These workshops included the Inflation Management Workshop and the National Forum on the State of the Economy in May 1996; the employment seminar of the influential Tripartite Committee (composed of government, the trade unions, and the employers’ association) in August 1996; the Forum for Policy Dialogue: Toward a Re-energized Partnership for Rapid Economic Growth in March 1997; and Ghana Reaching the Next Level Through Global Competitiveness: A Public-Private Sector Partnership in June 1997.

This exercise was part of an international initiative carried out in Ghana and seven other developing and transition countries–Bangladesh, Ecuador, El Salvador, Hungary, Mali, Uganda, and Zimbabwe–under World Bank sponsorship.

The Civil Society Coordinating Council (Civisoc) was formed to represent civil society interests in the SAPRI exercise. It has a membership of 25, drawn from the labor movement and associations of business, agriculture, students and youth, women, and Christian and Muslim groupings, as well as sector development NGOs. Kwesi Adu-Amankwah, the Deputy-Secretary-General (Operations) of the Trades Union Congress, chairs the council.

The local government law of 1988 created the district assemblies, whose responsibilities include preparation of development plans that take into consideration development needs identified by the local communities.

Membership in the committee includes representatives of the Ministry of Food and Agriculture, the Ministry of Local Government and Rural Development, the Ministry of Employment and Social Welfare, the Ministry of Environment, Science, and Technology, the NDPC, the National Council on Women and Development, the Ghana Statistical Service, and the National Population Council.

A comparative analysis of the first three GLSS surveys showed that the overall incidence of poverty in the country declined from 37 percent to 31 percent from 1988 to 1992. The new approach anchored the poverty line on caloric requirements, thereby defining a nutrition-based poverty line. It focuses on the expenditure needed to meet the nutritional requirements of household members and was set at ¢700,000 per adult per year for the 1998/99 survey year. Persons whose total expenditure falls below this level are considered extremely poor. An upper line was also established which incorporates both essential food and nonfood needs and was set at ¢900,000 per adult per year.

For example, in Côte d’voire, Ghana’s neighbor to the west, the share of agriculture in value added is close to half that in Ghana, and manufacturing represents a much larger share of output.

The drought also highlighted some structural problems with the tariff-setting system of public utilities: in spite of increases in January 1998, electricity prices in Ghana were among the lowest in Sub-Saharan Africa, and the Volta River Authority, the region’s main producer, was accumulating losses. However, since 1998 the government has been implementing an extended program of tariff increases to bring prices more in line with regional averages and to restore economic viability to the electric company.

World Bank and IMF data in constant 1975 cedis.

Domestic purchases of cocoa are undertaken by privately owned licensed buying companies (LBCs) and the Produce Buying Company (PBC), a public entity whose majority shares were sold recently; the Cocoa Marketing Company (CMC) has the monopoly of exporting cocoa. Minimum domestic cocoa purchase prices are announced by the Government before the beginning of the small crop season, which starts in June, and are based on projections of export prices, marketing costs, and costs related to extension services. In case actual export prices turn out to be less (more) than projected export prices, cocoa export tax would bear the burden (gain). Bulír (1998) showed that cocoa production trends in Ghana can be reasonably explained by price incentives: the real international price for cocoa, the real producer price, and the smuggling incentive, which is measured by the differential between Ghanaian and Ivorian producer prices in dollar terms.

Other important factors are the exchange rate and domestic prices for other goods, as these determine how much the cocoa farmer receives in terms of other goods he or she can purchase. For simplicity’s sake, marketing costs cited here will include marketing, extension services, and other financial costs.

The comparison is subject to uncertainty because data on Côte d’lvoire cocoa export proceeds were only available in CFA francs, and their conversion to dollars depends on the exchange rate used. For this study it was assumed that one-third of the crop was exported in the first calendar year and two-thirds in the next; the exchange rate used took this assumption into consideration.

LMC International Ltd., The External Marketing of Ghana’s Cocoa, June 1996.

The rate for commerce, printing, and publishing was reduced from 50 percent to the standard rate of 35 percent, and that for the financial sector from 50 percent to 45 percent.

The super sales tax, with rates of 10–40 percent, was abolished. The rates of the special tax on imports, which also had ranged from 10 to 40 percent, were reduced to a maximum rate of 10 percent, and import duties and sales tax on all building materials were eliminated.

Subvented agencies are independent agencies of government that receive subsidies from the budget to cover at least part (and often all) of their expenditures. The gratuities amounted to over 3 percent of GDP. The government agreed to spread these payments over four years, with 20 percent of the total being paid out at the end of 1992 for state enterprises and 25 percent for subvented agencies. The remainder, together with interest of 16 percent a year, would be paid in three equal installments over a 2½-year period.

The Cocoa Board cut about one-third of its labor force in August 1993 to reduce operating costs. The associated unemployment payments, amounting to 0.3 percent of GDP, had not been foreseen.

These organizations encompass 22 ministries (including the Office of the President), 48 departments and agencies, the 10 regional coordinating councils, and the 110 district assemblies. Subvented agencies and state enterprises are not covered.

The National Communications Agency was set up in 1996 by the National Communications Act of 1996, and the Public Utilities Regulatory Commission and the Energy Commission were established in 1997, by Acts 538 and 541 of 1997, respectively.

During 1966–72, some attempts had been made to introduce market-oriented reforms and to reduce state intervention in the economy through privatization. These attempts largely failed because of poor execution and lack of commitment.

During 1985–89, net outflow from the government to 14 core state enterprises–which accounted for 60 percent of employment, 72 percent of sales, and 67 percent of value added by the sector–averaged about 11 percent of total government expenditure; by 1989 that figure had reached 17 percent. For details see International Development Association (1991) and International Monetary Fund (1996).

The others included Tema Food Complex Corporation (for $14 million), Ghana Oil Palm Development Corporation ($7 million), GNTC Bottling ($7 million), Ghana National Manganese Company ($4 million), and Ghana Rubber Estates Ltd.(F21 million).

Among these are Ghana Airways, Electricity Company of Ghana, Tema Oil Refinery, Ghana Commercial Bank, Ghana Railways Corporation, State Shipping Company, and State Insurance Company of Ghana.

State enterprises passed on by the SEC to the DIC for divestiture often could not be sold without difficulty. For example, some enterprises did not have title to the land they occupied, where as others lacked audited financial records for some years.

Key companies floated on the Ghana Stock Exchange to date include Ashanti Goldfields Company, Aluworks Company, Ghana Aluminum Company, Ghana Commercial Bank, Social Security Bank, and the Produce Buying Company.

From September 1994 to the end of March 1995, the Ghana Investment Promotion Center registered 834 projects, whose total value was estimated at ¢1.3 billion. Foreign investment in these projects was $1.0 billion, one-third of which was in the form of direct investment and the rest in the form of loans. About 77 percent of these projects have been implemented, creating some 51,000 jobs, more than 48,000 of which were filled by Ghanaians and nearly 3,000 by expatriates. The remaining 15 percent of the projects were being evaluated, and 8 percent had been abandoned. For details see de Dianous (1999).

Data on the performance of these four divested enterprises were drawn largely from materials from the DIC.

The current structure of the DIC does not provide for a deputy executive secretary who could make decisions in the executive secretary’s absence. Also, all senior staff of the DIC report to the executive secretary. This structure does not lend itself to a smooth flow of information and decision making, especially when the executive secretary is absent.

As part of the bank restructuring initiative, the Bank of Ghana acquired shares in some commercial banks. This operation was conceived as a temporary step, but the shares remain with the central bank to this day, giving rise to a potential conflict of interest. However, the Bank of Ghana expects to sell all its shares in commercial banks shortly, as pan of the financial sector divestiture program.

The ownership shares in Ghana International Bank are as follows: Bank of Ghana, 51 percent; the Social Security and National Insurance Trust, 15 percent; GCB, 20 percent; ADB, 9 percent; and the State Insurance Corporation, 5 percent.

This calculation excludes Foreign currency deposits. The ratio including foreign currency deposits was 23.5 percent in 1999, but a comparable figure is not available for 1980.

The apparently slow pace of financial deepening has to be assessed in light of the economic dislocations of the 1970s and 1980s. The substantial fall in the currency-to-GDP ratio in recent years is evidence of increasing financial sophistication.

This figure rises to 50 percent of deposits and assets if one includes banks in which the government has a minority shareholding. For purposes of this study, NIB is still considered a public sector bank, as its ownership was changed only in January 2000.

The nonperforming loans removed at the time of the restructuring represented about 41 percent of total credit extended to state enterprises and private firms (World Bank, 1994). The nonperforming loans removed in January 2000 represent about 5 percent of total loans to the private sector.

The calculation of the minimum capital requirement does not follow the recommendations of the Basle Committee on Banking Supervision, although in practice it has resulted in levels of minimum capital in excess of the Basle Committee’s recommended 8 percent risk-weighted assets-to-capital ratio.

See Kapur and others (1991) for details of the evolution of the exchange rate system.

The trading patterns and their relative weights for the calculation of the REER are those used by the IMF’s Information Notice System. Major trading partners, listed from most to least important, are the United Kingdom, Germany, the United States, Japan, France, the Netherlands, Italy, Canada, Belgium, Brazil, Korea, Australia, Switzerland, China, Spain, Sweden, the Taiwan Province of China, Malaysia, Austria, and India.

The unit labor cost index is defined as the ratio of the index of monthly compensation per worker to the index of monthly production per worker in the manufacturing sector. The calculation of this index for Ghana for the period 1992–97 assumes that the growth rates of monthly compensation per worker and the number of workers in the manufacturing sector are equal to the growth rates of the average monthly salary of contributors to Ghana’s social security system and the number of contributors to the system in the manufacturing sector, respectively. The trading partners used in the calculation of the unit labor cost index-based REER are those used by the IMF’s Information Notice System, excluding Brazil, China, Malaysia, and India. Selection of trading partners was limited by the availability of data.

Ghana’s major trading partner is the United Kingdom, which has almost a 17 percent weight in the effective exchange rate index. The major trading partner of Burkina Faso, Côte d’lvoire, and Togo is France; that for Nigeria is again the United Kingdom.

For details see Ghana Statistical Service (1999).

The first National Economic Forum took place in November 1997 (see section I).