Ghana – which way now?

1. Ghana – which way now? Bob Digby Senior Vice-President Geographical Association

2. Frank Agyekum"Ghana has done well. It’s a thriving democracy with a stable economy; kids go to school and are fed.” • Samuel Ablakwa "So many kids are still on the streets hawking. I'm still carrying buckets of water on my head! Maybe our economists are cooking the figures." Ghana @50: Success or failure?

3. Some background Size: 230 000 km2 (nearly that of the UK) Population: 24.9 million (about 40% of the UK’s) Scale: 0 100 miles

4. How far has Ghana come in 50 years? • How far can Ghana be considered ‘independent’? • Which way should it go from 2011 onwards? Focus for tonight

5. Economic progress?

6. Trade pattern (typical of a developing economy) • has barely changed in 100 years • Primary product exports dominate • Imports remain mainly manufactured goods • An example of dependency theory: developing • countries remain dependent upon developed • nations for trade. Key economic issues

7. Social progress?

8. Colonial times: Ghana the world’s largest producer of cocoa • Britain dictated the global cocoa price 2010: the world’s second largest producer • Who controls Ghana’s cocoa trade now? Ghana’s cocoa trade

9. Upward pressure • Price of cocoa decided in commodity trading exchanges in London and New York • Buyers buy cocoa for companies e.g. Cadbury or Nestle • Traders compete for supplies • Cocoa prices depend on global supply and demand, which vary Downward pressure • Other countries produce cocoa e.g. Ivory Coast now the world’s largest producer • If Ghanaian prices are too high, dealers purchase elsewhere Who controls trade? 1

10. Global price of cocoa is volatile • 1991-5: the price of cocoa changed 60 times • 1996-2002: it changed 90 times • Between Jan 1991 and Dec 1993 it increased by 112% • Between June 1998 and Dec 2000 it fell by 32.5% Cocoa price 1971-2004 Global price patterns Cocoa price Sept 2007-Jan 2008

11. Unstable prices cause: • irregular income for workers • low tax returns for government • poor government planning. Impacts upon people?

12. Sustained chocolate consumption • Western Europe & US are biggest markets; Asia, E Europe & Latin America growing rapidly • Consumers react badly to high prices or shortages • Very strong response to FairTrade brands but not to unknown brands • Opportunities for Ghana to market its own chocolate are few. Why not market Ghanaian chocolate?

13. Poverty in developing countries caused by a reliance on developed economies • Trade in primary goods keeps countries poor, because no value is added by processing or manufacturing. • Therefore, no jobs & profit for investment • Countries trapped in a vicious cycle Dependency theory

14. Andre Frank’s ‘Development theory’ • Colonialism causes low levels of development, • Keeps colonies poor • Tariffs (duties) on imported manufactured goods used to protect from cheaper imports Development Theory

15. In 2011 • EU Import tariffs on cocoa beans are lower than on processed cocoa. EU uses 'tariff escalation' • 0% duty on imported raw cocoa beans • 7.7% on cocoa powder • 15% on chocolates • Japan & USA – no duty on raw cocoa beans but tariffs of up to 65% on imported chocolate Who controls trade? 2

16. WTO (World Trade Organisation) • Ghana joined the WTO in 1995 • Previously, subsidies paid to farmers to grow food • WTO policy – abolish subsidies, develop free trade Who controls trade? 3

17. Allows ‘domestic support’ for producers. • Three categories: Green, Amber and Blue. • Green – subsidies for environmental reasons, e.g. if farmers reduce grain output and plant woodland; • Amber – subsidies that governments have agreed to reduce but not to cut. • Blue – subsidies given where production will be reduced in the long-term. Impacts • EU and USA still subsidise farmers $400 billion annually • 50% of EU subsidies go to largest 1% of producers • 70% of US subsidies go to largest 10% • Large farmers produce huge volumes, which governments buy and ‘dump’ on poorer countries as ‘aid’ WTO ‘Agreement on Agriculture’

18. Reduced domestic prices • Farmers put out of work. • Ghana’s tomato-growers can’t sell produce, as EU tomatoes are cheaper • Canning factories closed • Rice growers also flooded by imported rice from the US Impact of WTO Policies

19. To develop, countries seek a virtuous cycle whereby they keep surplus production, and invest in processing and manufacture, adding value. • Many cocoa farmers now form co-operatives. • Kuapa Kokoo (‘good cocoa farmers’) began in 1993; now has 40 000 members, producing 1% of global crop. • Strong bargaining power, selling to European FairTrade companies. • 1998 The Day Chocolate Company formed in UK, making ‘Divine’ chocolate. • Provides members with cheap loans, improved drinking water in rural areas, & health insurance. Where next?

20. Aid or investment? • Supplied mostly by western countries • Wealth created by employment in construction, manufacturing or developing primary products. • Wealth ‘trickles down’ via job creation, spending and increased demand. • Known as the ‘multiplier effect’ How to develop in future?

21. Top-down: • Occurs where strategic decisions are needed, about e.g. improving health care or schooling or infrastructure (e.g. provision of energy). • Decisions come from above • Imposed on communities • Useful for major projects Bottom-up: • Occurs at community level by identifying people’s needs • Develops small-scale projects to meet needs • Decisions and working come from communities and by NGOs (Non-Governmental Organisations) e.g. charities Top down or bottom up?

22. Aid or investment?

23. Built 1961-66 from both aid & investment • Multi-lateral – World Bank (loans – US$40 million), Ghanaian government (investment – US$69 million) & aid from USA and UK governments. • Akosombo Dam created Lake Volta, the world’s largest artificial lake. • Designed to provide HEP for smelting raw bauxite into aluminium Case Study: the Volta Dam

24. Benefits

25. Problems

26. Benefits for Ghana?

27. 2005: Ghana’s government bought 90% of shares in VALCO smelter from Kaiser, hoping to re-start it • 2006: Production started • 2007: Ghana purchased the remaining 10% • 2008: Plant closed because of low water levels in Lake Volta caused by drought preventing electricity production • 2009-10: Low global prices of aluminium and bauxite kept it closed • 2011: reopened with 1 of the 6 smelters working Time to forge ahead?

28. Ghana was one of the first countries to have many of its debts cancelled after the 2005 G8 conference • In 2006, this saved Ghana US$166m in interest alone • Investment by the government in people and the economy possible • Debt cancellation took place on condition that all savings spent on improved education and health care Is there future hope?

29. Ghana’s Needs Safe Water • 2008: only 50% of Ghana’s population had access to safe, treated water • 60-70% of urban dwellers have access but only 35-40% in rural areas. • Even in urban areas, only 40% have a water tap that flows • Affluent Ghanaians buy from private sellers because public supply is so irregular • 78% of the urban poor have no piped water. • A Millennium Development Goal – to bring clean water to all by 2015 The World Bank says • Water treatment must not lead to increased government expenditure or debt • Loans for water systems only if they are privatised • People now have to pay for connection and supply – which many cannot afford. • Jobs are threatened as the new owner cuts costs & maximises profit. • Plans are to privatise only the urban water and sanitation systems. • What happens to rural water supplies? Joined-up thinking?

30. 54 years since independence • Loss of British control • Debts mostly cancelled • Rapid economic growth caused by global commodity prices • Greatly improved social indicators • Several targets still ahead – e.g. water • Has spent most of that time in debt • Control of the country’s largest development projects in the hands of the USA • Future development influenced by the US-controlled World Bank • China seeking to influence Africa – and its resources So who’s in charge?

31. What change lies ahead for them?

32. Thanks to the following; all images are for educational reference and use only • Photos from Ellie Doidge • Images and references ‘A2 Geography for Edexcel’ (2009) Oxford University Press) • CIA Factbook for Ghana 1987 and 2011 Acknowledgments