Tag Archives: Ghana

From Frank’s Taxi Backseat: Lessons on Ghana — Part 2

Women farmers in Ghana. (Photo: US Embassy, Ghana)

Read Part 1 of this series.

“So, sir, married or thinking of it?” Frank asked me.

He seemed shocked by my negative response. But after I had proferred a few reasons why, he became more understanding. However, I did not expect my responses to prompt the conversation to take the turn that it did:

“… I see. I, too, was raised by a single mother and I think that I understand what you are saying. The situation in Ghana is not favorable to women at all, sir. My mother raised my younger sister and me after my father left the family. Just like that – he woke up one day and just left! Simple. I woke one morning to find my mother crying; I was 8 years old. She told me that my father had left. For a child, like I was, it just sounded… normal. I do not think that I understood the true meaning of what she had said or of why she was crying because of it. I just wished for her to stop crying – that’s all. The reality of it all became clearer, as I grew older.”

“Have you seen him since?” I asked.

“No. Never since then. It was very tough, sir. I witnessed the hard times that my mother went through, as a single mother of two. At times, it was almost depressing. We lived in a rural community, where most people survived by farming on their lands and rearing their cattle. In our culture, land possession is handed over from fathers to sons. My mother had to struggle constantly to maintain possession of the land that was left by her father after he died. She fought mainly against her uncles, my late grandfather’s brothers, and her male cousins, my uncles. They all wanted possession of the land and tradition was on their side, even though the courts disapproved. It was very nasty. In the end, tired of all the hassles and to get some peace of mind, my mother gave away a significant part of her land. She gave up. Fighting over the land was taking so much out of her. She simply decided to give them enough of the land, so that they will leave us alone. What remained was just enough for her to farm for enough food for us to eat. That was the year when I decided to move to Accra. I had to find a way so that the family could survive.”

Frank had my undivided attention. He had broached a topic that was made prominent in global development circles by Peruvian economist, Hernando De Soto: the fundamental importance of land ownership on the economic performance of individuals. Also, he was describing a timeline in his life that I had witnessed so often in the lives of numerous others in my native Cameroon.

“After two years in Accra, I had saved up enough money to bring my sister over. I sponsored her studies at a vocational school, from which she graduated with a certificate in secretarial work. She began working as an assistant to a prominent Accra business man…”

He paused rather lengthily.

“He was married, and yet took a liking to my sister. He never stopped making advances to her, even as she repeatedly declined. Eventually, he became more assertive… she got involved. What else could she do? She needed the job and the money. I only found out about everything after she got pregnant and informed me about it. My nephew is now 2 years old.”

“Did she inform the business man, her boss, about the pregnancy and their son?” I asked.

“No, sir. If he realizes that the child is his, she’ll lose her job. He’ll find need to get rid of her, for the sake of his family, his reputation, and also because he knows that he can get away with doing so. When the pregnancy became obvious, she told him that the pregnancy was from her boyfriend, even though she never had one during that time. He lost all romantic interests in her ever since. She is no longer the person that I once knew. She goes about her daily business, but that experience has made her a very different person. It saddens me alot. Our women have a very hard time in this society, sir. Maybe, I am just too sensitive about it all because I was raised by women? Anyway, yes, marriage is not a joking matter. It is a very serious decision.”

I had just heard instances of social marginilization of women that bore significant economic consequences. Both in a rural and urban setting. In the rural setting, Frank’s mother’s legal claim to inherited land was called into question by traditional norms and this bore negatively on her economic performance. In the urban setting, Frank’s sisters faced limited employment opportunities and felt compelled to make certain compromises that have irrevocably altered the course of her life. Neither one of these women had the full benefit of a major aspect of a free-market economy: self-determination.

This benefit, or the lack thereof, is lacking among women in general on a global scale. The only difference comes in the degrees of variation of its absence in the lives of women in different regions of the world.

From Frank’s Taxi Backseat: Lessons on Ghana Part 1

The Ghanaian flag flies in front of an oil rig.

Taxi drivers’ opinions usually make for reliable surveys. They run the cities – literally. So, to get a better sense of a town, or city, or region – to better discern the noise behind the noise – I’ll recommend the opinions of cab drivers. It’s an approach that has consistently stood me in good stead in different countries, on different continents. I am back to my old tricks in Accra, Ghana, where I am spending a few days on program management and program development with recent and current CIPE partners. My daily cab driver, while in Ghana, is Frank Addo. Oblivious to it, Frank has been providing me with lessons on Ghana’s political economy as we’ve been driving across Accra.

On our first day of business, I mentioned the fact that Ghana is hailed, in many regions of the world, as a beacon of democratic stability in Africa. Before I could finish making my point and asking for Frank’s opinion, he was snickering dismissively. The beginning of his response was proverbial:

“Sir, you know … in a class that has nothing but ‘F’ students, the ‘D’ student comes off as a genius. In relative terms, Ghana is doing well enough, but that is only because the bar has been set so low. In absolute terms, there is still a lot that we Ghanaians have to improve on. So, those who hold such an opinion of Ghana are only pleasantly surprised by our mediocrity compared to the outright failures of our continental neighbors.”

I pointed out to Frank that since 1993 the country has built a track record of five effectively democratic presidential elections, and two changes in political power between the major parties: the New Patriotic Party (NPP) and the National Democratic Congress (NDC). He immediately saw where I was headed with my response and interjected:

“Sir, what you are mentioning so far are the minimal requirements for an orderly society. The fact that people can vote, and their votes will be counted, says little about how effective the society as a  whole is being managed … ”

I will wager multiple months of my salary that Frank had no clue that he just reminded me of a fundamental CIPE tenet: democratic elections are at most only as important as democratic governance. In other words, the habit of democratic elections is given most credence when accompanied by that of democratic governance. Frank continued:

” … there are many serious challenges to Ghana. This oil business, the drug problem, unemployment, poverty, and many others! Politics in Ghana has always been tough and rough, but it is now getting out of hand. I suspect this oil thing is making matters worse. Just yesterday, at a biometric registration center in the Odododiodio district, NDC and NPP supporters came to blows with broken bottles, stones, and knives. Two prominent members of the NPP, Abu Jinapor and Ursula Owosu, were attacked and had to be hospitalized. Also, the NPP presidential candidate, Nana Addo, has been inciting violence with his slogan ‘All  die be die‘. Ghana is now a major hub for the global trade in cocaine – it comes from South America, through Ghana, to Europe. On a regular basis, there are scandals about the involvement of government officials in the cocaine business. When you look at the poverty and unemployment levels, and you add this cocaine thing to the whole equation, what do you think will happen? No sir, many of us here in Ghana are very worried …  very worried!”

I asked Frank what the link was between Ghana’s recently discovered oil wealth and the worsening political discourse in the country:

“Politics has become more bitter, more personal … it was never like this. It was tough, but not wild like it is now. In Ghana, we understand that the oil was discovered back when the NPP was in power. But presidential elections came and the NPP lost to the NDC. So, oil production started after the NDC was in power. Ever since, politics has become a ‘do-or-die’ contest, since each side wants to preserve power by governing during an oil boom period. Why do you think that the NPP presidential candidate has a campaign slogan, ‘all die be die’, which means that either he wins or people will die?

I found myself nodding as Frank spoke. I asked him how the other issues that he mentioned challenge democratic progress in Ghana:

“Sir … these things are all connected. Ever since this oil business started, things are becoming more expensive in Ghana. Everything! Poor people are going to be poorer. Very soon, people without work will look at this drug business and get into it. If government officials are already in the cocaine business, then what more of the poor people, who have less? Our politics has always been along tribal lines, which is why it has always been rough. Now, oil production is making our politics worse. Poverty is still a big problem, but things are becoming more expensive. Then there is this drug or cocaine nonsense that is a huge problem. Sir, we worry a lot! We worry!”

I had stopped nodding long since. I was steadily looking outside the window, inhaling thick plumes of carbon monoxide from the exhaust pipes of the massive fleet of decades-old vehicles in Accra’s traffic. I wondered whether Frank had ever heard of the ‘resource curse’, because he just described some of its characteristics. As if to prove the point in all that he had told me, Frank switched the radio channel to one of Ghana’s numerous radio talk-shows. Nii Lamptey Vanderpuijt, an NDC presidential aide, and Abu Jinapor, the prominent NPP party member who was physically assaulted a few days prior, had called into the radio show. For the following ten minutes, there was nothing but a back and forth of baseless accusations, crude insults, and ad hominem attacks. The discourse was coarse and the venom from both ends was palpable.

Democratically, Ghana may not be far along enough just yet, for significant democratic backsliding to become manifest. After all, a few weeks ago, Mali was considered a thriving democracy as well.

The logic of corruption

Taxicabs in Ghana are recognizable by their yellow-painted fenders. (Photo: Facebook user via Tripadvisor.com)

After a pleasant evening at a popular restaurant in Accra’s East Legon section, a bunch of international volunteers, including myself, piled into a taxi to head back to our base in Teshie. The taxi driver didn’t mind that we outnumbered the seats in his car, and we didn’t think twice about it. It was much cheaper than splitting up into two cabs, and the cramped conditions added to our sense of adventure. Little did we know how adventurous our ride would be.

Shortly after passing the military hospital at 37 (the name of a junction in Accra), a swerving car drove up next to us. For a moment we thought the man driving must be drunk, but the taxi driver promptly blurted out that this driver was forcing him to pull over.

We oburonis (the Twi word for foreigner/white person) exchanged confused looks, for the maniacal car was not a police vehicle. After both cars had pulled over to the side of the road, the man hurried over to the passenger-side window with great indignation. Furiously, he lectured us about our overcrowded car. “Ei! You cannot do this in your country, so why do you think you can do it here?” he shrieked. In Twi, I tried to apologize and butter him up. It only aggravated him more.

After further lecturing our driver dejectedly handed over his license in exchange for a business card. The man demanded that he come to his office the next day to ‘work out’ the incident. We knew this meant he was going to have to pay a bribe to get his license back. As the man stood back and watched with approval, some of our group filed out of the taxi and flagged down another.

As we pulled away, I looked down at the business card in my hand. It was such a shock that it took me a minute to process what I was reading. The maniacal driver was a gynecologist at the military hospital.

Everyone burst into hysterics at the absurdity of the situation, but our driver merely shook his head. A few minutes later, we drove up to a military “checkpoint” that had not previously been there. A couple of uniformed men peered into the windows with their flashlights, and then luckily waved us on. As we exhaled sighs of relief, our driver began to laugh, saying “God is good.”

The situation, he explained, could have been much worse had the gynecologist not intercepted us first. The fact that he was going to have to pay a random gynecologist to retrieve his license was, somehow, a blessing.

I’ve reflected more deeply upon this experience while interning for the Africa Department at CIPE and thinking and learning about the dynamics of corruption and how to tackle it. What intrigues me most about this episode of the taxi driver and the gynecologist is that it underlines the sociological impact of corruption on society. The driver knew that what happened to him was illegal, but after coming across the military roadblock he realized that having to deal with the gynecologist was much more preferable.

What was clearly bizarre to the passengers made perfect sense in a place where corruption has permeated all facets of life, from mismanagement of funds at the highest levels of government to average citizens paying daily bribes–even to gynecologists with questionable driving skills.

Is 2011 Ghana’s 1978? New National Pension Fund Scheme Could Repeat History


Traders work on the floor of the Ghana Stock Exchange in Accra, Ghana, June 15, 2006. (Photo by World Bank/Jonathan Ernst)

Editors’ note: this post originally appeared on Nextbillion.net.

1978. How many Nextbilllion.net readers weren’t even born yet that year? That was the year, for example, when Garfield the Cat made his comic-strip debut. Two Popes died that year. The Chinese government lifted its ban on works by Aristotle, Shakespeare, and Charles Dickens. Israel and Egypt made peace. Atlantic City, N.J. opened its first casino. 1978 also happens to mark the birth of today’s U.S. venture capital industry. 2011 could be that year for Ghana.

In 1978, the U.S. Department of Labor relaxed key provisions in the Employee Retirement Income Security Act, allowing pension funds to invest in private equity (PE) firms, including venture capital groups. The change caused a tsunami of capital to new and growing firms, as capital under PE firm management went from $39 million in 1977 to $570 million in 1978. Startup and growth capital in the U.S. has never been the same.

This year, key changes from Ghana’s 2008 pension law come into effect that might lead to a similar explosion in private equity and venture capital. The pension scheme is now mandatory for all public and private formal sector workers in Ghana; 13.5 percent of formal sector salaries will be deducted and placed under the management of Ghana’s Social Security and National Insurance Trust. An additional 5 percent of each formal sector worker’s salary will be deducted and placed under management of private institutional investors.

That 5 percent could be as much as $400 million annually for institutional investors, as Bloomberg News recently reported. About 25 percent of that will go into equities, implying $1.9 million in capital per week moving into a stock market with a current weekly turnover of only $1.8 million, according to the Bloomberg report. The rest of the estimated $400 million will go into local currency debt investments.

“The entry of new institutional investors is therefore expected to have a marked effect on the local equity market,” a local economist told Bloomberg. “The new fund managers are also expected to make markets more liquid, efficient and transparent, offer alternative sources of financing from local commercial banks and stimulate financial innovation.”

More competitive institutional investors and more liquid stock markets would be a boon for impact investors, who need buyers and liquid capital markets to make exits more frequent and more lucrative.

The new pension law also calls for a privately-managed voluntary pension scheme catering to the 80-plus percent of Ghanaians who work in the informal sector – i.e. Ghana’s BoP markets. Just imagine: retirement savings from Ghana’s BoP helping to finance Ghana’s new and growing businesses. Time will tell if the scheme will gain traction, but it’s tantalizingly close to reality.

Additionally, as workers never lose ownership of pension fund contributions, Ghana’s new pension scheme allows both formal and informal sector workers to use the value of contributions under private management as collateral to obtain a bank loan. The effect that has on bank lending to Ghana’s BoP still depends upon a range of other factors, but liquid collateral is a major step in the right direction.

There’s no guarantee that Ghana’s new pension law will produce the same results as the 1978 changes did in the U.S. Things could go smoothly for a few years until Ghana’s economy hits a rough turn, and if there were any weaknesses in the transparency or accountability of pension fund manager governance, operations, licensing or oversight, then the whole system could collapse. In a speech at the launch of the new pension scheme, Ghana President John Evans Atta Mills urged pending pension fund managers to take the lessons of the recent global financial crisis to heart.

Plenty of blog posts have provided glimpses of the development power of savings, including long-term savings for retirement, weddings, or funerals. Ghana’s new pension scheme builds on the power of savings, mobilizing capital domestically rather than channeling capital from abroad, and using local savings for much more than just microcredit or buying central bank bonds.

Global go-to think tanks: The CIPE partners

The Think Tanks and Civil Societies Program at the University of Pennsylvania released its 2010 rankings of think tanks around the world in January. The report identifies 6,480 think tanks in the world and notes the growing impact of policy research organizations, especially “as catalysts for political and economic reform.” Many CIPE partners are included among the leading 25 think tanks from each region; we congratulate them for their performance. Here are a few examples of how think tanks have been working with CIPE to improve democratic policymaking.

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Food for Thought

Dohinayili Tiwumti Women Rice Processors

Dohinayili Tiwumti Women Rice Processors at an advocacy workshop for farmer-based organizations in Ghana's rural north. (Photo: CIPE)

From May 5-7, 2010 leaders from across Africa and over 1,000 participants from 85 countries converged in Dar es Salaam, Tanzania for the 20th World Economic Forum on Africa, entitled, “Rethinking Africa’s Growth Strategy.”  Participants examined opportunities to unlock Africa’s growth potential.  African and international leaders are focused on a wide range of topics important to Africa’s growth and development, ranging from regional integration to how to create a more conducive business climate and how regulatory reform can encourage both local and international investment.

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Private-Public Dialogue in West Africa: Moving Beyond the Financial Crisis Toward Democratic Development

The global financial crisis in West Africa, despite being less severe or immediate than in the U.S. or Europe, has affected local economies, governments, and citizens alike. In this Feature Service article, Dr. Charles Mensa, founder and chairman of The Institute of Economic Affairs (IEA) in Ghana, talks about that impact and how to recover from the crisis. West African governments and the private sector must work together. The essence of such public-private partnerships is to figure out solutions to common problems through building strong organizational relationships, not just personal contacts. By cooperating in that way, businesses and governments can become partners in building a brighter economic and democratic future.

Article at a Glance

  • Although the global financial crisis has not been as severe in West Africa as in the United States or Europe, it does have an effect on remittances, manufacturing, and financing for business.
  • The crisis has not undermined the basic confidence of West Africans in democracy and market economy but it has highlighted the need for stronger governments.
  • Stronger government does not equal strongman rule or too much control over the economy; it means strong institutions that can make democracy deliver regardless of who is in power.