Ghana and the World Bank@50

By Isabella Gyau Orhin
It was an evening of exchanging pleasantries, with handshakes and hugs, and meeting of old friends on March 3, 2007. The venue was the House of the Country Director of the World Bank in Ghana, Mr. Mats Karlson. The President of the World Bank Mr. Paul Wolfowitz was in the country to take part in Ghana’s 50th independence anniversary and all the people who ‘matter’ in the country had been invited to dine and wine with him.
As wine and Champaigne glasses got busy and the Gonje band provided music, Finance Minister Kwadwo Baah-Wiredu and Wolfowitz agreed that Ghana and the bank have been have had relations for about 50 years and this called for a reflection of Ghana-World Bank relations over the past 50 years.
Ghana’s relationship with the World Bank took off in the late 1950s during the first republic when it supported the country with the construction of the Akosombo Dam.
During the Second Republic headed by Dr. Kofi Abrefa Busia, the relationship was reportedly strengthened.
The World Bank’s relationship with the country however was not always a pleasant one. For instance, some of the military heads of states that ruled the country in the 1970s did not see eye to eye with the Bank and called for the abrogation of all forms of repayment of loans acquired previously.
In 1983, Ghana made a U-turn and reconnected with the bank following a devastating drought that brought about famine and an inflation of about 122 percent, the highest ever.
This new relationship resulted in the Economic Recovery Programme and the Structural Adjustment programmes. (ERP/SAP).
From 1983, Ghana became a test case of the efficacy of the World Bank and the IMF's stabilization and adjustment-based lending policies. This was with as one writer puts it “deregulated currency, liberalised trade, slimmed down state-owned enterprises and strengthened bureaucracies as prescribed by the lending institutions.”
After 13 years of the launch of structural adjustment, Ghana came to grips with the high cost of adjustment on its people when it complained to the visiting World Bank President James Wolfensohn and his wife Elaine and four top officials in February 1997 that it was facing problems with the implementation of the programmes.
''These adjustments have been difficult, but our ability to absorb the pain has been the reason we have been able to move thus far,'' Says the then Finance Minister Kwame Peprah.
Ghana’s President at the time Jerry Rawlings also had his own headaches about the adjustment programmes.
At a meeting with Wolfensohn, President Jerry Rawlings said Ghana's budget had come under severe strain from the rising expectations of the majority of Ghanaians. This, he explained, now made it difficult for the country to generate adequate budget surpluses to service its foreign debt and meet other financial obligations.
The amounts Ghana spent servicing its foreign debt went from 13.2 percent of its exports in 1980 to 24.8 percent in 1994, according to the World Bank's 1996 World Development Report. In the same period, the debt increased from just fewer than 1.4 billion dollars to close to 5.4 billion dollars, according to the same source.

According to an IPS report, Rawlings said that Ghana, like some other SAP-applying developing countries, now faced a dilemma: how to meet the rising expectations of its people and, at the same time, the objectives of the adjustment programme.
In a tacit admission of the lack of achievement of some of the objectives of the programme, Peprah said: ''The same issues are still with us as they were in 1983 when we had to explain them to the people.''
These problems include high unemployment, which government sources put at about 20 percent of the active population while the opposition at the time claimed that it was as high as 35 percent. They also include inflation -- reduced from 71 percent in January 1996 to 32 percent by yearend, but still short of the government's 1996 target of 20-25 percent.
Wolfensohn said in a pre-departure press briefing during his 1997 visit that the basic solution to Ghana's problem of macro- economic instability was for the government to rein in inflation. ''And the best way to do that is to make sure that you don't overspend,.”
Fast forward to March 2004, James Wolfensohn paid another visit to Ghana and if the first one was to assess the impact of adjustment programme, then this was to assess, the impact of the Poverty Reduction Strategy Paper (PRSP) and the Highly Indebted Poor Country’s initiative (HIPC) programmes.
He told Ghanaians that it is wrong for people to place all the problems of third world countries at the doorstep of the Bank. Answering questions at a meeting with students of the University of Ghana Wolfensohn said, “I have no doubt that the Bank has done some good things and I have no doubt that the bank has made some mistakes.” “Ghana was at the same level of development with Korea some forty years ago, they all went through the same programmes but let us ask what happened.” He cited the case of 10,000 ghost names out of 60,000 on the pay role of teachers in Ghana as a clear case of corruption in third world countries.He said while the accusations against the Bank may have an iota of truth, there is no doubt that corruption has played no small part in the impoverishment of the African continent.“We are prepared to change but the system of leadership is yours,” he said.
Wolfensohn also said Ghana has the potential of reaching the Millennium Development Goals than any other country and can become black star or shining star of Africa.
He said the goals set out in NEPAD are not from the Bank but from African leaders themselves who have resolved to fight corruption, have a transparent financial system and strengthen the capacity of its people.
Wolfensohn also said there is no need to debate the image of the Bank, which according to him has changed over the last eight years.
Earlier at the Ghana Institute of management and Public Administration where the fifth Development Dialogue series took place, the Deputy Executive Director of the Centre for Democratic Development (CDD) Dr. Baffour Agyeman-Duah said in spite of the World Bank’s insistence that it has good intentions for poor countries, there are many people in Ghana who believe that the removal of subsidies on social services and the prescriptions as well as the conditionalities of the Bank has contributed in no small way to the state of poverty in Ghana. Referring to a Ghanaian Times Article written by a former employee of the Bank, Sena Gabianu on the image of the bank in Ghana, he said the intended privatization of water over the past two years and the privatization of the Ghana Commercial Bank have given the Bank a different image in the country.Dr. Baffour Agyemang-Duah also said there is the need to involve poor people in the drawing up of poverty alleviation programmes.“An open environment is a panacea for development,” he said adding deepening the involvement of poor in problem definition and dialogue can go along way to curb poverty.”“Results will be much better if beneficiaries are kept in the knowledge of what is happening,” he said.He said it is the wish of civil society that decentralization process be put on a fast track to ensure good governance and accountability.
He said the focus now should be on how the Bank can help alleviate poverty and not a debate on its image.“Our focus is on giving opportunities to poor people or putting opportunities in their hands in order to help them.” This he said is reflected in the Bank’s support for the Ghana Poverty Reduction Strategy (GPRS) and the Comprehensive Development Framework (CDF).The CDF concept was an attempt to minimize the weaknesses inherent in the World Bank and the International Monetary Fund (IMF) development programmes to developing countries.
At an Evaluation of the CDF in Ghana in June 2003, a renowned Economist Tony Killick called on Ghanaians to say no to the World Bank and the IMF if their policies did not suit the country.
“Aid dependency does not have to mean donor domination,” he said.
At a media interaction in July 2003, the World Bank officials in Ghana reported that it has since independence invested about four billion cedis into the Ghanaian economy with an outstanding debt of 3.7 billion cedis at the time.
Since that time, a lot has happened in the relationship between the World Bank and the country. Official say Ghana has benefited immensely, for instance, they argue that without the assistance of the bank, Ghana would not have been able to pull itself out of the economic doldrums in the 1980s.
The debt relief under the HIPC initiative, the over 100 million grant for improvement of urban water supply, project with traditional authorities, traditional medicine practictioners, the development market place programme for youth, business incubation project with Busy Internet etc. are
On the economic front, Ghana has made some giant strides compared to the 1980s and 1990s.
On the homepage of the World Bank, The Country Director of Ghana Mats Karlsson reports that the last five years brought higher economic growth (6.2 percent in 2006), after a steady two decades of moderate 4 percent growth. Inflation is lower (10 percent, down from 40), and so are interest rates (15 percent, down from 30), and poverty (33.4 percent in 2005, down from 39.5 percent in 2000, and 51.7 percent in 1990.”

Those statistics, combined with strong improvements in business climate and the democratic process, civil liberties and freedom of the press, indicate Ghana may be able to halve poverty before 2015.

Wolfowitz has however urged Ghanaians not to be complacent with the economic growth obtained so far.
To him Ghana could have done better. On his arrival at the airport on March 2007, he said “I think if we are honest with ourselves, we would say that Ghana’s economic performance in the first years was disappointing and not what the people here wanted, but I am very pleased that in the last 10 years or so, Ghana has become one of the stronger performing African economies. It has come about, I think, through attention to human development, through attention to good, sound economic policy.”

While civil society groups acknowledge the positive role the bank has played in the country’s economy, it believes Ghana would have done better if it had been more transparent in the past.
The Head of the Economics Centre of the Institute of Economic Affairs (IEA) Dr. Kwabena Anaman in an interview with Public Agenda said the Bank has been criticized for being slow in incorporating environmental concerns into their sponsored projects.
“Although they do that now, this has affected projects in the past,” he said.
The Coordinator of the Centre for Budget Advocacy, Vitus Azeem says there is no doubt that the World Bank has contributed positively to the economic development of Ghana. “The huge resources for essential infrastructures like roads, tertiary institutions and hospitals could not have been secured without the support of the World Bank and other donors,” he said adding, “However, the focus of the World Bank’s support and the conditionalities that go with such support have had negative impacts on the lives of the vulnerable and excluded in society. “
According to him, Cost recovery and cost-sharing policies, redundancies, etc. have caused pain and suffering in several families and households.
Also, the emphasis on macro-economic stability as the key indicator of economic advancement has diverted attention from patients being left to die at hospitals, children sitting on the floor in schools without teachers, and corruption.
To the World Bank and other like-minded donors, good governance means opening up our economy to all sorts of imports, he said.
“We welcome the World Bank’s support but it should only focus in ensuring that we use the support for the purpose for which it is meant,” he said.
Meanwhile President Kufuor on independence day urged African youth to stop risking their lives on perilous journeys to Europe because their countries needed their dynamism, energy, creativity and dreams for development. He said Africa was marching forward with a better avenue for financial gains than anywhere else, adding that the future of the continent was in the hands of the youth.
"This is your heritage," declared the Ghanaian leader, current chair of the African Union.
Source: Public Agenda Ghana