Rising inequality in Ghana

In much of the global south there are increasing income gaps between a small middle class and a growing mass of poor who cannot earn a living wage. Foreign investments in Africa and Latin America often focus on major infrastructure development projects that promise trickle-down development.  But what is this money producing?

Take the example of Ghana, a country that, for years, has been on the receiving end of such aid and investment targeting infrastructure. Yet, in practice, most Ghanaians do not reap the benefits. And, often, the money seems to simply disappear.  In Accra, Ghana’s capital, increasing poverty and lack of basic infrastructure and government services has led to profound and palpable public frustration. While Ghana is still touted as an African success story, the growing struggles of a majority of people show the country is being governed in a manner that is, in fact, increasing unequal.

Never was this more evident than on June 3, 2015 when heavy rains caused massive floods across Accra, killing more than 150 people. This included a particularly gruesome fireflood at a petrol station where many commuters had gathered, seeking refuge from rising water.  Meanwhile, major infrastructural projects focus on building roads, high-rise buildings and shopping malls. These projects do not take account of regular flooding from annual rains and indeed have contributed to the channeling of flood waters through central urban areas.

To local people it is not a surprise that major floods occur on a yearly basis. The flooding has increased alongside Accra’s rapid urban growth that has taken place with little concern for the environment or public safety. The government’s ajor highway projects, for example, often block waterways and drainage in surrounding residential and business areas and tend to cut off poorer populations. Development, when done wrong, does more harm than good.

How did this happen in a country upheld as the epitome of a growing free-market economy, and Africa’s trustworthy recipient of foreign aid and investment?

The floods marked the anniversary of Ghana’s June 4, 1979 popular revolution which aimed to eradicate corruption, mismanagement, and inequality. Yet these days, Ghanaians are increasingly vocal in criticizing Ghana’s President John Mahama for presiding over corruption and ineptitude on an order of magnitude even greater than that which inspired the 1979 uprising.  But the growing instability has largely gone unnoticed – or unacknowledged – by many outside Ghana.

We need to pay more careful attention.

With currency fluctuations and rising oil prices forcing up the cost of fuel, food and basic living costs, working people increasingly struggle to survive.  

Infrastructural problems are key signs of flawed economic management from the government. Instead of orienting policies to fix major long-term problems, policy-makers scramble to present Ghana as a stable place suitable for short-term foreign investment, even as investors see fewer reasons to enter the Ghanaian market.

Domestic policies and institutions are structured with an eye to marketing the nation to foreign investors whose interest is resource extraction rather than serving the needs of the people.

The recent attainment of lower-middle income status – a reward for poverty reduction and political stability – may have provided a sheen of stability and a greater ability to attract investment, but it can also prove a greater burden because of the increased exposure it brings to loan repayment and foreign demands.

Ghana’s government is caught in a cycle in which fiscal policies are oriented towards servicing debt and attracting more short-term foreign investment instead of creating institutions to support local people’s productive capacities and infrastructural needs. Ghana is being built as a location for foreign assistance, not as a nation heading for self-sufficiency.

And from the perspective of global finance capital, the major threat to a national economy is unpredictability. Ghana’s ongoing crisis of electricity shortages illustrates this point. The ongoing blackouts have been debilitating to the economy, destroying small businesses that cannot afford generators. The electricity crisis has been humorously dubbed “Dumsor,” a compound Akan language word meaning “off-on” to describe the current state of life as one of uncertainty and unpredictability. Power outages are so common that a joke is circulating about someone calling Electric Corporation of Ghana complaining their power has been on for too long and it should be turned off so they can save some for later.

The Ghanaian state is doing little to solve the crisis, which is stagnating the economy and causing anger and instability across urban Ghana, while the government is working hard to maintain a good image in the eyes of major investors and development agencies.

President Mahama has pledged to solve the energy crisis before the December 2016 presidential election. But his solutions show more concern with securing good favor for the elections, in which he will be vying for a second term, than addressing the structural issues.  And to tie a solution to this crippling problem to political campaigning shows the indifference of the current administration to people’s hardships.

At this rate, Ghanaians’ frustration will only continue to mount. Solutions seem far off in what was once seen as a rising economic star.

Shipley is a research scholar in residence at the Institute of African Studies at Columbia University.