Contents - Previous - Next
This is the old United Nations University website. Visit the new site at http://unu.edu
Like the economy as a whole, the industrial sector in Ghana has been the subject of much inquiry (in chronological order, see Birmingham et al., 1966/7; Steel, 1977; Page, 1980; Andrea, 1981; Ewusi, 1986; Meier and Steel, 1989; Steel and Webster, 1990; Mosley, Harrigan and Toye, 1991; Sowa et al., 1991 and Rothchild, 1991). As mentioned already, industrial output as a whole has been growing since the adoption of the Structural Adjustment Programmes in Ghana. Within the industrial sector, it is small and medium scale industry that are increasing in proportion, and large scale industry that is static. The increase in output of the small and medium scale portion has been primarily through increase in the number of firms; entry into Ghanaian industry has been very rapid in recent years, but once established, the firms tend to remain fixed in size and employment. Large scale firms in Ghana have shown little resilience under the Structural Adjustment Programme. The liberalization of imports has permitted increases in foreign products with which they compete, often with disastrous results for the local industries. A headline from a newspaper (the Weekly Spectator, number 1233, Saturday, 9 November 1991) is 'factories collapsing... over 120 out of business'. The beginning of the article reads as follows:
Over 120 industries in the country have closed down since 1988 due to their inability to sell goods they produce. The industries affected include those of garment, leather, agricultural, electrical, electronic, metal and pharmaceuticals. Prominent among them are the Match Factory, Crystal Oil Mills, Ever Ready Battery, Ayrton Drug manufacturing, all the machine shops, Ghana Candle and Brush Company. Others are the Glamour garment factory, Ghana Umbrella Factory, Benya distilleries, Baston Terrazo Works, Akropong farm ltd. and African Motors. A spokesman of the Association of Ghana Industries who disclosed these in an interview on Thursday said that unfair trade competition from unchecked imported items into the country has contributed to this situation.
Even allowing for journalistic exaggeration, the majority of large Ghanaian firms competing with foreign producers have not fared well. The few that have prospered are those that have been endowed with exceptionally talented leadership and foreign technology (Lall et al., 1994).
It is a temptation to blame all of the business failures upon the Structural Adjustment Programme in general and upon the liberalization of imports in particular. What those who have studied the changes in Ghanaian industry since the adoption of the Structural Adjustment Programme, and those who are employed within industry, are coming to realize is that the industrial structure of a country cannot be changed overnight. Embodied in the law, in custom, and in the behaviour of Ghanaians, as well as others in Sub-Saharan Africa, are elements which prevent the quick and easy transfer of resources from one line to another, or from one sector to another, or from one type of enterprise to another. Take as an example the legal requirements on payment of redundancy, for those whose employment is terminated, and for retirement, for those whose working life is ended. Laws passed by the Ghanaian parliament in the late 1950s and early 1960s entitle employees who are declared redundant to payments amounting to approximately five years' wages or salary. Payments to those retiring are, upon their retirement, approximately twice as large. To reduce employment, a large firm, which would be expected to conform to legislation, would incur substantial costs, with no immediate return. It is no surprise that large firms when faced with these costs of retrenchment, prefer to operate for some period and then to close down permanently. The choice for them is not between running at a profit and running at a loss, but between incurring a substantial loss in the short period, through redundancy, and incurring a gentler loss over a much longer period, through unchanged operations with the original workforce, followed by exit from the industry.
It may well be asked why, in a study of the pursuit of science and technology, we direct so much attention to industry in Ghana. Part of the answer lies in the fact that many of the scientists and engineers who have been educated in Ghana are probably working in the industrial sector. We have data on the numbers of scientists and engineers in two countries in our sample of four, Ghana and Kenya. Expressing the number of scientists and engineers in each of the two countries on the basis of a million persons, Ghana has 403; Kenya 26 (UNESCO, 1990). Although Kenya's population is slightly larger than Ghana's, even in absolute numbers the number of scientists and engineers in Ghana exceeds that in Kenya, and probably in our other two countries as well, by an order of magnitude. With so many scientists and engineers, somewhere close to 10,000 in total, many must be employed within Ghanaian industry.
Our focusing on Ghanaian industry is also in part because industry affords an indicator of the success with which science and technology in Ghana have progressed in the past. To the extent that advances in science and technology occur in the industrial sector, and to the extent that they are applied within the firms operating there, we would expect Ghanaian industry to be relatively efficient, adaptable, and technically knowledgeable. To the extent that these virtues are not apparent, we would be forced to conclude that advances in industrial science and technology have not percolated down to the workplace. We should then search for reasons, which we might find in a lack of resources devoted to advancing industrial science and technology, in a failure to disseminate those advances that were obtained, in advances that are inappropriate for the Ghanaian industrial regime, in a disinterest in their application by Ghanaian firms, or in any combination of these. To the extent that reason or reasons have been suggested, we shall cite them; to the extent that these forces have been altered, for the better or for the worse, by the adoption of Structural Adjustment Programmes, we shall try to acknowledge them.
The structural adjustment programmes
After the Ghanaian government realized that its own efforts at adjustment would be insufficient, it appealed to the IMF and the World Bank, who imposed their first Structural Adjustment Programme in 1983 (negotiations over this and subsequent programmes are described in Martin, 1991). The conditions which were attached to this first and the subsequent seven loans from the World Bank are summarized by Toye (Mosley et al., 1991: 173) as nine major policy themes, governing:
1 the producer price of cocoa;
2 the cocoa marketing costs of the Ghana Cocoa Marketing Board;
3 the removal of subsidies and price controls;
4 the trade and foreign exchange regime;
5 cost recovery and removal of subsidies in health and education;
6 public sector programming;
7 state enterprise divestiture;
8 public sector management; and
9 banking reform.
Like most of the very poor countries which submit to the IMF and World Bank's conditions, Ghana's attempt at compliance has been sincere and success in compliance has been relatively high. The meeting of some of the conditions can be seen in the macro-economic statistics already cited; for example, in 1986 the Ghanaian government ran a budget surplus, the first year on record (see Table 3.8 above). Imports, particularly those of industrial commodities, have been liberalized, with the dire results for that portion of Ghanaian industry in competition with imports noted above. Employment in government and in the para-statal sector is slowly being reduced; for example 5,000 'ghost-workers' (imaginary persons, whose wages were appropriated by real persons) and 5,000 'retirees' (employees who had officially retired and received the appropriate financial emoluments, but were still receiving wages or salaries from the firm) had been taken off the rolls by 1991.
Other conditions have been much more difficult to fulfil (see, e.g. Rothchild, 1991: 9-14). As has happened in many Sub-Saharan African countries, Ghana's deficit and the balance of payments has risen rather than fallen, by extremely large amounts in the last two years (see Table 3.5 above). This is a common experience in the years following import liberalization and a substantial devaluation of the local currency, bringing it more nearly in line with free market rate: the volume of imports is quick to respond to the first of these regulatory changes; the volume of exports slow to respond to the second. Increases in the volume of Ghana's main export earner, cocoa, have been achieved, but the world market price has fallen, more than cancelling the increase in value terms.
Another change that will take a long time to come about, a change that is just as necessary as increasing Ghana's exports, is improving the ability of Ghana's civil service to plan the government's and the para-statal's future, and then to make the decisions and execute and monitor the programmes that will follow. These activities require many civil servants with technical as well as administrative skills; both these skills take time to acquire and perfect; the Ghanaian government and its ancillary institutions cannot be expected to improve their performance overnight. The acquisition of these skills may depend on previous advances in science and technology, and for these the time scale is even longer.
We have described enough of the recent economic history of Ghana to recognize the fragile nature of the economy; the inefficiencies, improprieties, and degradations that have occurred in the years since independence; and the substantial difficulties that lie in the face of adjustment. That these adjustments to the structure of the Ghanaian economy are necessary appears to all observers to be true; that it will take a long time to secure such an adjustment is beginning to be recognized also. But then the long horizon stretches before us, as well, when we consider the future of science and technology in the country. This consideration will begin in the next section, when we report on our inquiries into the activities of Ghana's R&D institutions.
Contents - Previous - Next