‘The clock is ticking’: Ghana’s new president tries to kickstart urgent economic reforms
Politics runs through the Akufo-Addo veins, competing for attention with the red and white blood cells. Like an elemental force, political campaigns have dominated Nana Akufo-Addo’s life. From his law firm’s modest offices in the Adabraka neighbourhood of Accra, he and his colleagues took on military regimes in the 1970s and 1980s, then graduated to fighting multiparty elections after the return to constitutional rule in 1992. In some ways, winning the presidency last December could have proved an anti-climax.
Akufo-Addo’s response has been to throw himself into yet more campaigns – this time for sweeping social, judicial and constitutional reforms. The government has already allocated funds for the launch of its promised free secondary-education plan, and the first class of students under the scheme will enrol in September.
In the next few weeks, attorney general Gloria Akuffo will nominate an independent special prosecutor to launch and investigate cases against officials and companies that defraud the government. The chosen candidate is to be politically independent and will have to win support from both main parties in parliament, Akufo-Addo says.
Next year, the government is to create six new regions and expand the number of elected officials running the 216 district authorities in a bid to devolve and decentralise government. Akufo-Addo’s overarching goal – the one on which he fought the December 2016 election – is his most ambitious: to change Ghana’s colonial and extractive economy and replace it with industries based on its farms and mining production, as well as a strong information technology sector.
Few countries in Asia or Latin America have made that transition under a pluralist multiparty system. Those countries in Africa – such as Ethiopia and Rwanda – that are making such bold economic changes have authoritarian governments. Authoritarianism is not an option in Ghana, insists Akufo-Addo: “We have our own history and that is informing the decisions we are taking […]. The opportunity for people to express themselves is very strong.”
Arriving at that shining city on a hill – or Flagstaff House, as the presidential office is known in Ghana – Akufo-Addo quickly drew up his government, appointing top ministers days after his inauguration on 7 January. Controversy started as the list of ministers grew longer and longer.
AN END TO PERKS
It is now up to 110 ministers and deputies, the biggest government in the country’s history. Critics such as Franklin Oduro of the Ghana Center for Democratic Development ask how this chimes with a president committed to cutting wasteful spending and reducing the role of the state over the next four years. Top officials in Ghana get houses and luxury cars as part of their salary packages, a perk the new government said it plans to end.
Akufo-Addo defends the appointments stridently: “The test will be performance,” he said in Geneva, where he spoke at the Africa CEO Forum. “If we deliver on the programme that people elected us on, the brouhaha about the number of ministers will quickly die down.”
After winning the presidency with the biggest margin of victory in two decades, Akufo-Addo argues he and his team have a mandate for radical change. However, the rumbling financial crisis in the country and its sprawling civil service have cast a long shadow over the government.
Ken Ofori-Atta, the soft-spoken investment banker-turned-finance minister, calmly lists the damage to public finances. Debt doubled over the past decade: by the end of last year, it was 74% of gross domestic product (GDP). Meanwhile, the economy was growing at just 3.6%, its slowest rate since 1990. By last December, the budget deficit was up to 10.2% of GDP, almost double the 5.3% target agreed by the last government with the International Monetary Fund (IMF).
That means about ¢7bn ($1.5bn) of the spending was unbudgeted. Somehow, the outgoing government had sneaked that past the IMF, which had announced the implementation of its programme in Ghana was “broadly satisfactory” just weeks before elections in December. When the spending overrun emerged in February, some investors in Ghana’s sovereign bond sold up, and yields climbed 1.7%. The cedi also dipped against the US dollar.
AN EYE ONTHE BIG PICTURE
After getting good reviews for his budget, read in parliament on 2 March, Ofori-Atta was more sanguine about the economic prospects, telling The Africa Report it would take about a year to get the economy back on track. He reckons that growth should almost double this year to 6.3%.
Clearing debts and boosting revenue will take priority over increasing spending, says Ofori-Atta. Treasury officials will work closely with local banks on how to restructure the government’s domestic debt, stretching out maturities and cutting debt service obligations in the short term.
As they plot their reform strategy, Ofori-Atta and vice-president Mahamudu Bawumia, who run the government’s economic team, are keeping a watchful eye on the biggest picture, earnings from the country’s three main exports: cocoa, gold and oil. Although the gold price could rise amid global political uncertainties and most forecasters reckon there will be at least a 20% boost to the oil price this year, the crash in cocoa by more than 30% since last year is concentrating minds. Neighbouring Côte d’Ivoire, the world’s biggest cocoa producer, has already revised its budget; Ghana, the second-largest producer, will have to make its own adjustments.
For now, government morale in Accra is high, still buoyed by the popular mandate issued last year. But public opinion could prove very fickle if people do not see improvements soon. As a poster in Ofori-Atta’s office reads: “There is a limited time window for reforms – and the clock is ticking.”
For corruption to feature would be a sign of defeat
TAR: What are the implications for Ghana and Africa from this increase in authoritarianism and nationalism around the world?
Nana Akufo-Addo: We have our own history, and it is that history that is informing the decisions we’re taking today.
We began our histories in authoritarian states. Ghana entered independence as a multiparty state, and within three or four years we had become a one-party state supported largely by the Preventive Detention Act, which decimated the opposition.
Many fled into exile. Those who couldn’t run away ended up in jail. This set in motion a series of events that have really marked Ghanaian history: the coup of 1966, the coup of 1972, the coup of 1979. So over a period of about 20 years, you had a series of four republics.
The consensus that emerged out of all of this, for the overwhelming majority of the Ghanaian people, is that we will be better off as a multiparty constitutional state – individual freedoms, open society and the rest. And so far, that compact, which was made in the beginning of the 1990s, is being maintained in Ghana. We’re finding a better context in which to preserve the unity of our state and stability and also to improve its governance and the management of its economy. So, maybe the events in Ghana are bucking the worldwide trend.
Global trends will impinge [on us] because we are all part of one interdependent world. But I believe that at the end of the day even in the West – in Europe and in America, where these phenomena are occurring – [authoritarians] will not succeed. We’re going through difficult economic times, there’s hardship in our country. But I believe the Ghanaian people are comfortable in their skins now because there is the opportunity for people to express themselves and take their own decisions.
Your policies speak of economic modernisation and an industrial policy. Will you have to get tough with companies that have vested interests in the status quo?
It’s clear to us that if we don’t make a concerted effort to transform the structure of our economy, to move away from this raw material-based economy, we will continue to wallow in mass poverty. Our policy will be consistent and we will expect the economic operators to comply. We have a mandate for the policies, and we will be clear about the rules and enforcing them. On corruption, for instance, if it was to become a feature of this government, that for me would be a major sign of defeat.
We’re going to set up this independent prosecutor’s office. Between now and three months’ time, it will be up and doing. We will give it the powers and the resources to do its work. We’re not saying that the special prosecutor in itself will solve all the problems of corruption. If we then come back to open tendering and a more transparent, competitive approach to government procurement, that in itself will minimise a lot of corruption. Coercive sanctions will be another step.
Why is it that West Africa unites on political matters, such as Yahya Jammeh’s refusal to accept the electoral verdict in Gambia, but the region is far less economically integrated than either East or Southern Africa?
In West Africa, authoritarian regimes were not able to deliver on the promise of independence. In many cases, our economies went backward. That’s one of the main reasons West Africa woke up to the need to open up our societies and have a more credible system of government. For the first time since independence, all 15 governments in West Africa are democratically elected. I think that it provides us with a better framework to tackle the issue of integration.
In Alassane Ouattara in Côte d’Ivoire and Roch Marc Kaboré in Burkina Faso, you sense it. These are people who have a mandate to take such decisions, and it will speed up regional integration.
What we haven’t had in West Africa – unlike the East Africans and the Southern Africans – are these regional projects. Let’s say infrastructural projects – a common rail system, roads that are connected through the various countries. I think that is the next phase we have to look at – developing jointly our resources.
What difference do you think Morocco’s admission to the African Union (AU) will make?
It will give us a truly African organisation. That, in itself, is important, that we now have a continental organisation which encompasses the length and breadth of our continent. Nobody is left out. So it becomes a more representative model; it becomes a more legitimate body. Morocco brings a lot to the table. It’s a relatively developed part of the continent. It has a long history of engagement in African development. […] There are also the implications of a lot of the conflicts in the Sahara, the Polisario, etcetera. These matters, I personally believe, are better sorted out within the context of the AU.
You have said you want to devolve and decentralise power. Will this mean limiting the power of the president?
I’ve spent the first month or two trying to make a government. But I also insist that we have to look at the arrangement of powers in our constitution between the executive – especially – and the legislature. I am instinctively for a reordering that will establish a greater balance. That is a task that we’re going to undertake: to reorder the distribution of powers in such a way that we get a more effective or accountable parliament against the executive.
The powers of the parliament are relatively limited. In our parliament, private members cannot bring money bills. That’s a major defect in the structure of parliament. A parliament that doesn’t have control over the exchequer, is that really a parliament? You could only bring a money bill with the authorisation of the minister of finance. Those are the kind of measures that we’re going to have a look at.
You are seen as quite a close ally of President Ouattara. Does that mean there’s more likelihood of an early resolution of the border dispute?
I think the initial discussions that have gone on between President Ouattara and myself have established one important fact: no matter the outcome of the court decision, we have to work together – first of all to implement the decision and to continue to cooperate for the benefit of our countries. Côte d’Ivoire is our western neighbour; we can never afford periods of tension with it. If possible, we can find common ground and then march forward. And in this dispute, there’ll be no effort on our part to abort or to curtail the judicial process. We’ll go to the end, we will see what it is.
The court has now set September for its ruling. We will wait for that ruling. But it doesn’t stop us from continuing to talk across the border, and it doesn’t stop us from wanting to show to the Ivorians our desire for cooperation and solidarity at all times.
From the April print edition