Ghana issues an invitation, but world is slow to respond

by Roy Wadia
Special to CNN Interactive

(CNN) -- At first glance, Asene is an idyllic village, located 90 miles (144 kilometers) north of Accra, Ghana's capital. The market is full of fresh produce, shops do brisk business seven days a week, and modest concrete homes are surrounded by a blur of red and pink flowers -- testimony to the civic pride of Asene's one thousand residents.

But Nana Ako Frimpong II, the village chief, is not a happy man. For some time now, he has been desperately waiting for investment in Asene. "The government has been telling people to invest in rural areas," he complains, "but people have not come." Investment in the cocoa-producing area could mean money for schools and health clinics. It could mean phone lines, more electricity, and better roads. It could be an incentive for Asene's young people to remain at home, instead of migrating to Accra in a search for higher-paying jobs.

A land of contradictions

Ghana: At a Glance

Population: 17 million (July 1996 est.) Languages: English (official), African languages (including Akan, Moshi-Dagomba, Ewe, and Ga) Capital: Accra Ethnic divisions: black African 99.8% (major tribes - Akan 44%, Moshi-Dagomba 16%, Ewe 13%, Ga 8%), European and other 0.2% Religions: indigenous beliefs 38%, Muslim 30%, Christian 24%, other 8% Independence: 6 March 1957 (from UK) Bordering countries: Burkina Faso, Cote d'Ivoire and Togo Life expectancy at birth: 56.17 years GDP per capita: $1,400 (1995 est.) Unemployment rate: 10% (1993 est.) Literacy: 65 percent (1992) Radios: One per 3.7 persons Televisions: One per 64 persons Telephones: One per 321 persons Average daily newspaper circulation: 280,000 (1992) Phone lines in use: 49,000 (1992) Did you know? Lake Volta, the world's largest artificial lake, is in Ghana. SOURCES: United Nations; U.S. Library of Congress; news reports

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The contradictions of Asene mirror those at the national level. Since 1983, Ghana -- which sees itself as a gateway to investment in West Africa -- has adopted free-market reforms. President Jerry Rawlings, a dictator-turned-democrat, has sold state enterprises, lowered trade tariffs, and reduced the red tape that tangled investors and entrepreneurs. The government has also embraced recommendations made by the World Bank and the International Monetary Fund. Yet, with the exception of the mining sector, Ghana's bid for international capital has foundered. Vital areas, such as agriculture and manufacturing, have drawn relatively little investment. Overall, international investment makes up less than 5 percent of Ghana's gross domestic product.

The reasons are many. Just ask Kwabene Afari, who exports pineapples from his hometown of Aburi, some 65 miles (104 kilometers) north of Accra. For years, Afari's customers could not phone him directly. First, they had to call a number in Accra. Then someone at that number would phone the Aburi post office. After that, a post office messenger would go to Afari's farm. Often, Afari would not receive the message for days. Not surprisingly, Afari lost business.

"Customers were complaining," he said. One buyer in Turin, Italy, "got fed up," recounts the farmer. "He said, 'I can't work with you anymore. It's too hard to communicate.'" In desperation, Afari recently bought an expensive cellular phone, but he still faces other problems. The water supply for his pineapple farm remains erratic, dependent on the annual rainy season and the vagaries of the El Niño weather system. And the rocky roads to the farm are full of deep potholes, high mounds, and ever-widening puddles. Bad roads in turn lead to damaged fruit, delays in fulfilling orders, and mounting repair costs for Afari's ancient tractor.

Sobering statistics, wary investors

It is the lack of infrastructure that frightens many potential investors. There are barely four phones for every thousand Ghanaians. The roads are in desperate need of repair. Electricity remains sporadic, and even large parts of Accra are without water most of each week.

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Added to this picture are the sobering statistics of more than 25 percent unemployment in urban centers, high rates of illiteracy in large parts of the country, and an average per-capita income of $430 -- the same as 30 years ago, after adjusting for inflation.

Analysts with the World Bank Fund say the government must make basic investments in infrastructure and in people, through health and education. For its part, the government points to a recent plan to upgrade Ghana's rural road system, under which plenty of money was spent. But that and other similar projects were not managed well, says the World Bank. The financial outlay contributed to Ghana's budget deficit, rising to more than 10 percent of the gross domestic product in 1996. Inflation soared as well, peaking at 70 percent before falling to the current level of around 28 percent.

There are other factors in the mix. Investors and international institutions alike have voiced concern at corruption and cronyism in the government's ranks. This is not unique to Ghana, but when coupled with the weak infrastructure, it acts as a further deterrent to investment from abroad.

Another impediment cited is the mind-set of government officials and employees who are supposed to facilitate the reform and investment process, but who often are personally opposed to it. Investors have quoted examples of civil servants who create obstacles for various projects -- obstacles that sometimes lead to the projects being shelved altogether.

Repairs at home to build a future

In an effort to help Ghana's government manage the economy better, the World Bank has established an office in Accra, with a director permanently based there. At the same time, the World Bank, working with other aid donors, has secured some $1.6 billion in assistance for Ghana, provided economic reforms remain on track. Under those reforms, Ghana's government is trying to reintroduce a value added tax (or VAT), a move that has rekindled a long-simmering controversy. When the idea was first floated in 1995, it triggered violent protests. The government, however, insists that VAT will generate much-needed revenue in tough economic times.

In his new year's message for 1998, President Rawlings warned Ghana's people of a tough road ahead, asking them to support the government's austere measures. Many, however, insist that the government should first support the aspirations of Ghana's citizens. Before investment from abroad can pour into the country, Ghana -- they say -- should invest in its own people to ensure a brighter future for investors at home and abroad.

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