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Staying Poor: Ghana's Political Economy, 1950-1990.

Douglas Rimmer states at the beginning that the purpose of this book, part of a World Bank project, is ~to emphasize the prevalence of poverty in Ghana, the limited relevance to the relief of this poverty of those policies usually said to serve equity, and the importance of economic growth as an ameliorative force'. His starting point is the proposition that in about 1950, although the then Gold Coast was probably the richest Black African society in per capita terms, the great majority of its inhabitants were poor, though there were wide income differentials, and the poorest people were mostly in the north. But there were reasonably favourable auguries. The national income was rising rapidly, the ratio of population to cultivatable land was quite good, economic life was highly commercialized, there was a sizeable educated elite, and a very high level of mostly involuntary saving through the Cocoa Marketing Board. Many people, not all Ghanaians, believed that things would be better still without British colonial rule: as Nkrumah is reported as saying in 1949, ~If we get self-government we'll transform the Gold Coast into a paradise in ten years'.

The main function of this book is to show and explain the fact that some thirty-five years after Ghanaian independence in 1957 the country, far from having become a paradise was very much poorer than it was in 1950. After three initial chapters which describe the economy and society in about 1950, Rimmer divides the next forty years into five periods and chapters, breaking at 1958, 1965, 1971, and 1982, each reflecting a change of political regime. His central theme is that from around 1960 until about 1983 the Ghanaian economy deteriorated fairly consistently, and his main question is why this happened.

Rimmer's basic proposition is that Ghana's misery was very largely its own doing. Whereas many have blamed a variety of exogenous influences, including deteriorating terms of trade, fluctuations in the international market for Ghana's key exports, and, more broadly Nkrumah's own pet bugbear, ~neo-colonialism', Rimmer puts the blame firmly on the policies - or at least the actions, since policy often exaggerates the rationality of what they did - of successive regimes. In his concluding chapter, which pulls the whole thing together admirably, he pinpoints the three fundamental failings that emerged from his detailed examination.

First, 'Killing the golden goose'. Cocoa was the basis oft he Ghanaian economy in the 1950s; but Nkrumah inherited from the colonial state not only the Cocoa Marketing Board (CMB) but also the paternalistic assumption that not all the profits of cocoa should accrue to its producers. Nkrumah, in common with many western economists of the period, saw the CMB as a valid means of taxing the peasantry so as to provide funds for development. In the long-term government greed, coupled with the use of the CMB as a source of patronage and employment for the party faithful, reduced the reward of cocoa-growing so much that production was roughly halved between the early 1960s and the 1980s, and with it the main source of foreign exchange and government revenues. Rimmer concludes [p.205] that ~the Cocoa Marketing Board can be recognized as central in the economic pathology of Ghana'.

Second, ~The abuse of money'. Rimmer traces the serious consequences of establishing an autonomous Ghanaian currency, initially the Ghanaian pound, then the cedi, to replace the previous currency tied to sterling. First, by making the local currency fiduciary and non-convertible, it enabled the government to issue as much credit as it found necessary, with inevitably inflationary consequences. Second, because the official exchange rate was kept at an artificially high level until 1983, and despite occasional devaluations, the cedi became useless as a measure of real values: in 1982 the official dollar exchange rate was 2.75 and the black market rate 61.67. This strategy had very serious results. For Ghanaian exporters it meant a very small return: conversely foreign imports were artificially cheap, though the blanket licensing of imports in fact severely restricted the volume of imports. These distortions inevitably encouraged smuggling of exports over adjacent boundaries to obtain a realistic price. Taken in conjunction with drastically declining real incomes, monetary policy compelled most wage earners to take second or even third jobs to make ends meet, often in the production of food for local consumption. Rimmer concludes that' economic life in the Ghana of 1983 was apparently devoted almost entirely to satisfying immediate consumption needs.' The third main cause of economic and social decline was ~The uses of government'. The main aim of Nkrumah's strategy, which was tampered with but never fundamentally altered by later regimes, was that government should acquire and use the investible surplus of the society. Its method was to take a large share of the proceeds of cocoa production, either through the CMB or by export taxes on cocoa, and to invest this in infrastructure and industry. Industrial ventures, many of them state owned and run, were particularly wasteful, few having any comparative advantage, and most badly run at very low levels of capacity utilization. The aim of converting Ghana from an agricultural to a manufacturing economy failed disastrously. In 1983 agriculture provided 56.3 per cent and manufacturing only 3.2 per cent of GDP at current market prices.

Ghana emerges as a case study in how bad government and unwise strategies can destroy the development possibilities of an African economy. Rimmer is quite clear where the blame lies. "The political degeneration and economic retrogression of Ghana cannot be attributed to external forces.' Foreign debt was not a serious problem until the mid-1980s and overseas creditors were exceptionally generous in rolling over their loans. The terms of trade were not consistently adverse. Hence, ~For the most part the causes of Ghana's decline were internal to Ghanaian politics and society. In retrospect it is clear that economic policies were perverse from the standpoint of economic growth.' [pp. 216-217]. Only after 1983 did the Rawlings regime, faced with virtual economic and possibly social collapse, draw back and accept disciplines which, by the early 1990s, offered some hope of long-term recovery.

These are not new conclusions and were suggested in much of Rimmer's earlier work. The special value of this book is that it pulls together a vast amount of published material and gives a thoroughly coherent and rigorous analysis covering the whole history of modern Ghana. It also provides comprehensive statistical evidence, though, as Rimmer emphasizes, its accuracy is problematic. I found the ~Note on the Currency' particularly useful. The central argument is likely to be rejected by those who still cling to the proposition that Third World countries are mere pawns of the international capitalist economy. But for all others this is a compelling book which will be essential reading for all who study or teach economic development in Black Africa.
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Author:Fieldhouse, D.K.
Publication:African Affairs
Article Type:Book Review
Date:Oct 1, 1993
Words:1140
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