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| Why Ghana Opted For SAP |
11/2/2005 |
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Why Ghana Opted For SAP
Ghana’s Decision To Implement Structural Adjustment Program (Sap), 1982-1992.
Ghana’s interaction with the IMF and the World Bank dates back to the late 1960s when the National Liberation Council (NLC) toppled Dr. Kwame Nkrumah, Ghana’s first president, in a bloodless coup d''état. The NLC became pro-IMF and revised Dr. Nkrumah’s state-oriented policies. In the 1970s, intense resistance from domestic social forces compelled successive leaders to rescind their decisions to implement rigorous neo-liberal economic reforms. Between 1983-1992, however, the military government of the PNDC turned around and accepted Structural Adjustment Program (SAP). SAP involves both economic and political dimensions. They both contain specific sets of prescriptions linked to the conditional loans of the IMF and the World Bank. The economic dimension involves such market-oriented policies as trade liberalization, privatization, and fiscal discipline. The political dimension, on the other hand, involves a process where government is structured in favor of the governed -democratization. This essay, however, focuses on the economic dimension of SAP. My objective is to assess how well the dependency theory and the bureaucratic politics model explain the PNDC’s decision to implement SAP. While the dependency theory offers a structural explanation, bureaucratic politics offers a domestic explanation to the decision. Thus, this paper focuses on Ghana’s international economic relations, particularly its encounter with the IMF and the World Bank. The essay argues that because the PNDC inherited virtually empty national coffers, economic difficulties compelled Ghana to return to the Bretton Woods institutions for salvation. By 1983, the country’s economy was in disarray and its international economic position had further weakened. Ghana did not have the necessary material base to be politically and economically independent of the industrialized West. As a result of this weakness, Ghana became integrated into the global capitalist economy, which greatly reduced opportunity for any policy maneuver.
The essay argues that Jerry John Rawlings, the leader of the PNDC, has been consistent in his determination to address the plight of the poor in Ghana. Although the PNDC’s initial response to the country’s economic decline was carved along socialist lines, internal and external socio-economic realities pressured the military junta to dance to the tune of the IMF and the World Bank. Arguably, no Ghanaian leader before Rawlings could have successfully introduced IMF/World Bank prescriptions because of the political implication of these prescriptions. Since independence, domestic social forces have been concerned about the negative impact neo-liberal economic reforms. In order to avoid domestic discontent, the PNDC succeeded in revising politically sensitive prescriptions such as devaluation, withdrawal of subsidies, and privatization. I will not assess the impact of structural adjustment for two reasons. First, the actual impact remains a contentious issue among scholars and policymakers. Second, dealing with the impact would take us far from the task of understanding the initial decision to implement SAP.
THE ORIGIN OF GHANA’S ECONOMIC CRISIS
A discussion of successive regimes’ approaches to development must necessarily precede any attempt to explain post-1981 Ghana. . At independence in March 1957, Ghana’s prospects for developments were bright and there was general optimism in the international community that an irreversible process of political, social, and economic development was about to unfold. The country was the world’s largest producer of cocoa and endowed with such resources as gold, diamond, manganese, and bauxite. These apparently ample resources facilitated President Kwame Nkrumah’s pursuit of a state-led strategy, focusing on import substitution. The result was a centrally planned economy in which free trade was highly discouraged. Indeed, Nkrumah’s Seven-year Development Plan stressed industrialization through domestic production of import substitutes. His central planning approach also included state provision of a wide range of social welfare services such as free education, health care, and housing. These socialist-oriented policies were predicated on the continuation of the post-war increase in the prices of raw materials and agricultural goods, particularly cocoa (Hutchful, 2002:9). Nkrumah’s state-led approach resulted in economic problems such as overstaffing of state enterprises, corruption, and incompetence. Since the focus was on redistributing national prosperity, the state became the “father and mother”, making it extremely difficult, if not impossible, to resist huge public expenditures. When cocoa prices fell in the early 1960s, the country’s export earnings were unable to fund these state-led policies. In this context, it did not surprise many Ghanaians that Nkrumah was toppled in a bloodless military coup on February 24th 1966.
The successor government was the National Liberation Council (NLC) under the leadership of General J. A. Ankrah. The NLC abandoned most of the industries established by Nkrumah with the support of the Eastern Bloc (Boafo-Arthur, 1999b: 47). The NLC immediately became pro-IMF and initiated Ghana’s first negotiation with the Bretton Woods institutions. Its standby agreement with the IMF covered trade liberalization, removal of subsidies, fiscal and monetary discipline, and most importantly, devaluation of Ghana’s cedi. Indeed, the NLC revised Nkrumah’s state-oriented approach to development and sought to empower the private sector to become the engine of economic growth. However, recognized professional bodies representing teachers, lawyers, and industrial workers resisted these market-oriented policies. These pressures forced the NLC to handover to Dr. K. A. Busia’s Second Republic in 1969. The Second Republic government was equally pro-IMF, and occupied itself with addressing the weaknesses in the private sector as well as reducing inflation. In other words, Busia’s approach was to use neo-liberal economic policies to bring back the economy on track. Its austerity budget of 1971 introduced taxes on imports, introduced a development levy, withdrew subsidies, liberalized trade, and abolished free education and transport. It also devalued the cedi by 44%. Again, major segments of the population were discontented and these austerity measures were cited by the military as reasons for toppling the Second Republic on January 13, 1972.
The National Redemption Council (NRC/SMC) of Col. I. K. Acheampong and F. W. K. Akuffo assumed office with a promise to capture the “commanding heights” of the Ghanaian economy. Acheampong sought to rid the country of neo-liberal tendencies. The NRC abolished the development levy, restored full benefits to public sector workers, repudiated many of the country’s external debts, and revalued the country’s currency by 42%. The intention was to put the cedi back fairly close to where it was before Busia altered the exchange rate. The early years of Acheampong’s rule focused on achieving food sufficiency through Operation Feed Yourself (OFY). These decisions won immediate popular support, but eventually worsened the country’s economic position. Some observers have contended that economic mismanagement, corruption, and incompetence of the NRC/SMC, siphoned-off the country’s scarce resources. The foreign exchange realized from the unprecedented increase in world producer prices of cocoa was largely diverted (Shillington, 1992:21). It was in this era of economic uncertainty that Flight Lieutenant Jerry John Rawlings intervened in politics on June 4, 1979, in what Ghanaians describe as “Rawlings’ first-coming”. Rawlings and his supporters established the Armed Forces Revolutionary Council (AFRC) with the intention of cleaning-up the “mess” created by the NRC/SMC. True to its promise, the AFRC fought corruption, profiteering, and mismanagement. To a great extent, the AFRC succeeded in suppressing these vestiges of exploitation before acting on its promise to hand power over to a civilian government of Dr. Hilla Limann in September 1979 (Gyimah-Boadi, 1993:6).
Dr. Limann’s Third Republic, inherited a collapsing social infrastructure, shortage of foreign exchange, scarcity of consumer goods, and weak state institutions. Mismanagement under the NRC/SMC had resulted in an era in Ghanaian social life where “destitution and despondency “ became the order of the day (Gyimah-Boadi, 1993:2), and Rawlings’s brief rule had not changed that situation fundamentally. Limann did consider seeking external assistance, including IMF loans, to resuscitate the economy. Domestic pressure groups such the Association of Registered Professional Bodies (ARPB), the National Union of Ghana Students (NUGS), and the Ghana Bar Association (GBA), once again, compelled the government to withdraw from the negotiation. As usual, these domestic groups were concerned about the negative impact of IMF prescriptions. In addition, the military concluded that the PNP was incompetent and “dull”. Little wonder that Limann’s Third PNP was abruptly ended on December 31, 1981 by another coup led by Rawlings. In what is called his “second coming,” Rawlings declared a “revolution” and established the PNDC.
GHANA’S EXTERNAL ECONOMIC RELATIONS
Successive governments in Ghana have stressed the need for domestic self-sufficiency and sought to de-link Ghana’s economy from that of the metropolitan countries. These efforts, however, have been unsuccessful. As is typical of developing countries, Ghana did not have the necessary material base to resist neo-colonialism. As a result of this weakness, Ghana became heavily dependent on external economic forces, particularly in the industrialized North. The PNDC is not an exception. As we shall examine shortly, PNDC’s decision to implement SAP reflect dependency views because the economy it inherited was heavily aid- driven and dependent on international trade. This made the country vulnerable to the capitalists’ interest.
The country’s integration into the capitalist global economy, therefore greatly reduced the possibility for any policy maneuver. As Smith (1979:249) puts it, developing countries “cannot exist without their dependence, but they also cannot exist within it”. Thus, Ghana had to follow the dictates of the Bretton Woods institutions. In short, dependency theory took as its starting point the world system and suggests that underdevelopment results from the unequal relationship within it.
The reason why leaders such as Dr. Busia would implement IMF austerity measures is because of Ghana’s weak bargaining position compared with the powerful Western economic institutions. The country had no way of dealing with its economic decline. The reliance on the cultivation of cocoa, it is argued, was at the insistence of the British colonial administration to serve industries in United Kingdom and other industrialized nations. The inability, therefore to diversify cash crop production meant that Ghana had no choice, but to follow the dictates of the prevailing international economy. Indeed, because the economy was deeply linked to the international capitalist arrangement, there is very little, if any, that any leader could do to reverse these trends. As an agricultural-based economy with emphasis on cocoa whose revenue was subject to fluctuations, Ghana was heavily dependent on foreign trade (Dzorgbo, 2001:2). Obviously, Ghana could not de-link itself from such a structural-dependent arrangement because of her inability to process most of her cash crops. It was a deliberate policy of the British Colonial Administration to make peripheral countries like Ghana a raw material producing centers and a dumping ground for surplus industrial goods produced in the Core. Stated simply, colonialism did not facilitate the development of local industries. This explains why Ghana’s processed cocoa cannot compete on the global market. Additionally, as a country heavily dependent on external sources for its machinery, manufactured items, petroleum, and other essential commodities, de-linking itself from international economic institutions would be a recipe for economic disaster. In effect, despite the rhetoric of non-alignment in their dealings with the great powers, economic and political exigencies have compelled successive leaders to seek foreign support to undertake national development programs.
When the PNDC assumed office in 1981, the country’s economy was in disarray and its economic position had further weakened. As we shall observe shortly, the PNDC was confronted with economic and political realties, which forced it to accept the economic doses offered by the twin Bretton Woods institutions. Indeed, the IMF and the World Bank were in a favorable position to assist Ghana address the economic decline. Considering the fact that there was no real alternative to dealing with the capitalists, the PNDC had no option but to burry its pride and negotiate with these institutions. By the 1980s, as Kay and Gwynne (2000:51) observe, the capitalist system became the only viable alternative of pursuing economic development. The PNDC knew that participating in the global economy meant accepting neo-liberal economic policies, which have the potential of giving the Western business firms control of Ghana’s economy. Thus, even if neo-liberal economics policies were inimical to the interest of the country, there was no need to be hostile toward the IMF and the World Bank. The military implemented its preferred economic measures during its first year in office. In the face of dramatic decline of the economy, however, these measures failed (Martin, 1991:241). Rawlings’ PNDC, therefore came to a realization that the time to seeks external support had arrived. In the absence of any credible alternative, the PNDC accepted neo-liberal policies. This move was therefore necessitated by tactical and pragmatic considerations. Key players within the PNDC realized that their second intervention in the country’s politics must produce some concrete results. When the military junta assumed office on the last day of 1981, Rawlings indicated his willingness to surrender himself for execution if the PNDC failed to deliver on its economic promises – bridging the gap between the rich and the poor. Thus, the country’s economic success was not only necessary in fulfilling this revolutionary promise, but also would help consolidate power. Rawlings was confident that although Ghana’s relations with the Bretton Woods institutions had deteriorated since the days of Nkrumah, none of his predecessors faced the economic realities the PNDC encountered, and he would be able to maintain popular support despite a major change in economic policy.
We need to revisit the statistics in order to fully appreciate the economic decay Rawlings inherited. . The economic performance of the 1970s was the worst in Ghana’s recent history. The fluctuations in world commodity prices strained the country’s foreign exchange base. By the early 1980s, as Shillington (1992:112) observed, economic hardships had intensified and became deeply ingrained in the collective memory of most Ghanaians. Available statistics indicate that between 1970 and 1983, the Gross Domestic Product (GDP) per capita fell by more than 2% per annum. Industrial output also dropped by 4.2% per annum, while agricultural production dropped by 0.2 % (Bawumia, 1998:50). Within the same period, the ratio of exports to GDP fell from 21% to 4%. Similarly, the ratio of investment to GDP dropped by 14% to 2%, real wages reduced by 80%, with earnings from exports reducing by 50% of their 1970 levels. Per capita income equally declined by 30% (World Bank cited in Brydon, 1999:368). Between 1974 and 1983, Ghana’s currency was devalued only once (from 1.15 to 2.75 cedis to US$1), and this unwillingness to devaluate the currency led to accumulation of external debt. This is because an overvalued exchange rate made production for export less profitable for major exports such as cocoa, and gold. Instead of raising exports to attract foreign exchange, Ghana had to use its dwindling foreign exchange to import such essential commodities as spare parts, crude oil, and drugs. No wonder Ghana’s debt in 1982 stood at 105.7% of its GDP (Issahaku, p.7).
These poor economic figures were compounded by several internal and external shocks that hit the country by 1983. Firstly, between 1978 and 1983, series of bush fires and severe drought reduced the production of major agricultural commodities. The bush fires destroyed both food and exportable crops such as cocoa. Ghana was only able to meet two-thirds of its own food requirement, and only Chad faced a worse food situation (Anyemedu, 1993:14). The government had to import grains on a commercial basis at a time when the national coffers were running empty. Because about 65% of Ghanaians depended on farming, mass poverty became unavoidable (Donkor, 1997116). The drought also compelled the Akosombo Hydroelectric power plant to operate under capacity. The failure of Akosombo to provide the needed hydroelectric power reduced Ghana’s export of energy to neighboring West African states further decreasing its export earnings. It also led to decrease in industrial production since power supply was rationed. Secondly, the first (1973-1974) and second (1979-1980) oil crises overstretched the economic position of both the Second and Third Republics. The second oil shock, in particular, was followed by a steep global recession, which affected the development agenda in many countries (Jaycox, 1989:36). Arguably, the only commodity that a country can depend on is oil because of its demand on the world market. Because of increases in oil prices, world producer prices for other exportable commodities such as cocoa fell as they found fewer buyers. It is worthwhile to note that between 1911 and 1978, Ghana was the world’s leading cocoa producer, controlling 40% of the market share and setting the quality standard for cocoa. By 1980, cocoa contributed about 60 % of the country’s export earnings (Jacobeit, 1991:222). Between 1977 and 1986, however, world price of cocoa dropped from 3000 pounds sterling a ton to 600 pounds sterling (Olukoshi, 1994:97). Since Ghana remained a mono-crop based economy, the decline in cocoa prices inevitably led to shortages of foreign exchange and mounting balance of payment deficits. The fall in world producer price of cocoa compelled the government to reduce domestic prices of cocoa to maintain one of its few sources of foreign exchange. The new lower prices became a disincentive to local cocoa farmers, for whom growing food for domestic sale or smuggling of exportable commodities became more attractive as a source of revenue (Bryon, and Legge, 1996:12). Indeed, smuggling to neighboring Cote D’Ivoire (Ivory Coast) and Togo compounded the government’s revenue shortage. The range of smuggling was extensive, but it was the loss of cocoa that was often complained about. Both Cote D’Ivoire and Togo offered farmers a greater share of the world producer price of cocoa than the Ghana Cocoa Marketing Board (GCMB). These neighboring countries also ensured that cocoa farmers were expeditiously paid, whereas the GCMB only offered farmers chits because of insufficient cash. The fact that Ghanaian cocoa farmers were offered 900 cedis per load in Togo and 1200 cedis in Cote D’Ivoire, as opposed to the 360 cedis offered in Ghana meant that many farmers were willing to smuggle cocoa. I it note worthy to note that between 1980 and 1981, for instance, over 15 % of Ghana’s cocoa production was lost through smuggling (Nugent, 1991:76). Smuggling led to a reduction in export earnings and resulted in huge foreign exchange problem for the country. Thus, the only way Ghana could finance her rising expenditure was by taking on more foreign loans.
Thirdly, Ghana’s precarious economic situation was worsened in January 1983 by the Nigerian government’s decision to deport about 1 ½ million of Ghanaians residing in Nigeria. These deportees were part of the over two million Ghanaians who traveled to Nigeria in the early 1970’s to take advantage of the oil boom (Boafo-Arthur, 1999b: 47). By the 1980’s, however, Nigeria was in crisis due to internal and external economic pressures. Consequently, President Shehu Shagari who was facing elections later in 1983 deported undocumented aliens as a way of reducing unemployment and invigorating Nigeria’s economy. Shagari’s decision was an attempt to avert the widespread threats of coups and discontent among the Nigerian public (Brydon and Legge, 1996:19). There is no doubt that the deportees from Nigeria worsened Ghana’s food situation as well as adding to the pressure on the collapsing social infrastructure. An international appeal for emergency relief did not yield favorable outcome since most of Ghana’s allies were still dealing with the impact of the economic recession that followed the second oil crisis. In this context therefore, Rawlings saw the situation as an opportunity to demonstrate his commitment to serve Ghanaians.
Fourthly, the PNDC’s own political survival was threatened by coup attempts in 1982 and 1983. Former members of the PNDC and its revolutionary organs, most notably Chris Atim and Alolga Akatapore staged these abortive uprisings. It was alleged that the American Embassies in Accra-Ghana and Lome-Togo funded these dissidents. Martinson (2000:144) speculates that the source of this intelligence was one Ms. Sharon Scranage, a female African-American CIA agent who served in Accra until 1985. Ms. Scranage was later convicted in the United States for having divulged CIA secret to her boyfriend, Michael Soussoudis. Michael Soussoudis is Rawlings’ cousin. The PNDC was stunned by this information and the general reaction that followed the uprising. There is little doubt that Rawlings had the loyalty of the military, but it was wiser to avoid complacency. These threats increased the political pressure on the PNDC to speed up its efforts in searching for economic remedies. Knowing that Ghana had witnessed five successful coups and several abortive ones, Rawlings realized that he had to do something about the situation.
Last, but not the least, the PNDC’s inability to attract support from its Communist East, either in cash or in kind, was a motivation for neo-liberal economic reforms. The PNDC members who took trips to the USSR, Cuba, China, and Libya in a bid to attract economic support returned, “empty- handed” (Boafo-Arthur, 1999b). The Communist East, particularly the Soviet Union (USSR) complained about the weak performance of their own economies and revealed their intention to reduce their external financial and material commitments to their allies. The USSR was in crisis because of its huge investments in technology and arms race needed to match-up with the US. Thus, the USSR had no choice but to advise Ghana to return to the IMF and the World Bank while holding on to the “revolutionary ideals”.
In all of this, one thing was certain: the PNDC inherited virtually empty national coffers. Since empty coffers cannot support the transformation of an economy, the PNDC had no choice but to return to the Bretton Woods institutions for recovery. After all, “if you can’t beat them, join them”.
THE NATURE OF STRUCTURAL ADJUSTMENT
While structural adjustment may differ from country to country and region to region, its common features include the following: liberalization of foreign exchange, import controls, withdrawal of subsidies, fiscal and budgetary discipline, and greater hospitality to foreign investors through privatization and trade liberalization. Structural adjustment is therefore a process whereby a national economy is opened through a combination of demand and supply side policies (Ibhawoh, 1999:158). It is an attempt to redirect the economy toward economic growth by addressing internal and external imbalances. These specific set of policies are linked to the conditional loans of the IMF and the World Bank. The influence of both institutions, therefore is often felt in every SAP. Just like other countries, the PNDC implemented SAP in stages. Between 1983 and 1992, Ghana implemented two major phases of SAP, locally described as Economic Recovery Program One (ERP I) and Two (ERP II). ERP I (1983-1986) was the first phase of the program, which focused on resuscitating the economy. The goals of ERP I were numerous, but essentially aimed at stabilizing the Ghanaian economy. Stabilization was intended to halt the downhill trend in the economy, particularly in the export and industrial sectors. ERP I aimed at increasing export while discouraging exports. The stage is characterized by what Donkor (1997:122) describes as the PNDC’s obsession with reducing inflation, and exchange rate liberalization as an incentive to export. In effect, ERP I was an effort to restore fiscal discipline, encourage savings and investments, and to lessen Ghana’s domestic and international imbalances (Rothchild, 1991:8). ERP II (19871992) focused on consolidating the gains made in ERP I. This phase attempted to integrate stabilization and economic reform. Medium to long-term goals were therefore set to achieve the following: an economic growth rate of about 5% per annum through increasing investment from about 10% of national income to 25%, increasing savings from 7% at the end of ERP I to about 15% by 1990, public sector reform through the Public Enterprise Reform Program (PERP), reduction in government expenditure, privatization of non-performing state-owned enterprises, and establishing a program to address the social cost of adjustment otherwise know as PAMSCAD (Donkor, 1997:124). There is no doubt that these measures were prudent but very risky for any Ghanaian government. The state-centric approach to development pursued in the 1960s and 70s made the state the “mother and father” of every citizen .The practice of “jobs for the boys”, and client-patron relationships were the major features of state-owned institutions. Most state corporations were created to avoid undue political pressures. Thus, these institutions were not intended to raise revenue, but rather to provide employment and to render basic and essential services. The absence of profit motivation made them inefficient as commercial entities. The government did not only fail to raise revue through state enterprises, but rather had to finance major aspects of their operations. By 1980s, SOEs continue to drain about 13% of the government’s expenditure. Related to privatization is Public Sector Reform, particularly reform of the Civil Service. The Civil Service was earmarked for reform because it was a classic example of incompetence and inefficiency. Since the 1960s, the Civil Service in Ghana has been characterized by pervasive corruption, mismanagement, and overstaffing. Although privatization and civil service retrenchment are necessary in reducing the government’s role in the economy, they constitute a recipe for political disaster, particularly in a centrally planning environment. Indeed, Boafo-Arthur (1999b: 49) reminds us that Ghanaian leaders who indicated their intention to implement such austerity measures were ousted by the military. Busia’s Second Republic readily comes into mind.
TOWARD BUREACRATIC ANALYSIS
It is noteworthy that SAP was negotiated at two levels: domestic and international. Individuals and institutions identified by the ruling PNDC participated in domestic discussions. The external discussion was between the PNDC’s team and the representatives of the IMF and the World Bank. It is the intention of this essay, however, to focus on the domestic bureaucratic level. The PNDC established additional institutions to complement bureaucratic units such as Ministries, Departments, and Agencies (MDAs). The stakeholders in the discussions on SAP largely included representatives of the Ghanaian bureaucracy. None of the bureaucratic units favored all or rejected all of IMF conditions (Martin, 1991:243).
In discussing the bureaucratic paradigm, however, this essay focuses on Graham Allison’s (1969) bureaucratic politics model (model III). The PNDC’s decision to opt for SAP fits into the bureaucratic politics model rather well. Thus, I ignore Allison’s rational actor (model I) and organizational process models (model II). Except to argue that the PNDC’s willingness to introduce such reforms was influenced by its rational calculation, this essay avoids the rational actor model for two reasons. First, the rational actor model would be more useful if one intends to focus on individual players with roughly equal influence. The bureaucrats who participated in the PNDC’s negotiation did not have equal influence. Second, the rational actor model would be more useful if actors operated as self-interested bargainers. Because the PNDC decision to accept SAP result from negotiation and compromise, it cannot be explained using rational choice analysis, which stresses the rational calculations of a unitary actor. Since advisers are less likely to share the same worldview of rational calculations or costs benefits analysis, what emerges, as a policy decision, is a combination of alternatives presented by various actors. There is little doubt therefore that Game Theory is more appropriate in explaining the interaction of more than one actor (Bendor and Hammond, 1992:303).
Additionally, the essay ignores the organizational process variant because bureaucrats involved in the PNDCs discussions on SAP were working to compromise rather than to defend their unit’s standard operating procedures (SOPs). Obviously, the participants in the negotiations represented various ministries and government organizations. The bureaucrats, to be sure, offered different perspectives and solutions on issues discussed, but they were not constrained by organizational rules and procedures established prior to the event. Since SAP was fundamentally about how to reform what these organizations represented, their organizational interests and preferences were either suppressed or irrelevant to the discussion. In short, SAP constitutes a decision to move away from what these bureaucratic institutions represented.
Consequently, the burden of my argument rests on bureaucratic politics. Bureaucratic politics helps in understanding how conflicting bureaucratic interests are reconciled through competition and compromise (Allison, 1969:708; Krasner, 1972:165). This makes policy a political outcome, which does not necessarily reflect a particular interest. The individuals or groups involved in the negotiation do not necessarily wield the same power. Advisors or actors with status can guide or even dictate the process whereas the less powerful may be ignored or marginalized (Redd, 2002:343). They are simply involved in the negotiation because they occupy relevant positions in the government institutions. They may be political appointees, bureaucrats or professionals (Allison, 1969:709).
The PNDC’s economic team was as intricate as the bureaucratic politics model suggests. The PNDC consisted of members of the revolution, leftist sympathizers, bureaucrats, and academics. Although the country’s economic problems were well understood by members of the PNDC, the decision on policy reforms was extremely difficult to reach. Some elements felt that poor economic performance and the threats to the PNDC’s were not enough to warrant an ideological shift. Thus, the initial years of the PNDC were characterized by struggles among the various members of the economic team and the bureaucrats as to which views were to drive the country’s economic agenda (Boafo-Arthur, 1999: 82).
Rawlings initially aligned himself with such individuals espousing variants Marxism-Leninism as Dr. Kwesi Botchwey, Totobi Quakye, Tsatsu Tsikata, Kojo Tsikata, P.V.Obeng, Dr. Joseph Abbey, Dr. Ammisah-Arthur, Chris Atim, Sgt. Alolga-Akatapore, and Brigadier Mensah-Nunoo. These individuals were respected scholars, bureaucrats, military personnel, and cadres of the revolution. Indeed, Botchwey, Ammisah-Arthur, Tsikata, and Abbey had served as professors before taking up senior bureaucratic positions. Others such as Chris Atim and Kwamena Ahwoi, were members of such revolutionary groups as the June Fourth Movement (JFM), the New Democratic Movement (NDM), the Peoples Defense Committee (PDC), and the Workers Defense Committee (WDC). These revolutionary organs were created to pursue the regime’s ideals of probity, accountability, and popular participation in national development effort. The revolutionary groups played a significant role in drafting the contents of SAP because their support was crucial for the political survival of the PNDC.
The PNDC established the Committee of Secretaries to be responsible for Ghana’s major ministries and departments. These included the Ministries of Finance and Economic Planning, Trade and Industry, Mobilization and Social Welfare, Agriculture, Foreign Affairs, Lands and Forestry, Education, and Youth and Sports. Chief directors of these ministries and departments who were career civil servants reported to the PNDC secretary responsible for the ministry. These secretaries were either members of the Committee of Secretaries (CS) and or the PNDC. The members of the PNDC could hardly exceed ten. To appreciate the bureaucratic politics involved in Ghana’s decision to opt for SAP therefore one needs to focus on the PNDC, the Economic Management Team, the Committee of Secretaries, and bureaucrats at the Ministries of Finance, Trade, Agricultural, and Employments and Social Welfare.
Once it appeared likely that SAP would be adopted, each participant sought to reduce its perceived losses from adjustment while stressing what it perceived as beneficial. Arguably, the negotiations within the government did not only focus on how to preserve the vitality of the bureaucrats and professionals, but also took into account the need to fulfill the various promises the regime had made to Ghanaians. Little wonder that the participants focused on increasing producer prices, provision of social infrastructure, and other programs necessary to mitigate the social cost of adjustment (PAMSCAD). In all of this, whether a group supports or opposes SAP depends on where it stood on the anticipated costs and benefits of such neo-liberal economic reforms (Baofo-Arthur, 1999:62).
In terms of policy preference, the PNDC could be grouped into two: “neo-Marxists” and “pragmatists”. The first group was made up of such left-wing critics of SAP as Brig. Mensah-Nunoo, Zaya Yeebo, Chris Bukari Atim, Sgt. Alolga Akatapore, Akwasi Adu, and Taata Ofosu. They were involved in SAP discussions because they are sector secretaries, PNDC members, leaders, and sympathizers of the revolution. Their leftist views reflected the various units they represented. They argued that a decision to implement neo-liberal economic policies would amount to a contradiction of the PNDC’s original ideological posture. No wonder they vociferously opposed any dealings with the IMF and the World Bank. They insisted on the need for the PNDC to hold on to Ghana’s “heritage” of rejecting imperialist policies and to concentrate on popular participation and mobilization (Hutchful, 2002:141-143). The leftists in the PNDC yearned for a return to an era when Ghana was in the forefront of the struggle to end colonialism. Consequently, they believed that major components of SAP such as privatization, had the potential of squeezing-out the domestic industries, making it extremely difficult, if not impossible, for local entrepreneurs to compete with their foreign counterparts. Privatization, they argued, would reverse Ghana’s post independence emphasis on “state-oriented” policies, which helped in reducing the exploitative posture associated with the private sector. In addition, they emphasized that liberalization of prices was not in the interest of the PNDC because price control helped to check the profiteering associated with scarce commodities. The PNDC’s initial approach to pricing was to designate basic commodities such as canned fish, sugar, detergents, and evaporated milk, among others as “essential commodities”. Special arrangements were therefore made to import these items, which were then sold at “fair” and “controlled” prices to avoid profiteering (Brydon and Legge, 1996:11). Furthermore, the opponents of IMF/ SAP insisted that withdrawal of subsidies on products was likely to increase consumer prices, which would increase the burden on the ordinary Ghanaian. These leftists felt SAP would defeat the revolutionary ideals of refocusing attention to the suffering rural population who had been ignored by urban-oriented programs of previous governments.
The other group in the PNDC’s economic teams was made up of “pragmatists” such as Dr. Botchwey, Dr. Abbey, Dr.Amissah-Arthur and Rawlings. Some of these individuals had served in various professional positions such as economists in the ministry of finance, senior officials of the Central Bank, Bank of Ghana (BOG), and others were university professors. By the end of 1982, these individuals within the PNDC felt the need to reconcile the pressures of pragmatism and revolutionary idealism. In a series of public broadcasts between 1982 and1983, both Rawlings and finance minister Botchwey blamed their leftist friends for their delay in salving Ghana’s economy. They contended that the country’s steady economic decline needed to be addressed, and that the longer the PNDC waited, the more difficult it would be to address the decline (Ahiakpor, 1991:598; Shillington, 1992:111). By January 1983, Dr. Botchwey, a staunch critic of IMF policies in his teachings at the University of Ghana revised his views and admitted that implementing SAP was necessary to promote social justice, which is central to the PNDC’s goals (Jebune and Oduro, 1993:29).
Rawlings, Botchwey, and other “pragmatists” on the economic team blamed the uncompromising leftists for the mistakes of the PNDC’s economic failures. They further indicated in their televised interviews that the government was no longer going to postpone its determination to address the country’s economic crisis. The regime was under pressure to provide relief to an economically starving population and to fulfill the promise of economic stability it had made in the heat of the revolution (Bawumia, 1998:56).
Profound cleavages and competition emerged within the ruling PNDC and among its members’ respective supporters in the society over which ideological group would determine policy preferences and directions (Boafo-Arthur, 1999:82). The struggle within the government was so acrimonious that there was a series of abortive coup attempts by the leftist elements of the PNDC in late 1982 and 1983. At the end of the game, however, the “pragmatists” led by Rawlings and Dr. Botchwey triumphed.
Neo-liberal economic reforms were accepted not only because the uncompromising “left-wingers” resigned or were forced into exile, but also more importantly, because implementing the particular structural adjustment agreement reached with the IMF and the World Bank was perceived as a reasonable compromise among the leading policy advisers on the economic management team. The initial resistance demonstrated by the erstwhile leftist members of the team compelled the PNDC and the Bretton Woods institutions to reexamine several aspects of SAP. Thus, the specific sets of prescriptions adopted by Ghana did not reflect the full demands of the Bretton Woods institutions. Trade liberalization, was revised to focus on such areas of agreement as tariffs and import licensing while privatization, which was highly controversial, was limited to non-performing enterprises in non- strategic sectors. With regard to devaluation, the PNDC and the IFIs settled on a multiple exchange rate as a transition to full devaluation of the cedi. Such a compromise was necessary because previous attempts to devalue the country’s currency resulted in military intervention (Martin, 1991: 238-239).
The decision to implement SAP therefore was the outcome of varying ability of the various participants to demonstrate their prominence in negotiation. It is arguable that because economists and bureaucrats dominated the “pragmatist” group, they were likely to back their arguments with reliable and verifiable data. It appears easier to prove the modernization impact of the global economy. As suggested by the bureaucratic analysts, advisers with high status or power can guide or even dictate the decision-making process whereas the less powerful can be easily marginalized. The consensus in the economic negotiation was that the government could not rely on domestic sources to solve the country’s problem. It is difficult to prove a counterfactual, but it is reasonable to infer that Ghana’s economy would have headed for total collapse if the PNDC had not opted for reforms in 1983. As an illustration, neighboring West African countries such as Sierra Leone, Gambia, Senegal, and Niger who opted for SAP couple of years after Ghana’s decision, did so at a time when their economies had deteriorated from bad to worse.
The PNDC had an easier time adopting SAP than predecessor governments because the impressive achievement of countries such as Taiwan, South Korea, Singapore, Brazil, and Mexico challenged the classic dependency views that countries like Ghana cannot develop within the international capitalist economy (Dzorgbo, 2001:14). Rawlings and his advisers were more optimistic about the dynamic impulse of the developing world. They often asked: how does one account for the marked difference between Ghana and South Korea when by the late 1950s and 1960s per capita income in both countries was comparable? Although Ghana’s position was weak vis-a-vis the Bretton Woods institutions, it was still possible to make the best out of the situation. Indeed, the “associated-dependent development” variant of dependency theory offered by Cardoso and Faletto (1979) suggests the possibility for development even in an unequal relationship. By 1983, therefore Rawlings conceded that the world had become more complex than classic dependency theorists such as Andre Gunder Frank (1966) and Walter Rodney (1972) sought to portray. International trade was no longer a zero-sum in which the South was exploited for the sole benefit of the industrialized North (Munck, 1999: 60). The PNDC concluded that an agreement between Ghana and the IMF could be beneficial to Ghana. Even if the IMF and the World Bank had little to offer Ghana, it was still better to negotiate with them than choosing to ignore the crisis. As observed earlier, the PNDC was able to modifying specific SAP requirements.
THE RAWLINGS FACTOR
Many observers have argued that because the head of the PNDC had no significant academic achievement, he relied heavily on his able advisers and was therefore caught within organizational and inter-agency competition. Bureaucratic analysts would assert that Rawlings could only overcome the self-serving interests of his advisers with great difficulty. However, such an assertion, to say the least, is untenable. The PNDC implemented SAP simply because it was in the leader’s best interest. Rawlings indicated that he was running out of patience with the “populist nonsense”, which must give way to “scientific sense, whether popular or not” (Bawumia, 1998:56). Rawlings was interested in showing results, and was not a man to be tied to ideological argument. This is why it is untenable to explain the decision to opt for SAP without citing the leader’s preference for neo-liberal economic reforms.
There is little doubt that Dr. Botchwey and other “pragmatists” caught Rawlings’ attention. They became the lead players in the discussion and their influence shaped the contours of the government’s subsequent interaction with the Bretton Woods institutions. Contrary to the bureaucratic politics analysis, they succeeded because their views coincided with Rawlings’ personal values. No wonder the “anti-IMF” elements such as Chris Atim and Akatapore were marginalized because they disagreed with the PNDC leader. Indeed, these uncompromising neo-Marxists were marginalized from the negotiations on SAP while the “pragmatists” or “reformed Marxists” who agreed with the leader re-emerged in similar roles year after year (Shillington, 1992:136).
The military came into power accusing the Third Republic government of incompetence and inability to improve the situation of the rural poor. It was for these views that “Junior Jesus” Rawlings intervened in Ghanaian politics. Rawlings had no justification, whatsoever, for failing to rescue Ghanaians for the second time. The military junta’s delay in ameliorating the plight of Ghanaians could result in both rural and urban discontent. Even without democratic elections, the PNDC needed rural and urban support to survive in office. The Association of Recognized Professional Bodies (ARPBS), the Ghana Bar Association (GBA), National Union of Ghana Students (NUGS), and others, while condemning the military’s human rights records, traced economic hardships to the NRC/SMC era (Dzorgbo, 2001:293). Although most of these interest groups had always opposed IMF policies, they came to a realization that something had to be done.
The military’s polemics of probity and accountability had found widespread favor, but without economic and social progress, they were meaningless. Suffice it to add that the plight of the rural population in the early 1980s was the worst in the country’s recent history. Although the military was unwilling to please the smaller urban population, it could not in any away ignore the needs of the rural majority. The PNDC’s success and stability relied heavily on rural support. Knowing that the praise and blame rested squarely on the leader, Rawlings could not have cited bureaucratic hurdles as rationale for failing to address Ghana’s economic decline. Asking critics of SAP to halt the “populist nonsense” was a reminder that the leader’s values could not be obscured by bureaucratic politics. Indeed, responsibility for failure to act would rest on the leader of the PNDC and not the bureaucrats. Leaders do rely on their own judgment in accepting or rejecting views, and are aware that, as Redd (2002: 243) noted, some advisers are not motivated by genuine interest to help the leader to decide. Above all else, a leader’s calculations are based on the political consequences of policies. Although the imperatives of organizational behavior limit a leaders ability to implement a policy, they do not in any significant way extend to policy formulation (Krasner, 1972:178). With regard to implementation, bureaucrats could facilitate or frustrate specific policies. As the founder and leader of the military government, Rawlings could not in anyway be considered merely primus inter pares. His advisers served at his will and only asked for advice whenever necessary. The dismissal of Ms. Aanaa Enin from the PNDC in 1989 is one example. The admission of Mahama Iddrissu, Justice Daniel Francis Annan, and Kojo Tsikata, who were not part of the revolution until much later, is another illustration. Indeed, Rawlings had the ability and power to reorganize the PNDC in any manner, giving him in fact total control and influence on the policy-making process. The PNDC leader was no doubt the “king” in the discussion on whether to accept SAP. Since Parliament was dissolved and the Judiciary organ of government was dormant, Chairman Rawlings had no effective political competition within the government. As Hutchful (2002:146) rightly conveys, the meetings of the PNDC were not held to carefully deliberate on policies, but rather to ratify Rawlings’ decisions. Rawlings’ perspectives influenced the weight attached to specific issues by the economic team. Hutchful (2002:145) demonstrates this viewpoint when he reminds us of the view among the IMF and World Bank staffs that, “all that was needed was Rawlings’ personal commitment to ensure that a policy will be carried”. In all of this, the contention is that Ghana opted for SAP because Rawlings felt it was a good idea and the economic team shared this view.
Thus the bureaucratic politics model obscures the power of the leader in selecting his advisers and in defining their influence in the policy-making arena (Krasner (1972:160). Rawlings’ experience with the Ghanaian bureaucrats and economic experts makes one reject the claim that it is extremely difficult, if not impossible for a leader to control his advisers. The PNDC without Rawlings can be equated to a “ Hamlet without the Prince”. Even the formation of the economic management team to discuss SAP was a clear indication that the leader could go outside the regular bureaucracy to brainstorm on economic reforms. If a leader has an interest in an issue, his values are more likely to shape the outcome. The Ghanaian case suggests that the leader could look elsewhere for alternatives or may even rely on his or her own accumulated experience to decide on an issue. It is when there are few areas to exploit for views that the leader is entangled in a bureaucratic web.
CONCLUSION
This essay has argued that the PNDC’s decision t to accept SAP was strengthened by the nature of Ghana’s economic crisis. Although the PNDC did not intend initially to adopt neo-liberal reforms, Ghana’s sinking economy compelled the military junta to establish relations with the IMF and the World Bank. However, the particular set of SAP implemented did not reflect the full demands of the Bretton Woods institutions. The essay did not discuss the impact of SAP on the Ghanaian economy because it remains a contentious issue among scholars and policy makers. It is noteworthy, however, Ghana achieved an average GDP growth rate of about 5.5% in the decade following the introduction of SAP. In this essay, two models have been tested: dependency theory and the bureaucratic politics model. The essay has examined the extent to which each of these models explains the PNDC’s decision to implement SAP. The inherent weaknesses of both models, however, serve as caution against any attempt to rank one explanation above the other. The bureaucratic analysis, for instance supplements, but does not supplant the dependency analysis. Little wonder that the leader’s values and interests have been cited as another possible explanations for the decision.
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YAKUBU AZINDOW
PhD Program
Dept. of Pol. Science
Univ. of Massachusetts
Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.
Source:
Azindow, Yakubu
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