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Economic History highlights

Economic and Social Development (Before 1957)

1874 - Gold Mine in Wassa and Asante.

Between 1946 -1950 gold export rose from 6 million pounds to 9 million pounds.

1898 - 1927  Railway expansion in Ghana.

1928 - Takoradi harbour.

1878 - Tetteh Quarshie brought cocoa from Fernado Po.

1885 - Cocoa first exported to Britain.

1951 - Revenue from cocoa was 60 million pounds.

Cocoa Marketing Board (CMB) was founded in 1947.

1957 - Inherited 200 million pounds from Britain.


1957 to 1966

  • Development Projects/Policies:
  • socialist path to development
  • proliferation of state farms and industries
  • no linkages between farms and industries
  • universities and secondary schools (free for all)
  • health care facilities
  • negative NPV projects (e.g., Job 600)
  • WET (e.g., Akosombo Dam)
  • Price controls
  • emphasis on cocoa for export



  • inheritance is fully spent (no more free lunch for the future)
  • balance of payment deficits
  • inflation
  • disguised unemployment
  • Foreign debts


1966 to 1972

  • Privatization of state farms and industries
  • university student loan scheme
  • families asked to take more responsibility for education
  • proliferation of private medical practice
  • blue print for sewage system for the whole country
  • devaluation to solve inherited problems
  • elimination of price controls
  • emphasis on staples for domestic consumption



  • unemployment
  • foreign debts and servicing
  • cedi value allowed to fall
  • good excuse for military


1972 to 1979

  • Repudiate foreign debts
  • Operation feed yourself and industry
  • revaluation
  • price controls
  • import licensing
  • university loan scheme
  • CMB scholarships for education on whom you know basis
  • increase money supply



  • Kalabule
  • inflation
  • smuggling



  • seize assets from cheats
  • burn down makola, the citadel of kalabule
  • enforce tax code
  • price controls
  • rationing


1979 to 1982

  • relax price controls
  • reestablish credibility with donor and donor countries



  • inflation persists
  • balance of payment problems persist
  • kalabule persists


1982 to 1984

  • socialist path to development
  • price controls
  • rationing
  • PDC's in charge of distribution
  • WDC's in charge an as part of the IMCC
  • use of force to control prices, smuggling
  • confiscate 50 cedi notes
  • blame the rich



  • embargo on Ghana
  • Inflation
  • queuing
  • lack of medicine, food, transportation, etc.
  • Rawlings chain and necklace


1984 to 2000

  • Economic recovery program
  • free markets
  • layoffs at civil service
  • students bear more of cost
  • patients bear more of cost
  • stock exchange
  • more privatization of state industries
  • float the cedi
  • boost exports
  • VAT, then UNVAT



  • inflation
  • massive unemployment
  • schools/health care is broken down
  • interest rate at close to 50%
  • Goods available but not affordable


2001 - 2013

Following the successful completion of a two-term presidential rule — first time in post-Independence Ghana — and the peaceful hand-over of the reins of government across the political divide in 2001, the nation received what has been described as a “handsome democracy dividend”. In spite of this, or, perhaps because of it, fiscal excesses in the early years of the new Administration led to the failure and abandonment at the end of September 2002, of the three-year economic programme of 1999-2002 agreed with the International Monetary Fund (IMF) under its Poverty Reduction and Growth Facility (PRGF).  This debacle was largely on account of:

  • higher-than-budgeted for public sector wage bill; and
  • Subsidies to the petroleum, water, and the electricity sub-sectors.

A successor programme agreed with the IMF for the period 2003 to 2005 required the removal of the petroleum price subsidies as conditionality. A policy of import parity pricing, meaning a full pass through of changes in the cedi value of world market prices of petroleum and petroleum products to domestic consumers was instituted.  A mechanism to give effect to this policy was also put in place. Consistent with the poverty reduction objective, the mechanism included cross-subsidization of products of importance in the consumption baskets of the poor — such as kerosene.

Given the high social and political costs involved, however, the policy was not consistently implemented.  Subsequent continued increases in international prices of petroleum and petroleum products were not fully passed through to domestic consumers. The Government of Ghana, apparently, could not countenance any such domestic price increases since (as was communicated to the IMF and the development partners) in its view, this could be politically “destabilizing”. In January 2005, with the 2004 elections out of the way, petroleum product prices were increased, on average, by 50 per cent.

Thereafter, the policy of full pass through of price changes in the world market, once more, was not consistently implemented resulting in significant losses and debt at Tema Oil Refinery (TOR) currently estimated at GH¢1.4 billion.

These experiences in the oil sector, concerned with subsidies, fiscal discipline and macroeconomic stability, serve to illustrate the futility and unsustainability of pursuing the strategy of macroeconomic stability with growth. They also show the possible high cost of procrastination in responding to shocks whose consequences linger on — in other words, better considered as permanent rather than temporary shocks. A good rule in economic policy management is that permanent shocks call for policy adjustment; temporary adverse shocks are best financed. Delayed responses to a persistent or permanent shock could accentuate costs which could be destabilizing.

  • GDP growth for 2012 is estimated at 7.1%, driven by oil revenues, the services sector and the strong export performance of cocoa and gold. Ghana’s medium-term growth outlook remains positive, thanks to large investments in the extractive industries, public infrastructure and commercial agriculture.
  • The successful inauguration of President John Mahama in January 2013, following the death of incumbent John Evans Atta Mills in July 2012, indicates further consolidation of democracy. The depth and maturity of the country’s democracy are being further tested by the New Patriotic Party case in the Supreme Court contesting the election results.
Despite significant progress towards most of the Millennium Development Goals (MDGs), the country continues to be challenged by MDG 4, reduce child mortality; MDG 5, improve maternal health; and the sanitation component of MDG 7.