, itdeclined to 661,400 tonnes in 1992 and then recovered to 773,100 tonnes in1993. Further rehabilitation planned for the Eastern and Central lines, includ-ing new engines and rolling-stock, is expected to improve tonnage. Passengerjourneys have fallen consistently from 3.4m in 1987 to 1.4m in 1993.

The ports are handlingmore traffic

In contrast, throughput has been rising fairly steadily at Ghana’s two ports,Tema to the east and Takoradi to the west, following rehabilitation works sincethe late 1980s. This has helped to reduce the turnaround time for ships, whichis now estimated to be the quickest in West Africa. While Tema appears tohandle the bulk of imports, Takoradi handles most of the exports. The amountof cargo unloaded at Tema has risen consistently, from 2m tonnes in 1985 to4.2m tonnes in 1996. Loadings at Takoradi more than doubled between 1985and 1995, from 581,000 tonnes to 1.2m tonnes, but declined to 1.04m tonnesin 1996. The bulk of loadings at Takoradi comprised timber, manganese andbauxite. In the same period (1985-96) Takoradi’s incoming loads rose from

18 Ghana: Transport and communications


317,000 tonnes to 755,000 tonnes. Inland water transport on Lake Volta is lessefficient, mainly because of inadequate port and navigation facilities.

Good airline connections Ghana is quite well served by international airlines, including the nationalcarrier, Ghana Airways, which is due to be privatised. There are direct flights toEurope, the United States, southern Africa and most countries in the westAfrican subregion from Kotoka, Ghana’s international airport.

Telecommunications areinadequate

It is hoped that Ghana’s ramshackle telecommunications sector will be trans-formed by new investment and competition. Capacity in 1995 was 98,000 lines—many of which were in bad working order—putting availability at aroundfive telephones per thousand people. But in late 1996 the government sold30% of Ghana Telecom to a Malaysian-led consortium, G-Com, under termsthat require the new investors to install 225,000 new lines by 2002.

The government also licensed a competitor, the ACG consortium, which isbound to install a further 50,000 lines and invest more than $40m during thenext decade.

Energy provision

Weather dictatespower supply

Water is the main source of domestically generated energy, which means thatsupply is vulnerable to the weather. Lake Volta supplies the main hydroelectricpower station at Akosombo, while another smaller lake supplies the Kpongplant some 40 km downstream from Akosombo. These plants have a combinedcapacity of 8,000 gwh per year; however, low water levels in the Volta and itsoutlets have limited output to 6,400 gwh in the best years. In 1994 Lake Volta’swater levels fell dangerously low, forcing the Volta River Authority (VRA) to cutback supplies to business and domestic customers.

Energy balance, 1996(m tonnes oil equivalent)

Elec- Oil Gas Coal tricity Other Total

Production 0.00 0.00 0.00 1.59a 5.87 7.46

Imports 1.60 0.00 0.00 0.08 0.00 1.68

Exports 0.20 0.00 0.00 0.12a 0.00 0.32

Primary supply 1.40 0.00 0.00 1.55a 5.87 8.82

Net transformationb –0.15 –0.00 –0.00 –1.11c –0.00 –1.26

Final consumption 1.25 0.00 0.00 0.44c 5.87 7.56

a Expressed as input equivalents, on an assumed generating efficiency of 33%. b Transformationinput and output, plus energy industry fuel and losses. c Output basis.

Source: Energy Data Associates.

Such problems have hastened government efforts to develop alternativesources and generation systems. In 1994 the VRA initiated its first major diver-sification project: a 300-mw combustion and combined-cycle power station,which is being constructed at Aboadse, near Takoradi, and is due for comple-tion in 1998. The first combustion turbine system will run either on oil or gasfrom the Tano area or Nigeria, and thermal output will increase by roughly

Ghana: Energy provision 19


6,700 gwh by 1997. An additional hydroelectric plant at Bui on the Black Voltahas also been under study for some time, with the aim of increasing powersupplies to northern Ghana and/or for sale to Côte d’Ivoire and Burkina Faso.

Since the current government came to power in 1992, aid projects have fi-nanced the extension of the national electricity grid in several phases all theway to the north. The latest extensions include the connection of major townsin Upper East Region to the regional capital, Bolgatanga.

Akosombo’s main domestic customer is the Volta Aluminium Company,whose smelter consumes 45-60% of its output. Ghana also exports electricity toTogo and Benin and hopes to sell to Côte d’Ivoire and Burkina Faso.

Financial services

Despite reforms there aremajor shortfalls

Financial services have improved in recent years, with the introduction of anew stock market, the Accra stock exchange, and several new institutions andstockbrokers. Under the financial sector adjustment programme that began in1989, the banking system’s balance sheets were cleaned up and bad loans takenover by the government. A new law prescribed minimum capital requirementsand capital adequacy ratios and improved the regulatory and supervisoryframework.

However, while it is now financially viable, the system is incapable of fuellingor adequately servicing the accelerated growth that Ghana needs. Marginsremain large and, while service tends to be adequate for medium to large firmsand foreign companies, the system has failed to cater for Ghana’s smallerbusinesses and microenterprises, particularly in rural areas and in the light ofhigh real interest rates (see Reference table 3). Of all private-sector financialsavings, 45% goes into the informal financial sector. This problem must beovercome if Ghana’s domestic private sector is to flourish.

State banks remaindominant

Ghana’s state banks (which are now being privatised) have dominated thefinancial sector for many years. At the end of 1992 they accounted for 70% ofassets, 76% of capital, 65% of deposits and 63% of net loans and advances.There was barely any competition or incentive to introduce new instrumentsto tempt investors and lenders. In fact, as the World Bank pointed out in 1995,there was “little genuine intermediation between savers and investors”.Though keen to take deposits, which account for their main source of funds,the banks tended to shy away from all but the lowest-risk lending. Loansaccount for only a small proportion of assets, which mainly comprise safe,high-yielding government instruments.

The government began privatising the banks in October 1995, when it putshares in the well-managed Social Security Bank (SSB) on the market. SSB isnow controlled by a consortium comprising Blakeney Management, MorganStanley Asset Management, Alliance Capital Management, New Africa Invest-ors and JP Morgan Asset Management which reportedly owns 51% of the stock.In February 1996 the government sold a large minority stake in GhanaCommercial Bank (GCB), the country’s largest institution, then accounting foraround 44% of assets. The following year, Malaysia’s Denko Industrial

20 Ghana: Financial services


Corporation bought a 30% stake, with the intention of assuming managementcontrol. The government intends to sell another large commercial bank, Nat-ional Investment Bank, by the end of 1997.

The non-bank financialsector is relatively

undeveloped

Ghana’s non-bank financial sector is relatively small, contributing only 24% oftotal financial assets, with 11% in the government-owned Social Security andNational Investment Trust (SSNIT) and 4% on the stock exchange. There are16 insurance companies but the industry is dominated by two state firms.Other financial institutions include Merchant Bank (Ghana), CAL MerchantBank, Ecobank Ghana and Social Security Bank. Databank provides a range ofservices including brokerage. There are several stockbrokers.

Ghana also has mortgage companies, including the Home Finance Company,building societies, one unit trust, at least one venture capital company andthree leasing companies. In the area of securities and capital markets, Ghanahas two discount houses, Consolidated Discount House, established in 1987,and the Securities Discount Company, which followed in 1991.

A fledgling stock market The Ghana Stock Exchange (GSE) began operating in 1990 to trade in corporateequities, bonds and government securities. Operations are governed by theSecurities Industries Law, which provides adequate protection to ensure thatsecurities transactions are fair and transparent.

The exchange’s market capitalisation was C30bn ($190m) in 1990. Divestmentof government-owned shares and the listing of Ashanti Goldfields Corporation(AGC) shares in 1994 deepened the market. By the end of 1994 total capital-isation had reached C1.97trn, equivalent to about 30% of GDP, and one of thehighest levels in sub-Saharan Africa. The volume of shares traded rose to 93m,the average number traded per session being 715,674, including shares off-loaded by the government (for more details, see Reference table 10).

However, performance dropped off in 1995. Trading volumes declined sharplyto 56m shares, and in 1996 they fell further still, to 36m. Domestic buyers weredeterred by escalating inflation, turning instead to high-return money-marketinstruments, while foreign investors were put off by cedi depreciation, whichundermined hard-currency returns, and by the small volume of shares avail-able. Nevertheless the GSE all-share index rose by 14% in 1996, taking marketcapitalisation to C2.8trn.

The market remains relatively illiquid and is skewed by the fact that onecompany, AGC, accounts for 85% of capitalisation.

Production

Manufacturing

Government facesdifficult decisions

The Economic Recovery Programme (ERP) has brought mixed results to themanufacturing sector. Reduced subsidies and exposure to competition haveforced many businesses to rationalise and improve performance and capacity

Ghana: Manufacturing 21


utilisation, but others have gone under. Meanwhile high interest rates, bankcharges and lack of finance are preventing new and existing businesses fromexpanding. This could explain why manufacturing grew by a meagre 1.5% in1994 and 1.8% in 1995. However, it did pick up to 3.3% the following year, ledby a recovery in beverage production.

The government nevertheless faces some difficult decisions, in particular onways on which it can assist viable or nascent industries at a time when thesuperior technology and economies of scale of Asian and other competitorsthreaten Ghanaian enterprises before they can develop or rationalise. Choicesare limited by donor conditionalities, which prohibit subsidies and protection-ism. Although it rejects blanket protectionism out of hand, the governmenthas displayed a readiness to support selected nascent industries. In 1994 it setup a C10bn ($10.4m) business assistance fund, financed by privatisation earn-ings, to aid distressed but potentially viable enterprises. It has also equaliseddomestic sales-tax rates with levels on competing imported items to eliminateany tax advantages enjoyed by imports.

Ghana has a broad anddiverse industrial base

For a sub-Saharan country of its size, Ghana has a broad and diverse industrialbase, covering aluminium smelting, sawmills, timber and agricultural process-ing plants, brewing, cement manufacture, oil refining, textiles, electricals,pharmaceuticals, mining and many others. The impetus for this came in theyears following independence from Kwame Nkrumah’s Convention People’sParty (CPP) government, which sought to create a self-sufficient Ghana with adiversified industrial base. However, much of the planning and many of theindustries were ill-conceived. In subsequent years, inappropriate policiesstarved many viable industries of foreign exchange for spare parts, while keep-ing unviable plants afloat with subsidies and protective policies. By 1982 utilis-ation of industrial capacity had declined to 21% in medium and large factories.

The positive impact of reforms began showing through after the mid-1980s.Capacity utilisation rates recovered from 35% in 1987 to 40% the followingyear and 44.5% in 1992 (the latest year for which data are available). Sectorsshowing the most improvement were textiles, garments, metals, plastics andnon-ferrous metal manufactures. (Reference table 11 gives historical manufac-turing production statistics.) At the same time, however, Ghana’s industrylobby estimates that at least 120 factories were closed between 1988 and 1992,the garments, leather, electrical, electronics and pharmaceuticals sectors beingworst hit.

Mining and semi-processing

Gold dominates the mining sector, which has thrived as a result of a series ofastute revisions to Ghana’s mining laws in the late 1980s. Although it is not amajor contributor to GDP, gold is Ghana’s single most important source offoreign exchange, and any change in international prices has a direct bearingon the country’s external accounts. The diamond, manganese and bauxitesectors are recovering after considerable contraction during the economy’sdecline in the 1970s.

22 Ghana: Mining and semi-processing


Gold reforms havequadrupled output

Ghana’s gold reserves lie in Ashanti, which has vast underground resources,and in Western and Central regions where much alluvial mining takes place.Ashanti Goldfields Corporation (AGC) has long been the country’s largestproducer; a series of expansion programmes more than tripled output from300,000 oz in 1985 to 1.1m oz in the year ending December 1996, includingoutput from AGC’s new acquisitions. AGC was once owned by the government(with a 55% stake) and the UK conglomerate Lonrho (45%), but the ownershipstructure changed in April 1994, when a portion of its shares was floated on theLondon and Accra stock exchanges, leaving the government with around 29%.Another sale, in February 1996, reduced its stake to 22%. AGC used to accountfor 90% of Ghanaian production, but its dominance has been eroded by othermines, which accounted for about one-third of Ghana’s estimated productionof about 1.5m oz in 1996. Since the flotation, AGC has made several acquis-itions in an attempt to restore its position. These include Cluff Resources,whose Ayanfuri mine added 30,000 oz to AGC’s output this year, and a 70%stake in the Iduapriem open pit mine (which produced around 126,000 oz in1996), acquired after AGC’s merger with Australia’s Golden Shamrock.

Other major producers include the Teberebie Mine, Billiton Bogosu andGhanaian Australian Goldfields. The Tarkwa Mine is expected to become amajor producer in future. A revamp there, by Goldfields Ghana, should event-ually increase production to 270,000 oz/year.

Gold output, 1994(fine oz)

AGC 853,739

Teberebie 177,289

Billiton Bogosu 109,049

Ghanaian Australian Goldfields 100,960

Small-scale miners 82,681

Goldfields Ghana 39,393

ScMC 22,234

Total incl others 1,401,627Source: Ghana Minerals Commission.

The government’s enlightened policies for the sector included legalisation ofsmall-scale mining, its predecessors’ prohibitions having simply created a largemarket in illegally mined gold. Since liberalisation, small operations havemade a significant contribution to output. In 1994 they produced 82,681 oz,surpassing the combined production of the former state mines, Prestea andDunkwa. The following year, they produced at least 90,000 oz, and reports ofsizeable discoveries are attracting an increasing flow of prospectors. Thegovernment granted 70 mining leases in 1995 and 100 the following year.

Diamonds—a history ofcorruption and smuggling

Ghana’s diamond reserves lie mainly in the Birim basin. The sector has had anunfortunate history characterised not only by corruption and smuggling butalso by poor management at the former state-owned Ghana ConsolidatedDiamonds (GCD). GCD figures suggest that output in 1978 was 1.4m carats,declining steadily through the 1980s to around 139,339 carats per year bythe end of the decade. Official data suggest that total diamond output de-clined to 150,300 carats in 1990 and after a brief recovery fell back to around

Ghana: Mining and semi-processing 23


Comparative economic indicators, 1996

0 2 4 6 8 10 12

Nigeria

Côte d'Ivoire

Ghana

Senegal

Guinea

Mali

Burkina Faso (a)

Benin

Niger (a)

Togo

Mauritania

The Gambia

Guinea-Bissau (a)

Gross domestic product$ bn

(a) 1995. Sources: EIU estimates.

26.626.626.626.626.626.626.626.626.6

0 100 200 300 400 500 600 700 800

Côte d'Ivoire

Senegal

Mauritania

Ghana

Benin

Togo

Gambia

Nigeria

Guinea

Guinea-Bissau (a)

Mali

Burkina Faso (a)

Niger (a)

Gross domestic product per head$

(a) 1995. Sources: EIU estimates.

0 1 2 3 4 5 6 7 8

Mauritania

Togo

Côte d'Ivoire

Mali (c)

Benin (c)

Ghana (b)

Guinea (c)

Senegal

Guinea-Bissau (a)

Burkina Faso (a)

Nigeria

The Gambia

Niger (a)

Gross domestic product% change on previous year

(a) 1995. (b) Actual. (c) Official estimate. Sources: EIU estimates; national sources.

0 10 20 30 40 50

Ghana (b)

Guinea-Bissau (a)

Niger (a)

Nigeria

Burkina Faso (a)

Togo (c)

Benin (c)

Mauritania (c)

Côte d'Ivoire

Guinea

Mali

Senegal (c)

The Gambia (c)

Consumer prices% change on previous year

(a) 1995. (b) Actual. (c) Official estimate. Sources: EIU estimates; national sources.

24


222,000 carats in 1993 (see Reference table 12), perhaps because of the reorgan-isation following GCD’s acquisition by Lazare Kaplan International of theUnited States and De Beers of South Africa. Ongoing reorganisation could alsohave been behind a further decline in GCD’s 1994 output, although outputfrom small-scale mines more than offset the fallback. The IMF estimates thattotal production in 1994 was 371,000 carats.

Manganese—Ghana is abig exporter

Ghana is one of the world’s largest exporters of manganese but this item rarelyappears in the external accounts or GDP breakdowns, suggesting that its con-tribution to GDP is small. According to Ghana’s notoriously unreliable manga-nese statistics, output was 362,000 tonnes in 1993, lower than in the precedingthree years (see Reference table 12 for historical data).

Bauxite output is rising Only a small proportion of Ghana’s bauxite reserves are being mined, at Bui.The latest estimates for 1994 production vary between 396,861 tonnes and451,802 tonnes.

Agriculture and forestry

Agriculture is critical to Ghana’s economy, accounting for 40-45% of GDP andemploying most of the workforce. However, despite its importance and somefundamental reforms of the sector, growth has been sluggish and unpre-dictable. There was a rise of 4.8% in 1991, a fall of 0.6% the following year anda recovery of 2.8% in 1993. Growth averaged 2.8% annually during 1991-95.

So far the government has removed food price controls and raised cocoa pricescloser to those on the international market. It has also reformed the agricul-tural input subsidy system. However, the government and the World Bank,which has been advising on sectoral reform, both admit to having paid insuffi-cient attention to this sector, which the Ministry of Food and Agricultureestimates might be operating at only 20% of potential.

The government attributes the problem to low investment and poor tech-nology, especially in the food crops and livestock sector. Another factor be-lieved to be constraining expansion is the removal of subsidies on fertilisersand other agricultural inputs.

More recently, the government and the World Bank have launched furtherinitiatives, including several to widen private-sector involvement. Since 1995sectoral growth has picked up, registering growth of 4.2% and 4% in 1995 and1996 respectively. However, it is not clear whether this reflects the success ofthese initiatives or simply favourable weather conditions.

Weather plays a crucialrole

The sector produces timber, staple foods and cash crops. There are relativelyfew plantations and, except for timber, the vast majority of output is producedby small-scale operators. Cocoa farmers have proved responsive to price andother incentives, and output has expanded significantly in response to higherproducer prices. However, output remains very vulnerable to weather condi-tions. Lack of rain or late rains can affect a whole season’s output of cocoa and

26 Ghana: Agriculture and forestry


food, with severe repercussions for foreign exchange earnings, the imports billand domestic inflation.

Food crops Maize, cocoyam, cassava and other root vegetables are the main food crops,accounting for 55% of agricultural GDP. Plantings appear to have risen consid-erably since 1990, when the government ended minimum prices. Cereal plant-ings (including rice, millet and guinea corn) rose from 853,000 ha in 1990 to1.23m ha in 1993, while output increased by 95%. The area under starchystaple cultivation has also risen and in 1993 output was more than double the1990 level. This suggests either that farmers were producing more efficientlyfrom less land or that the data are unreliable. No records are available for pulsesand vegetables. (Reference table 13 gives historical production of selected foodcrops.)

Areas planted, 1993(’000 ha)

Cereals 1,227

Starchy staples 1,076Source: Ghana Statistical Service, Quarterly Digest of Statistics.

Much of the food is produced in northern Ghana, where increasing pressure onland, particularly on the eastern border with Togo, has brought heightenedconflict between the Konkomba, who are major yam producers, and otherethnic groups. An explosion of ethnic conflict in March 1994 contributed tothe food sector’s poor performance that year.

Cocoa Most cocoa is produced by some 1.6m peasant farmers on plots of less than3 ha in the forest areas of the Ashanti, Brong-Ahafo, Central, Eastern, Westernand Volta regions, where rainfall is between 1,000 mm and 1,500 mm per year.In the early 1960s Ghana was the world’s largest producer of cocoa, with anaverage annual output of 450,000 tonnes, but output fell to an all-time low of159,000 tonnes in 1993/94. It has since recovered significantly. The 1995/96crop was the best since the 1960s, at 404,000 tonnes. However, less favourableweather conditions mean that the 1996/97 crop is likely to total a more typical330,000 tonnes (production levels have averaged around 303,000 tonnes annu-ally since 1991).

Higher producer prices, which the government has been steadily increasingsince the mid-1980s, were one recovery incentive; another was the provision,by donors, of seedlings to replace trees lost to age and bad weather. This wasimportant, since more than 25% of Ghana’s trees are over 30 years old and pasttheir best. The area under cultivation is around 850,000 ha, which thegovernment would like to increase by 100,000 ha by 2000. It would also like tosee yields, currently 450 kg/ha for the highest-yielding variety, double to the800-1,000 kg/ha attained in Malaysia. This would require far more fertiliser andinsecticides, which farmers can barely afford since subsidies were removed aspart of the agricultural-sector reforms.

In 1992 the government, under pressure from donors, liberalised internal mar-keting, allowing licensed private traders to buy cocoa domestically at pricescompetitive to those offered by the state-owned Ghana Cocoa Marketing Board

Ghana: Agriculture and forestry 27


(Cocobod). Though slow to take off, the reforms are delivering higher prices tofarmers; private buyers now account for 30% of local purchases. However, thishas led to quality-control problems in post-harvest fermentation and dryingand in handling dried beans. The government and, more recently, inde-pendent advisers too argue that the reform process should be slowed downuntil such problems have been solved. The World Bank, on the other hand, iskeen to press ahead with liberalisation of external marketing.

Forestry More than one-third of the total land area of Ghana is covered by forest, not allof it suitable for commercial exploitation. Commercial forestry, concentrated inWestern Region in southern Ghana, was the third largest foreign exchangeearner in 1995, with revenue of $190m. Since 1983 the industry has benefitedfrom more than $120m in aid and commercial credits and has undergone sub-stantial changes. The old Ghana Timber Marketing Board has been disbandedand replaced by two bodies, the Timber Export Development Board, which isresponsible for marketing and pricing, and the Forest Products’ InspectionBureau, which monitors contracts, maintains quality standards, grades productsand acts as a watchdog for illegal transactions. Some of the aid funds have beenused to strengthen these organisations—although both remain substantiallyunder-resourced—but much of the money has gone into forestry management,research and equipment for logging, saw-milling and manufacture.

The programme has been successful in raising foreign exchange earnings buthas contributed to the depletion of forest reserves, as has Ghana’s need toexport. Deforestation is estimated to have amounted to 2% of forest coverannually during the 1980s. The government has had to make difficult choicesbetween preservation and the need for hard currency: it banned exports of 18species of log in 1989 and has since extended the list, but plans to phase outlog and lumber exports altogether have been shelved. The current strategy is apackage of incentives and penalties to encourage exporters to increase valueadded. Although there are signs that this has happened recently, lack of funds,managerial skills, technical expertise and marketing facilities remain signif-icant constraints.

The external sector

Merchandise trade

Ghana’s trade profile is that of a poor developing country: a yawning tradedeficit and dependence on a few primary products—in Ghana’s case gold, cocoaand timber. This dependence is reflected in swings in export earnings accordingto output of the key commodities and international price fluctuations.

Export volumes arerecovering—

In 1991-94, the annual rate of growth in dollar export earnings averaged 7%,yet fluctuated within a range of -1.1% and 15.3%. Even so, the primary exportbase has strengthened in recent years and put Ghana in a better position thanmany sub-Saharan countries. In the early 1980s a bad cocoa crop meant disas-ter. Now, when low prices and bad crops have occurred, they have been offset

28 Ghana: Merchandise trade


to a greater extent by gold and timber. The improved mix is reflected in the factthat in 1996 cocoa accounted for only 32% of export earnings compared with,for example, 53% in 1983. Gold’s share had risen from only 15% or so in themid-1980s to around 40% in 1996, making gold the country’s highest foreignexchange earner in the 1990s.

Foreign trade, 1996($ m)

Exports 1,510.2 of which: gold 612.2 cocoa beans 482.5 timber 141.3

Imports 1,823.0Non-oil 1,563.9Oil 259.1

Trade balance –312.8Source: Bank of Ghana, Research Department, preliminary estimates.

Higher gold volume exports reflect the surge of investment drawn in by favour-able mining legislation and the liberalised foreign exchange regime. By con-trast, higher producer prices lie behind the recovery in cocoa exports duringthe 1980s, from an average 160,000 tonnes/year in the mid-1980s to more than250,000 tonnes/year in the early 1990s. At the same time the crop’s extremevulnerability to weather changes is clear from the large dips of 1992/93 and1993/94 when output fell to around 240,000 tonnes. Similarly, good weatherhelped to boost the volume of cocoa beans exported from Ghana to above317,000 tonnes in 1996.

Wider diversification is also evident in the growth of non-traditional exports,from $1.9m in 1984 to $274m in 1996. The main growth sectors includeagriculture and agri-processing industries, including fish products, pineapples,processed timber and aluminium sheets, coils and plates. While the ever-weakening cedi favours non-traditional exports, the constraints are the same asthose facing private-sector growth more generally: high interest rates, lack ofcapital for investment and formidable competition from exporters in othercountries. However, the economy still has some way to go before it has adiverse and stable portfolio of exports. (Reference table 14 gives exports ofcocoa, gold and timber in 1992-96.)

—but earnings remainvulnerable to price swings

Despite some attempts at price hedging, cocoa and gold both remain vulnerableto cyclical commodity price trends. The most recent downturn in the cocoaprice began in 1989 and bottomed at 45 US cents/lb, a 20-year low, in thesecond quarter of 1993. Prices have since recovered, to average 65.9 US cents/lbduring 1996, although this is nowhere near the more than 100 US cents/lb (andoccasional peaks of over 170 US cents/lb) reached in the late 1970s and mid-1980s. Gold prices have likewise experienced a long period of decline over thelast two decades, broken only by a brief recovery in the late 1980s.

Since most cocoa is sold forward, a drop in prices in any given year is reflectedin lower earnings the following year. Mining companies try to induce pricestability by means of swaps and options, and Cocobod by trading on the

Ghana: Merchandise trade 29


futures exchanges. So far, AGC, a sophisticated hedger, has been able to ironout fluctuations in gold prices. Cocobod has been less successful, in part be-cause there are fewer hedging opportunities for “soft” commodities.

Import levels aredetermined by

exchange rate policy

Exchange rate policy plays a key role in determining import values, as dointernational price trends for manufactured items. For example, (correct) ex-pectations that the government would defend the cedi for much of early 1993led to a rapid build-up in stocks and imports that year and helped causeimports to exceed projections by around $200m. Changes in international oilprices have a limited impact, in that the oil bill normally accounts for onlyaround 10% of total imports.

The bulk of Ghana’s trade is with OECD countries (see Reference table 15). Thisis typical of developing-country patterns of exporting primary products andimporting capital and manufactured goods. Unfortunately, Ghana’s trade sta-tistics are not sufficiently up-to-date to indicate how the composition of ex-ports and imports to and from each destination has changed in recent years.

Main trading partners, 1997a

(% of total)

Exports to: Imports from:

UK 15.7 UK 16.2

Togo 10.8 Nigeria 13.4

US 9.6 US 10.2

Germany 9.0 Germany 5.4

a Derived from partners’ trade data and subject to a wide margin of error.

Source: IMF, Direction of Trade Statistics Yearbook.

The main non-OECD trading partners are Nigeria, from which Ghana importsmost of its oil, and Togo. The UK has been Ghana’s main supplier for manyyears, often providing more than 20% of Ghana’s imports, together with Nige-ria and the United States. Ghana’s main export markets are Germany, whichtakes much of its timber, and the UK. The most notable change over the pastdecade has been the growth in trade with France, which under the formerpresident, François Mitterrand, strove to extend its influence beyond franco-phone countries. Imports from France have almost doubled since 1989, whileexports to France have more than quadrupled; the rise in imports from Francecorresponds with increases in French aid.

Invisibles and the current account

The balance on services and income has traditionally been in deficit, by around$380m. The main outgoings are debt service and insurance and freight services,reflecting the decline of Ghana’s once-illustrious Black Star shipping company.(Balance-of-payments data are given in Reference tables 16 and 17.)

Tourism draws muchinvestment

Like many developing countries, Ghana produces few exportable services, al-though recent efforts to revive the tourism sector have paid off to some extent.Much private investment has gone into revamping and upgrading Ghana’s

30 Ghana: Invisibles and the current account


hotel sector, which declined dramatically during the 1970s and 1980s. Poten-tial tourist locations are also being rehabilitated, including old slave forts andcastles along the coast and a wildlife park further north. Tourism officialsreport 271,000 arrivals, bringing in C8.22bn, in 1994. They estimate that therewere 286,000 arrivals in 1995. However, the data are unreliable, as the figurescited have combined business visitors, Ghanaians resident abroad returning toGhana and foreign tourists.

Current account, 1996($ m)

Merchandise exports fob 1,510.2

Merchandise imports fob –1,823.0

Trade balance –312.8

Services balance –421.6

Net transfers 481.7

Current-account balance –252.7Source: CEPA, Macroeconomic Review and Outlook.

Net private transfers haveincreased

Another notable trend on the invisibles account is the increase in privatetransfers. After hovering at around $200m for most years since 1987, theyincreased by 25% to $255m in 1992 and have risen a little more since then.Anecdotal evidence suggests that they are mainly going into new small busi-nesses funded by Ghanaians abroad.

Official transfers mainly comprise aid grants, which ranged between $300mand $420m during 1987-93. Official and private transfers have together to-talled around $450m to $520m net for most of the past five years. In 1996 theywere estimated at $481.7m; such inflows are all the more consequential whencompared with the services deficit of the same year, which amounted to$421.6m.

Capital flows and foreign debt

Aid flows were generousduring the late 1980s

When the Provisional National Defence Council (PNDC) seized power in 1981it was clear that large amounts of foreign aid would be required to achieve anysignificant improvement in the economy. Since private lending had dried up,aid was necessary not only to repair Ghana’s crumbling infrastructure, sustaindevelopment projects and support policy reforms, but also to provide balance-of-payments support in the short term.

During the early 1980s Ghana was one of the first sub-Saharan countries tosustain implementation of structural adjustment. Donors saw Ghana as a testcase, and wanted to prove that their policy prescriptions worked. Anxious for asuccess story to set an example for the rest of Africa, they put more aid per headinto Ghana than into most other African countries. For the most part thestrength of flows reflected the success of government reform efforts, thougheven when the government was slow to implement some of the more sociallyand politically difficult reforms, such as state-sector retrenchment and privatis-ation at the start of the 1990s, donors generally gave it the benefit of the doubtand approved disbursements. (See Reference table 19 for data on official devel-opment assistance.)

Ghana: Capital flows and foreign debt 31


From 1986 to 1992 Ghana also received significant flows from the IMF, startingwith one-year stand-by arrangements from about 1986. It then progressed to amulti-year extended fund facility (EFF), before qualifying for the concessionalenhanced structural adjustment facility (ESAF) when the IMF introduced thelatter. It is currently negotiating to resume an ESAF programme agreed in 1995but suspended for the duration of the 1996 election year.

The government has agood record on

debt service

Since the present government came to power, Ghana’s debt has quadrupled,from $1.39bn in 1980 to $5.87bn in 1995, according to the World Bank’sGlobal Development Finance (see Reference table 18 for further data). The Bankof Ghana’s estimate was lower, at $5.07bn. The latter estimates that externaldebt rose in 1996 to $5.35bn.

The debt-export earnings ratio has risen from 115.2 in 1980 to around 366.5 in1995, causing some concern. However, 65% of the debt has been contracted onhighly concessional terms, and Ghana’s position looks far more manageablewhen earnings are set against debt-service requirements. Moreover, in recentyears the ratio of debt service to export earnings has fallen dramatically from ahigh of 57.4% in 1988 to a manageable 23.1% in 1995, even with IMF obliga-tions included.

Given earlier difficulties in the 1980s, when it inherited considerable debt andarrears from its predecessors, the present government’s record on debt serviceis impressive. Indeed, it is the most distinguishing feature of Ghana’s debtprofile since the early 1980s. Though some arrears have been reported, thepayments record, which facilitated Ghana’s return to the capital markets in1991, stands in sharp contrast to that of most other countries in sub-SaharanAfrica. Moreover, by 1991 the government had cleared most of the arrearsaccumulated by previous governments. One reason for this was the govern-ment’s desire to pave the way for its return to the international capital markets.

At the turn of the 1990s, in a move to diversify lending sources and reducedependence on aid tied to policy conditions, the country returned to theinternational capital markets, where it managed to secure favourable rates onits borrowings. Since then, trends have indicated a structural change in thecomposition of debt maturities. According to central bank estimates, short-term export credits have recorded the highest growth, soaring by nearly 40%from 8.2% of total debt in 1994 to 10.4% in 1995. The significance of suchloans lies in the fact that, besides having an immediate impact on next year’sdisbursements, they are often contracted on non-concessionary terms.

Most of Ghana’s debt continues to be multilateral which—unlike bilateraldebt—cannot be rescheduled, because of then prevailing multilateral lenders’rules. According to Global Development Finance, the multilaterals’ share inGhana’s total external debt rose from 20% in 1980 to around 50% in 1995.Official bilateral debt was relatively static throughout much of the 1980s butbegan climbing after 1991 to reach $1.16bn in 1995.

Direct and portfolioinvestment

After more than a decade of low and static flows, direct inward investmentbegan to pick up in 1993. That year’s inflow, at $125m, was more than fivetimes the annual level in previous years. The following year it almost doubled

32 Ghana: Capital flows and foreign debt


to $233m, where it remained in 1995. While no breakdown of the destinationof flows has been provided, it would appear that much is going to the miningsector and a significant amount towards the purchase of divested state enter-prises not floated on the Ghana Stock Exchange.

The data on portfolio flows are partial and conflicting. While the IMF’sInternational Financial Statistics fails to show any portfolio investment since thestock exchange began, the World Bank’s Global Development Finance shows arow of zeros for 1990-93, and then a huge surge to $557m in 1994, the year thatthe government divested shares in Ashanti Goldfields Corporation and sevenother state enterprises. In view of the scarcity of data it is difficult to cross-check the information. It is known that the amount raised from the sale ofAshanti Goldfields alone totalled $377m and that several foreign investmentfunds bought into other enterprises, which may explain the total. Actual dives-titure has slowed somewhat since then. In 1995 portfolio investment sank backto $267m, reflecting relatively smaller- scale transactions after the major dives-titures of 1994.

In contrast to the past few years, where the current-account deficits were morethan financed by net capital inflows, the overall balance of payments in 1996recorded a deficit of $18.9m. This deficit was financed by drawing on reservesand by a 13.4% increase in short-term loans and overdraft facilities.

Foreign reserves and the exchange rate

Having been kept artificially high for many years, the exchange rate was deval-ued and floated in stages after 1984. The first devaluation took place in 1983,on the eve of the country’s first IMF stand-by arrangement. In 1987 thegovernment introduced an auction system, and then in 1990 allowed foreignexchange bureaux to set up. Since then foreign currency has been easy toacquire for relatively small transactions, but the imbalance between supply anddemand has caused the cedi to depreciate significantly since 1992 (see Refer-ence table 21).

In 1995, the government began to use the exchange rate as a nominal anchoragainst inflation. This strategy, which involved considerable intervention inthe foreign exchange market, slowed the nominal rate of cedi depreciationagainst the dollar, with the year-end interbank exchange rate depreciating by36.6% in 1995 and 21.3% the following year (Bank of Ghana figures). This,combined with still high rates of inflation, translated into a sharp appreciationof the real exchange rate, likely to be followed by a decline in export pricecompetitiveness.

Imports cover is now backto manageable levels

After several years of struggle, the government’s prudent budgetary and ex-change rate policies raised reserves and took import cover to 4.1 months in1991. However, the fiscal profligacy in the 1992 budget caused demand forimports and dollars to rise. The World Bank’s suspension of some loans madethe foreign exchange shortage acute, causing a severe depletion in reserves anda further slide in the cedi. The problem did not dissipate until 1994, wheninflows from the sale of AGC boosted reserves and restored import cover to

Ghana: Foreign reserves and the exchange rate 33


manageable levels. Since 1995, the ongoing government intervention on theexchange market has eroded official foreign exchange reserves significantly,from $710m (3.8 months’ import cover) in 1995 to $299m (2.9 months’ importcover) at the end of 1996 (see Reference table 20.). Meanwhile, private reservesincreased. Analysts anticipate that the shortage of government reserves and thegovernment’s return to the practice of using money as the main anchor againstinflation could pave the way for significant depreciation in 1997.

Exchange rate and foreign reserves, 1996

Exchange rate C:$ (end-period) 1,754 C:$ (period average) 1,637

Foreign exchange reserves ($ m) 801

Total reserves excluding gold ($ m) 829Source: IMF, International Financial Statistics.

34 Ghana: Foreign reserves and the exchange rate


Appendices

Regional organisations

The Organisation ofAfrican Unity (OAU)

The OAU was formed in 1963 with the aims of promoting solidarity amongAfrican states, raising the living standards of the African population, defendingsovereignty and eliminating colonialism. The initial 30 signatories to theOAU’s charter have since been joined by another 21. Namibia formalised itsmembership immediately after independence in March 1990 and Eritrea didthe same in May 1993. After its first multiracial elections, South Africa, the onlyremaining sub-Saharan non-member, joined the OAU in May 1994. All theNorth African countries are also members, with the exception of Morocco,which left the organisation in 1985 in a dispute over the admission of theSahrawi Arab Democratic Republic (SADR). A Moroccan request for the expul-sion of the SADR was again rejected at the 1992 heads-of-state summit.

The foreign affairs ministers of member states meet twice a year to discuss theimplementation of the organisation’s objectives. The issues raised are dealt withat the annual assembly of heads of state, which meets in June or July. Theannual conference is hosted by the member state that is due to take over thechairmanship of the organisation for the next year. The 1997 conference tookplace in Harare, where the Zimbabwean president took over from the presidentof Cameroon, Paul Biya (although Mr Biya failed to attend the conference andwas represented by his prime minister). There have, in addition, been threeextraordinary conferences of heads of state: the first was in 1970 to discuss theAngolan crisis; the second, in 1980, sought to address the continent’s economicproblems; and the third, in 1990, tried to tackle the problem of African debt.

The OAU is committed to the creation of an African Economic Community(AEC) according to the Lagos Plan of Action drawn up in 1980. This wasoriginally scheduled to be in place by the year 2000, but at the 27th summit ofheads of state in Abuja (Nigeria) in June 1991 this target was postponed to2025. The AEC treaty, signed at this summit, outlined six stages, including theremoval of tariff and non-tariff barriers to trade and the establishment of acontinent-wide customs union by 2004. A commitment was also made to theestablishment of an African Common Market (ACM), with a central bank andsingle currency, by 2031.

The problem of conflict resolution has come to dominate the annual summit ofheads of state. At the 1992 summit the accusation was levelled at the OAU thatit had never successfully resolved a conflict in any of its member states. Thepossibility of establishing a military force to observe and monitor ceasefiresnegotiated by the OAU has also been raised by several heads of state but noformal commitment has been made. The issue has been particularly pressing inthe wake of renewed ethnic violence in Burundi in 1996, but the OAU onceagain stopped short of agreeing to establish a military force, although it didarrange for peace talks to be held between Burundian factions in Addis Ababa.

Any move to step up the activity of the OAU is, however, hampered by theorganisation’s severe budgetary problems. In November 1995, the ten worst

Ghana: Regional organisations 35


debtors, owing $16.5m between them, were debarred from speaking or voting atany OAU meeting. The return of full rights is conditional upon a substantial fallin accumulated arrears. By the time of the 1996 summit, although the organis-ation’s finances were in better shape than they had ever been, membershiparrears still totalled $54m. The OAU’s budget for 1996/97 was set at $30.6m.

The OAU remains a high-profile talking shop, with only limited action result-ing from its policy decisions, constrained as it is by a shortage of funds and thevarying of levels of commitment on the part of its members.

The Lomé Convention The Lomé Convention is a trade and aid agreement signed by the EuropeanCommunity (now the EU) and 70 African, Caribbean and Pacific (ACP) states,including 47 African states, which guarantees preferential access to the EUmarket for some commodities produced by the ACP countries. All sub-SaharanAfrican countries are members, except South Africa, which has, however, ap-plied to join. The EU has so far been reluctant to admit South Africa on thegrounds that, on several criteria, it fails to qualify as a developing country.

The fourth convention (Lomé IV) was signed in December 1989, replacing theprevious agreements signed in Lomé in 1975, 1979 and 1984. Lomé IV main-tained the long-term development aims of previous conventions, but placednew emphasis on economic policy reform in member states in line with thegeneral emphasis on “conditionality” among multilateral funding bodies. Theterms of Lomé IV will hold for ten, as opposed to the usual five, years, althoughthe initial Financial Protocol covered funding until March 1995 only. Aftermonths of protracted discussion, a new protocol was agreed at the EU Cannessummit in June 1995. The cause for the delay was a divergence in the EUmember states’ priorities. The UK and Germany were seeking to cut contrib-utions by a total of 30% and switch to bilateral aid instead. France had sug-gested an increase in total funding to Ecu14.3bn ($18.6bn), while the ACPcountries’ stated requirements amounted to Ecu15.8bn. In the eventual dealtotal funding of Ecu14.6bn was agreed.

To achieve its objectives, a series of instruments is clearly defined in the con-vention. The most important is the European Development Fund (EDF), withan allocation of Ecu13.3bn under the Financial Protocol that was agreed inJune 1995. The EDF is the main source of multilateral EU aid to the ACP states,and of all EDF funding up to March 1995, 92% was provided as grants, asopposed to 75% under Lomé III. An additional Ecu1.3bn will be made availableto the European Investment Bank (EIB), which lends on a commercial basis.Total funding has been increased by 22% over the previous five years, but somecommentators argue that this rise barely takes inflation into account. However,the ACP states did gain, in addition, a 16% cut in import tariffs for mainlyagricultural products that did not previously enjoy preferential treatment.

The convention offers two other schemes that are separate from the FinancialProtocol. The Stabilisation of Export Earnings Scheme (Stabex) was set up tocover losses of earnings caused by a drop in prices or production of the mainACP agricultural exports. It has been made more effective under Lomé IV andnow includes better risk coverage. A total of 49 products are on the Stabex list.The overall financial resources allocated to Stabex under Lomé IV were in-

36 Ghana: Regional organisations


creased by 62% to Ecu1.5bn. However, the European Court of Auditors an-nounced in May 1995 that the scheme suffered from a chronic shortage offunds and that it was able to compensate only 40.7% of eligible ACP exportlosses between 1990 and 1992. Sysmin, a special financing facility for countriesreliant on the export of minerals, covering copper, phosphates, manganese,bauxite, tin, uranium and iron ore, was increased by 16% to Ecu480m.

Economic Community ofWest African States

(ECOWAS)

ECOWAS was established in 1975 by 15 West African countries: Benin, BurkinaFaso, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali,Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo. Cape Verde joined in1977. The principal objective of the community, to be achieved in stages, is theestablishment of a customs union and a common market in order to promotethe free movement of people and goods within West Africa. The initial treatyfurther provided for the harmonisation of regional policies in several sectors,particularly agriculture, industry, transport and communications.

Members’ rival trading interests and the existence of other regional organis-ations with similar aims have slowed progress towards the initial objectives ofECOWAS. Other problems include the multiplicity of currencies, the delays bymember states in the payment of their subscriptions and the slow implement-ation of laws to allow free movement between member states. By the time ofthe 1991 summit, arrears in subscription payments had fallen by $24m butthey still stood at $58m and sanctions were threatened for those still owing,including the refusal of ECOWAS project funding from the Fund forCo-operation, Compensation and Development.

In a radical departure from the community’s principal objectives, ECOWASacted as a regional peacekeeper in the Liberian civil war in 1990-93, sending inthe ECOWAS monitoring group (ECOMOG) to monitor a ceasefire and installan interim government. Involvement in the Liberian imbroglio initially didlittle to remove potential divisions within the organisation but it did see newlife breathed into ECOWAS and gave it a high profile in West African affairs. Atthe 16th conference of heads of state in 1993, with the Liberian crisis appar-ently nearing a close after the signing of a peace treaty by all the sides inGeneva, it was decided that a permanent regional conflict resolution roleshould be adopted by ECOWAS. Several institutions, including a regionalparliament and a permanent military adviser’s office, are to be established tohelp the organisation fulfil this new mandate. On July 24, 1993, a new treatywas signed by all the members, replacing that of 1975 and adding the role ofregional peacekeeper to the ECOWAS list of objectives. In signing the newtreaty ECOWAS members acknowledged that supranational interests must beborne in mind by policy-makers at all times.

Concern has, however, continued to be expressed at the slowness of economicintegration in the region. As a step towards this, the commitment to fullmonetary union by 2000 was reiterated before the 1993 summit and a feasibil-ity study was launched in February 1992 to examine the possibility of adoptingone of the region’s currencies as a common currency for all members. The tworeal contenders are the naira and the CFA franc, although the latter involvesconsiderably more complex changes and the unlikely co-operation of France.At the 1992 summit the schedule for the removal of tariff barriers was restated

Ghana: Regional organisations 37


(giving countries up to ten years from January 1990, depending on their degreeof industrialisation, to remove all tariffs on goods arriving from other ECOWAScountries). Companies which are at least 25% owned by citizens of ECOWASmember states are exempt from all tariffs, as are goods that are at least 40%manufactured within ECOWAS. Nonetheless, trade between ECOWAS mem-bers stood at only $2bn in 1990 and had actually fallen since 1981, when ittotalled $2.3bn.

Sources of information

National statistical sources In the 1980s Ghana’s statistical data were plentiful by regional standards. How-ever, Ghana has recently fallen behind other African countries where therehave been aid-financed improvements in data gathering and formulation. Themost obvious example is the government’s tardiness in submitting data to theIMF’s International Financial Statistics.

Shortage of expertise and trained personnel and lack of money mean thatmany of the statistics are out of date. The Quarterly Digest of Statistics (publishedby the Ghana Statistical Service), the main source for all important nationaldata, is patchy. While some of the data in the 100-plus tables in the June 1994edition, still the latest comprehensive source available even in mid-1996, coverto the end of 1993, some of the trade statistics go only to 1989. However, therehave been some improvements, particularly in the agricultural output sections,which are now more up-to-date.

The Bank of Ghana’s Quarterly Economic Bulletin is the main source of inform-ation about money supply and bank and exchange rates. The Central StatisticalOffice also provides reasonably up-to-date information about inflation. TheGhana Stock Exchange reviews its operations in its annual Fact Book.

The Accra-based independent think-tank, CEPA, provides a comprehensiveanalysis of recent macroeconomic trends in its annual Macroeconomic Reviewand Outlook; data are drawn from local sources and from CEPA’s own estimates.

Further data are contained in the Budget speeches issued by the Ministry ofFinance, Accra.

International statisticalsources

Apart from these key sources, most of the rest of the data are derived from theWorld Bank and the IMF, which in turn rely on the government to furnish thedata. This applies to both the International Financial Statistics and the WorldBank’s World Debt Tables (now called Global Development Finances). There aregenerally few inconsistencies between data in these sources and the QuarterlyEconomic Bulletin.

Otherwise, use is made of the World Bank’s own data for information aboutsubjects it has researched extensively while preparing for project lending. Thebest information on the financial sector, including “informal savings”, exists inthe December 1994 Financial Sector Review, Bringing Savers and Investors Together.The Bank’s Country Economic Memorandum, published in collaboration with thegovernment of Ghana in May 1995, provides a broader view of the macro-economic issues, under the title Ghana: Growth, Private Sector and Poverty

38 Ghana: Sources of information


Reduction. More useful data are included in the World Bank’s Technical Paper,Supply & Demand for Finance for Small Enterprises in Ghana. For more generalinformation on social and economic development, see the Bank’s Social Indica-tors of Development and Trends in Developing Economies.

For information on international aid, see the OECD’s Geographical Direction ofFinancial Flows to Aid Recipients.

Select bibliography J Carmichael, Profile of Ghana, London, 1992

J Herbst, The Politics of Reform in Ghana, 1982-91, Califonia University Press,1993

D Rimmer, Staying poor: Ghana’s political economy, 1950-90, Oxford, 1993

Reference tables

Reference table 1

Government finances(C m)

1992 1993 1994 1995a 1996b

Total revenue 396.1 664.4 1,261.0 1,784.8 2,268.5 Tax 336.1 516.1 826.4 1,138.7 1,728.9 Non-tax 36.7 112.4 395.4 552.3 462.1 Grants 23.4 35.9 39.2 93.8 77.5

Total expenditure –498.8 –760.9 –1,150.0 –1,714.5 -2,410.5 Current 378.8 615.7 975.7 1,271.4 1,804.9 Capital 120.0 145.2 174.3 443.1 605.5

Overall balance –102.7 –96.5 112.0 70.3 -142.0

Financing 102.7 96.5 –112.0 -70.3 142.0 of which: external 0.3 56.4 –85.0 –42.6 –195.7

a Official estimates. b Subsequently modified due to rounding.

Sources: Ghana Statistical Service, Quarterly Digest of Statistics; Ghana, Budget 1997.

Reference table 2

Money supply(C bn unless otherwise indicated; year-end)

1992 1993 1994 1995 1996

Money (M1) 360.69 461.35 693.55 925.29 1,215.72

Quasi-money 165.24 203.32 275.16 434.38 586.89

Total money supply (M2) 525.93 664.67 968.71 1,359.67 1,802.61 % change 52.2 26.3 45.7 40.4 32.6Source: IMF, International Financial Statistics.

Ghana: Reference tables 39


Reference table 3

Interest rates(%; year-end)

1992 1993 1994 1995 1996

Central Bank rate 30.0 35.0 33.0 45.0 45.0

Treasury bills 25.4 32.0 29.5 40.5 42.8

Commercial bank deposits 11.0-16.0 15.0-22.5 13.7-22.5 21.5-31.0 25.0-31.5

Commercial bank lendingAgriculture 19.7-26.5 24.0-39.0 22.5-35.0 28.0-47.0 30.0-47.0Export trade 19.5-26.5 23.0-39.0 20.3-35.5 34.25-47.0 30.0-47.0Manufacturing 19.5-26.5 26.0-39.0 26.0-35.5 33.0-47.0 39.0-47.0Source: Bank of Ghana, Quarterly Economic Bulletin.

Reference table 4

Gross domestic product(C m unless otherwise indicated; % change in brackets)

1991 1992 1993 1994a 1995a

GDP at current prices 2,575,774 3,008,783 3,949,023 4,950,379 7,577,167(26.7) (16.9) (31.3) (25.4) (53.1)

GDP at constant (1975) prices 7,217 7,498 7,871 8,172 8,539(5.3) (3.9) (5.0) (3.8) (4.5)

GDP per head at current prices (in cedis) 173,587 197,187 251,200 305,630 453,874(2.4) (13.6) (27.4) (21.7) (48.5)

GDP per head at constant (1975) prices (in cedis) 487 491 501 504 511(2.7) (1.0) (1.9) (0.7) (1.4)

a IMF estimates.

Sources: Ghana Statistical Service, Quarterly Digest of Statistics; IMF, Country Report.

Reference table 5

Gross domestic product by expenditure(C m; at constant 1975 prices; % change in brackets)

1991 1992 1993 1994a 1995a

Private consumption 5,713 6,157 5,684 5,569 6,466 (3.6) (7.8) (–7.7) (–2.0) (16.1)

Government consumption 1,147 1,282 1,432 1,216 1,398 (5.5) (11.8) (11.7) (–15.1) (15.1)

Gross fixed investment 1,000 889 1,875 2,266 1,655 (15.1) (–11.1) (110.9) (20.8) (–26.9)

Change in stocks 3 3 3 3 3

Gross domestic expenditure 7,863 8,331 8,994 9,054 9,522

Exports of goods & services 1,266 1,347 1,375 1,405 1,757 (14.9) (6.4) (2.1) (2.2) (25.1)

Imports of goods & services –1,912 –2,179 –2,498 –2,287 –2,740 (11.2) (14.0) (14.6) (–8.5) (19.8)

GDP at market prices 7,217 7,498 7,871 8,172 8,539

Factor income from abroad –137 –139 –129 –134 –173

Gross national product 7,079 7,359 7,742 8,038 8,366

a IMF estimates.

Sources: Ghana Statistical Service; IMF, Country Report.

40 Ghana: Reference tables


Reference table 6

Gross domestic product by sector(C m; at constant 1975 prices; % change in brackets)

1991 1992 1993 1994a 1995a

Agriculture 3,204 3,183 3,274 3,358 3,500 (4.7) (–0.6) (2.8) (2.7) (4.3)

Industry 1,032 1,091 1,138 1,187 1,227 (3.7) (5.8) (4.3) (4.3) (3.3)

Mining & quarrying 97 107 116 122 129 Manufacturing 635 652 667 694 706 Electricity & water 98 110 119 125 133 Construction 202 222 236 246 259

Services 3,167 3,411 3,650 3,817 4,004 (6.3) (7.7) (7.0) (4.6) (4.9)

of which: wholesale & retail trade, restaurants & hotels 1,060 1,155 1,249 1,320 1,406 finance, insurance, real estate & business services 662 690 731 778 801

GDP at factor cost 7,403 7,685 8,062 8,362 8,731

a IMF estimates.

Sources: Ghana Statistical Service, Quarterly Digest of Statistics; IMF, Country Report.

Reference table 7

Prices

1992 1993 1994 1995 1996

Consumer price index (1990=100) 129.9 162.3 202.7 353.4 473.7 % change 10.1 24.9 24.9 74.3 34.0

Food price indexa (1990=100) 120.2 150.2 188.9 302.6 n/a % change 10.3 24.9 25.8 60.2 n/a

a Food prices have a weighting of 492 out of 1,000 in the consumer price index.

Sources: IMF, International Financial Statistics; Ghana Statistical Service, Statistical Newsletter.

Reference table 8

Population and labour force

1992 1993 1994 1995a 1996a

Population (m; mid-year) 15.76 16.20 16.64 17.08 17.52

Population growth (%) 2.9 2.8 2.7 2.6 2.6

Labour force (m) 7.33 7.53 7.74 7.96 8.18

a EIU estimates.

Source: World Bank, Social Development Indicators.



Reference table 9

Transport statistics

1992 1993 1994 1995 1996

RailwaysPassenger traffic (m km) 135.1 117.7 n/a n/a n/aGoods traffic (m km) 108.6 137.1 n/a n/a n/a

RoadNew registrations of motor vehicles 15,262 n/a n/a n/a n/a

Ports (’000 tonnes)Tema 3,910 4,130 4,090 4,611 4,890 Loaded 791 601 629 681 690 Unloaded 3,119 3,529 3,461 3,930 4,200Takoradi 1,802 2,123 2,315 1,857 1,795 Unloaded 702 722 811 657 755 Loaded 1,100 1,401 1,504 1,200 1,040Sources: Ghana Statistical Service, Quarterly Digest of Statistics; Ghana Ports and Harbours Authority.

Reference table 10

Stock market indicators(end-period unless otherwise indicated)

1992 1993 1994 1995 1996

No of listed companies 15 15 17 19 21

Market capitalisation C bn 43.8 96.5 1,968.4 2,399.0 2,862.7 $ m 100.2 148,7 2,056.8 1,999.2 1,748.5

Volume of trading (m shares) 2.04 37.94 93.04 55.84 35.75

Value of trading (period total) C m 173.4 3,177.9 73,088.2 27,085.3 27,880.0 $ m 0.4 4.9 76.4 22.6 17.0

Local indexa 62.2 132.9 298.1 316.9 360.7 % change 3.6 113.7 124.3 6.3 13.8

a GSE all-share index.

Source: Ghana Stock Exchange, Fact Book 1996.



Reference table 11

Manufacturing production(volume indices unless otherwise indicated; 1977=100)

% weighting 1991 1992 1993 1994

Food manufacturing 15.0 59.3 62.8 90.3 90.8

Beverages 8.4 93.0 112.2 105.5 109.4

Tobacco & tobacco products 7.8 40.6 47.1 52.2 53.0

Textiles & clothing 13.7 39.1 23.7 60.2 48.0

Timber 7.2 133.6 120.2 91.9 98.2

Paper & printing 1.9 45.3 54.6 33.7 47.1

Petroleum refining 19.0 92.2 65.0 65.8 94.4

Chemicals 6.6 44.7 56.7 38.4 129.8

Cement 2.6 125.6 177.0 206.2 217.0

Iron & steel 3.3 n/a 356.0 392.8 541.7

Non-ferrous metal 9.6 104.0 115.8 109.9 88.8

Cutlery & metal products 0.5 63.2 83.3 99.9 124.0

Electrical goods & appliances 1.3 40.0 46.3 52.6 29.8

Total incl others 100.0 71.3 76.9 87.3 101.2Source: Ghana Statistical Service, Quarterly Digest of Statistics.

Reference table 12

Minerals production(’000 tonnes unless otherwise indicated)

1990 1991 1992 1993 1994

Gold (’000 kg) 16.5 26.1 31.4 38.6 42.4

Bauxite 382.1 485.1 498.1 482.5 420.5

Manganese 364.0 415.2 477.7 361.7 294.2

Diamonds (’000 carats) 150.3 419.4 584.5 222.0 371.1Sources: Ghana Statistical Service, Quarterly Digest of Statistics; IMF.

Reference table 13

Production of selected food crops(’000 tonnes)

1992 1993 1994 1995 1996

Cereals 1,255 1,644 1,546 1,835 1,793a

Maize 731 961 940 1,042 1,000a

Rice 132 157 162 202 202a

Millet 133 198 168 201 201a

Guinea corn 259 328 276 390 390

Starchy staples 10,277 11,250 11,025 n/a n/a

Cassava 5,662 5,972 6,025 6,899 6,899a

Cocoyam 1,202 1,234 1,245 n/a n/a

Yam 2,331 2,720 2,561 n/a n/a

Plantain 1,082 1,321 1,194 n/a n/a

a FAO estimates.

Sources: Ghana Statistical Service, Quarterly Digest of Statistics; FAO Production Yearbook.



Reference table 14

Exports(’000 tonnes unless otherwise indicated)

1992 1993 1994 1995 1996a

Cocoa beans 223.8 263.7 238.3 236.3 317.6

Cocoa products 19.3 22.8 14.0 13.9 11.4

Gold (’000 fine oz) 995.4 1,210.5 1,435.4 1,689.5 1,485.0

Timber (’000 cu metres) 406.7 727.8 780.0 590.0 n/a

a Provisional estimates.

Sources: Bank of Ghana, Quarterly Economic Bulletin; based on recorded receipts (differ from Budget data on cocoa).

Reference table 15

Main trading partners($ m)

1992 1993 1994 1995 1996

Exports to:UK 119 98 193 235 268Togo 90 107 127 157 185US 32 199 187 184 163Germany 80 178 219 192 154France 20 58 86 125 127Côte d’Ivoire 67 3 3 8 5EU 375 520 799 856 905Africa 208 163 188 235 269

Imports from:UK 368 356 322 416 518Nigeria 305 333 346 388 426US 219 236 137 173 325Germany 192 117 114 193 171Japan 142 82 138 102 108Netherlands 69 91 84 128 97EU 932 853 882 1,105 1,395Africa 405 447 491 607 702Source: IMF, Directory of Trade Statistics Yearbook.



Reference table 16

Balance of payments, IMF estimates($ m)

1991 1992 1993 1994

Goods: exports fob 997.6 986.4 1,063.7 1,226.8

Goods: imports fob –1,318.7 –1,456.7 –1,728.0 –1,579.9

Trade balance –321.1 –470.3 –664.3 –353.1

Services: credit 95.1 110.3 136.6 139.4

Services: debit –319.3 –372.2 –428.2 –400.7

Income: credit 15.2 18.6 19.7 19.9

Income: debit –143.5 –132.9 –140.1 –142.1

Net transfers 422.8 471.2 518.4 472.8

Current-account balance –250.8 –375.3 –557.9 –263.8

Net direct investment 20.0 22.5 125.0 233.0

Net portfolio investment 0.0 0.0 0.0 0.0

Net other investments 318.1 299.1 500.5 278.2

Financial balance 338.1 321.6 648.1 511.2

Financing (– indicates inflow)Movement of reserves –136.7 107.3 –53.2 –167.4Source: IMF, International Financial Statistics.

Reference table 17

Balance of payments, national estimates($ m)

1992 1993 1994 1995 1996

Merchandise exports 986.3 1,063.6 1,237.7 1,431.2 1,510.2

Merchandise imports –1,456.5 –1,728.0 –1,579.9 –1,687.8 –1,823.0

Trade balance –470.3 –664.4 –342.2 –256.6 –312.8

Services (net) –376.2 –412.0 –383.5 –410.3 –421.6

Private transfers (net) 254.9 261.2 271.0 263.2 276.1

Official transfers (net) 215.3 256.2 200.8 260.0 205.6

Current-account balance –376.3 –559.0 –253.9 –143.7 –252.7

Capital inflows:Official long- & medium-term (net) 386.5 370.2 295.3 135.5 258.1Private long- & medium-term (net) 6.4 106.3 205.8 261.2 70Short-term (net) –118.9 153.6 –22.3 62.4 –94.3

Capital-account balance 274.0 630.1 478.8 459.1 233.8

Errors & omissions –22.1 –30.0 –61.1 –66.3 –

Overall balance –124.4 41.1 163.8 249.1 –18.9Source: CEPA, Macroeconomic Review and Outlook.



Reference table 18

External debt, World Bank estimates($ m unless otherwise indicated)

1991 1992 1993 1994 1995

Total external debt 4,371 4,499 4,882 5,463 5,874Long-term debt 3,144 3,345 3,669 4,180 4,595Short-term debt 394 414 476 582 631 of which: interest arrears on long-term debt 37 41 56 59 37 Use of IMF credit 834 740 738 700 649

Public & publicly guaranteed long-term debt 3,110 3,310 3,632 4,148 4,568Official creditors 2,825 3,013 3,323 3,768 4,143 Multilateral 2,083 2,200 2,407 2,706 2,984 Bilateral 742 813 916 1,062 1,159Private creditors 285 297 308 380 425 of which: bonds 0 0 0 0 0 banks 6 5 5 28 86

Total debt service 302 321 310 367 370Principal 190 200 190 248 273Interest 112 121 120 119 97

Ratios (%)Total external debt/GNP 63.6 66.4 81.7 85.1 95.1Debt service/exports of goods & services 27.1 28.6 25.2 26.2 23.1Short-term debt/total external debt 9.0 9.2 9.7 10.7 10.7Concessional long-term debt/ total external debt 56.0 58.7 60.0 62.6 64.9

Note. Long-term debt is defined as having original maturity of more than one year.

Source: World Bank, Global Development Finance.

Reference table 19

Net official development assistancea

($ m)

1991 1992 1993 1994 1995

Bilateral 449 333 312 332 358 of which: Japan 116 71 83 135 122 US 25 27 46 53 54 Germany 125 24 51 24 44 UK 54 55 37 29 21

Multilateral 425 284 310 220 301 of which: IDA 195 168 201 172 234 EU 27 62 61 42 54 IMF 159 0 –11.5 –43.7 –46.1

Total incl others 1,434 933 939 853 1,000 of which: grants 552 320 320 306 346

a Disbursements minus repayments. Official development assistance is defined as grants and loanswith a grant element of at least 25%, provided by OECD and OPEC countries with the aim ofpromoting development and welfare in the recipient country.

Source: OECD Development Assistance Committee, Geographical Distribution of Financial Flows to Aid Recipients.



Reference table 20

Foreign reserves($ m; end-period)

1992 1993 1994 1995 1996

Foreign exchange 291.6 385.3 554.3 669.2 801.5

SDRs 4.4 0.5 4.2 2.4 2.2

Reserve position in the IMF 23.9 23.9 25.4 25.8 25.0

Total reserves excl gold 319.9 409.7 583.9 697.5 828.7Source: IMF, International Financial Statistics.

Reference table 21

Exchange rates(C per unit of currency; period averages)

1992 1993 1994 1995 1996

$ 437.1 649.1 956.7 1,200.4 1,637.2

SDR 716.1 1,125.9 1,536.7 2,154.3 2,522.7

£ 768.6 968.7 1,465.3 1,894.9 2,556.8

DM 281.2 390.8 589.5 837.6 1,088.0

FFr 82.9 112.7 172.3 240.5 320.0

¥ 3.5 5.9 9.4 12.8 15.0

CFAfr 1.7 2.3 1.7 2.4 3.2

Naira 25.3 29.4 43.5 54.8 74.8Source: IMF, International Financial Statistics.

Editor:All queries:

Charlotte VaillantTel: (44.171) 830 1007 Fax: (44.171) 830 1023



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Ghana - International University of Japan · Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151,