Country on the march.

As far as the World Bank and IMF are concerned, Ghana has gone from being the 'bad boy' in the class to 'favourite pupil' in less than a decade. Under the uninterrupted leadership of President Jerry Rawlings, Ghana's once shambolic economy has been growing steadily. But the big spurt needed to take it into a new phase of prosperity for all its citizens has been hamstrung by plunging gold prices and escalating power costs. Seterwo Gagakuma profiles a country on the march.

The performance of the ports of Ghana perhaps best mirror the health of the economy. The more vibrant the activities on the seaports, the higher the living standards up-country can be expected to be. The ports have indeed woken up from the slumber of the early '80s when the daily scenes at the main ports of Tema and Takoradi were of youths scrambling for imported food items even as the cranes were lowering them from the ships. By 1983 the situation had become critical: cargo throughput at the two ports declined from 5.5m tonnes in 1979 to 2.2m tonnes in 1983. Indeed the largest bulk export, Tema and Takoradi cocoa beans, had declined from 208,846 tonnes in 1982 to 141,401 tonnes in 1984.

Firm action to reverse the trend started in 1986 when the Ghana Ports and Harbour Authority (GHPA) was established. The fully state-owned organisation was tasked to rebuild and operate the ports more efficiently. The GHPA had only to look at its competitors the west, the port of Abidjan, and the port of Lome to the east.

Indeed the free port of Lome had been happily thriving on the misfortunes of the ports in Tema and Takoradi. GHPA was, however, not without a strong backer. It was one of the first beneficiaries of the IMF supported Structural Adjustment Programme. Would Bank affiliate International Development Association (IDA) immediately injected $106m for a complete rehabilitation of the two ports. By 1988 signs of recovery began to show in Tema port where the rehabilitation had started. Cargo throughput crawled to 3m tonnes.

Today Tema port stands tall among its neighbours on the West African coast. After a full rehabilitation and re-equipment, the port now boasts a cargo throughput of 5.2m tonnes. Similarly, the average tonnes-per-ship working hour improved from 46.5 in 1988 to 94.9 in 1997. The average tones per net gang hour also improved from 13.2 tonnes to 53 tonnes during the same period while average turn around time for vessels improved from 240 hours (10 days) in 1983 to 57.4 hours (2.4 days) in 1997.

Improvements at the Takoradi port are similarly spectacular. Cargo throughput rose from 1.4m tonnes in 1988 to 2.2m tonnes in 1997 while average ship turn around time improved from 117 hours (4.9 days) in 1987 to 39.1 hours (1.6 days) in 1997.

This year the GHPA is well in sight of its officially declared vision: 'To become the most efficient one-stop port services centre in the West African sub-region of Africa'. In particular, the GHPA has been eyeing business in Ghana's land-locked northern neighbours, Burkina Faso, Mali, Niger and Chad. It has opened up a new container port for transit cargo to these countries and hopes to shift imports and exports from these countries away from the ports of Lome and Abidjan. Improved road networks to the northern states as well as cheaper and more efficient port services seem to be doing the trick.

Today, the GHPA believes that it has brought its ports around well enough to sell them to international port operators for good profit. As part of an overall divestification programme, the government is in the process of selling off most of the GHPA activities to foreign investors. GHPA will then become a 'landlord' collecting rent and overseeing the various operations of the ports. It is hoped that when the new investors take over, hopefully next year, they will inject further investments to fully commercialise the operations of the ports of Ghana.

Mining hits hard rock

This year, Ghana's gold propelled economy has been hit hard hit by low world prices for the commodity. After enjoying years of boom, the gold industry seems to be going through its most trying moments and so is the Ghanaian economy. Power curtailments to the mines for most of this year means that production will be slacker and more expensive. Last year gold fetched $563.7m against $612.4m in 1996. This year projected gold earnings are pegged at $528.6m.

For the first time since gold took a powerful grip on the economy in 1984/85, cocoa is set to regain its position is Ghana's number one export earner. With increased production and higher international prices, cocoa exports are projected to bring in $533.7m, 32.8% of total expected foreign earnings.

Ashanti Gold Fields Limited, the main gold producer, is reacting to the gloomy market by cutting expenditure. Where operation costs exceed its set maximum cost in a mine, it will close down operations. In 1999, it is set to seal off Iduapriem mine which has performed, up to September this year, at $256/oz. Though Iduapriem returned 112,846 ounces for nine months ending September, its production cost are above the entire Ashanti average for the period of $222/oz.

Prestea Gold fields, sold to a South African Conglomerate and now named Barnex Prestea Ltd, has shut down its entire underground operations citing too high operating costs. The mine now prefers to undertake only surface mining operations on its concessions. A total of 1,400 miners worked the underground operations.

This year, power cuts to mines owing to a sharp drop in hydro-electric generation has been the main cause of frustration for mining companies. However full power has been restored, although at a high cost since the new thermal generators are more expensive to run. This means that most mines will be discouraged from going into expensive underground operations. Ashanti has had to invest in an expensive thermal generation plant that will guarantee it uninterrupted electric power supply. Ashanti's production accounts for about 80% of Ghana's total gold production. As of September 30, it produced a total of 912,964 ounces of gold at an average value of $380/oz.

The new champions: cocoa and tourism

Although the lustre of gold seem to be dimming, the cocoa and tourism sectors are gleam with hope. Cocoa farmers have responded positively to increasing producer prices. The current producer price paid to farmers is Ce1.8m/tonne ($800) up from Ce1.2m ($533.33). Purchasing and carting of produce from farmers has also improved with the licensing of private buyers to break the state-owned COCOBOD'S monopoly. Total production for 1998 is expected to reach 350,000 tonnes from 317,000 tonnes last year.

Tourism is definitely the most promising sector. Economic and political stability has meant that Ghana has become a very attractive destination. Last year, the country officially recorded 325,458 tourists, up from a figure of 300,000 in 1996. Revenue from the sector amounted to $297m.

Almost all the major airlines make four flights into Accra weekly compared with just a weekly flight by the few that called 10 years back. The major airlines include Swissair, KLM, British Airways, Lufthansa, American Airlines and Alitalia. The national carrier Ghana Airways has been busy on its European and American routes as well as on flights to South Africa.

The challenge to the hospitality sector is what investors need to take up in the coming years. First class hotel accommodation is still inadequate. The three top hotels, Labadi Beach Hotel, Novotel, and Golden Tulip between them have a total of up to 600 rooms, which is scarcely enough for five fully loaded tourist jumbos. A new five star beach hotel to be commissioned next year by IGIC hotel group will add about 150 rooms to the first class hotel accommodation list.

Ghana has taken full advantage of its historical position as a major slave transit point. Its coastline is the site of the highest concentration of slave trading castles and these have become major attractions to Africans in the Diaspora particularly African Americans. The Biannual cultural fair, Pan African Festival of Arts and Culture (PANAFEST) has become a major event on the calendar of Africans. It has opened up the country to visitors who keep returning to the country and pass on the word about Ghana as a holiday destination.

The Ghanaian tourism authorities believe that eventually sufficient enthusiasm will be whipped up to attract the needed investment into the hospitality sector. A comprehensive tourism plan being followed by the Ministry of Tourism is expected to reach full maturity by 2010. Well before then, it is expected that, everything else being equal, tourism will lead Ghana into the next century.

For the IMF, the economic turn-around by Ghana from the gloomy years around 1983 when its controversial structural adjustment programme was introduced, is a matter of great satisfaction. It has had few success stories in the region. International creditors have confidence that the country can be relied on to deliver on its word. This accounts for the current foreign debt of $5896m.

Privatising for greater efficiency

Indeed the government has said that it eschewed a number of commercial loans offered and has been veering rather to long term concessional loans and grants for financing various projects. The expansion of the economy has overstretched utilities and other infrastructure. Chief among these are electricity, housing, and road networks. These areas offer immediate opportunities for investors.

The inadequacy of the long depended-on hydro-electricity from Akosombo and Kpong has created a huge energy gap. This is being filled by American and British investors. British firm Agriko has installed diesel-powered generating plants in Tema and is generating 30MW for industrial concerns in the harbour city. American company Westinghouse has also won a contract to provide and operate two power barges to produce emergency power at a cost of $67m. The financing has come from the energy department of the USA government. The deal was signed by US Transportation, Secretary Rodney Slater and CEO of Ghana National Petroleum Company, Tsatsu Tsikata.

The Volta River Authority (VRA) that runs the hydro-electric dams also signed an agreement on 17 July with American firm Marathon Power Antores of Houston to build a 300MW thermal plant at a cost of $200m. Marathon will pay for 70% of the cost while VRA will provide the remainder. The Akosombo Dam which started generating 912MW in 1966 will be refitted next year at a cost of $18m by General Electric, Canada and Voest Alpine of Austria.

VRA boss, Gilbert Ohene Dokye said at a contract signing ceremony in Accra on September 23 that with the overhaul, the dam could go another 25 years generating at 90% capacity. "The power problem is primarily the result of low inflows into the reservoir arising from poor rainfall pattern in the last few years and to the high, unprecedented growth in demand," he said. "The fact is that power generation from the relatively cheap hydro sources can no longer sustain national requirements and the need for economic tariffs is our only guarantee for continued reliable electricity supply". A thermal plant producing 100MW of power was commissioned this year by GNPC and VRA.

Also on course is the government's divestiture programme which is expected to sell off about 300 state-owned concerns to private ownership. The Divestiture Implementation Committee (DIC) said on November 3 that it had so far divested 206 state-owned enterprises. The sales raked in a total of $601 m. Of this, government's sale of its shares in Ashanti Gold Fields alone earned $400m. Other notable sales were Ghana National Manganese Corporation and Ghana Telecom.

The Director of the DIC, Emmanuel Agbodo admitted that the process was not proceeding fast enough because of delays in sourcing buyers. He said arrangements are in process to sell off Tema Oil Refinery, Ghana Oil Company, Electricity Company of Ghana, Ghana Airways, Ghana Railways Corporation and the Agricultural Development Bank.

Privatisation is a key demand by the IMF and it has been closely monitoring the process. The short term effects of privatisation and other IMF demanded economic remedies have meant that large hordes of workers have been temporarily displaced. For the new owners of some of these enterprises labour has been very restive. It will definitely be a matter of a few more years before the fruits of the current economic reforms are manifested.

One sector in particular which is feeling the heat is manufacturing. The trade liberalisation policy adopted by government has meant that cheap imports from overseas can compete with goods from unprotected industries.

The recently increased electricity tariffs have hit the high energy using industries particularly hard. From September 1 this year, electricity tariffs were upped by 1000%. The Association of Ghana Industries say they cannot pay the new tariffs; the Electricity Corporation has responded by cutting off some defaulting companies. Notable among these is the Tropical Glass Factory which was bought by an American firm under the privatisation programme. The company says it simply can't pay the new bills and has subsequently closed down, laying off its 250 workers. The factory is the main producer of green bottles to local breweries.

On November 4, two steel mills in Tema served notice that they would also close down when they got their new electricity bills. Their workers went on a public demonstration against the new tariffs.

Ghana has enjoyed cheap electricity from its two hydro-electric dams on the Volta River for a long time. The Volta Aluminium Company was set up by the American firm Kaiser Aluminium in 1966 specifically to purchase more than half of the 912MW power generated by the first dam in Akosombo. The excess was sold to neighbouring Togo and Benin. But a rapid increase in demand by local industry and domestic use over the past decade has put considerable strain on the hydro-power. The two dams in Akosombo and Kpong have a total output of 1,072MW - Akosombo 912MW and Kpong 160MW. Now the two dams produce less than a third of their capacity due to low levels of the Volta River. Even if the dams fill up and generate full power, the reality is that other more expensive supplements must be sought. So the high tariffs will stay but no one knows how many actually pay.

Despite the unexpected hurdles, Ghana is on the march and there is a renewed belief that tomorrow will be far better than today.