Ghana Leaves Many Behind on Road to Startling Economic Comeback : Third World: Benefits of African nation’s restructuring haven’t filtered down. Western investors remain wary. : head

“Clandestine attempts by malefactors to sabotage the labor redeployment effort will be dealt with severely.”

If this stern warning posted in the lobby of the Ministry of Finance here has the tone of a wartime stricture, that is no mistake. Ghana’s anti-patronage campaign, which is designed to pare 100,000 excess workers from the civil service, has all the purposefulness of a military operation and the desperation of a last-ditch defense.

So far the defense is holding, even prevailing. For over the last five years Ghana has become, to use an increasingly common term, the “star pupil” of the World Bank and International Monetary Fund, the two multinational agencies whose difficult financial prescriptions for developing economies have been imposed on dozens of poor nations in Africa and Latin America.

The agencies’ programs generally require subject nations to sharply devalue their (admittedly overvalued) currencies, cut back their characteristically bloated civil service rolls and liberalize import restrictions.

Not more than a handful of developing countries have ever managed to stick the programs out long enough to see if they actually work because their short-term impact is almost always high inflation, high urban food prices, a surge in unemployment and, consequently, political instability.

Ghana comes closest in all Africa to showing that good marks in the IMF and World Bank books can translate into economic growth--in its case, gross domestic product expansion of 5% a year since 1985.

Still, the country is now beginning to show some of the familiar stresses and strains that have provoked nations like Zambia and Nigeria from time to time to abandon their IMF programs. With inflation having soared as high as 120% before settling down to about 30% last year, the lot of the poorly-paid Ghanaian worker has gotten worse.

Foreign investors wary of Africa’s endemic political instability and economic ineptitude have yet to acknowledge with new investments that Ghana has made a distinctive accomplishment--meaning that its recent growth is likely to slow sharply in the next few years.

And all this is coming as the 8-year-old government of Flight Lt. Jerry J. Rawlings faces increasing challenges over its legitimacy. Rawlings’ Provisional Military Defense Council still rules largely by fiat, and without a constitution. It has never discussed in earnest a return to civilian rule beyond establishing some local elected administrative boards. Recently there have been signs of unrest in the military.

Economic observers still back the government, reasoning that Rawlings’ display of personal rectitude and the council’s relative lack of corruption and extravagance are what have inspired the Ghanaians to support the recovery program so far, despite its harshness. But they fear time is running out.

“The window of opportunity can’t be much more than the next couple of years,” observes a prominent international banker here.

In some ways, Ghana’s program is a testament to the determination of people who have scraped bottom, like alcoholics who reform after finding themselves face down in the gutter.

For this country, the bottom came in 1984. Nearly 20 years of quasi-socialism, including the nationalization of scores of enterprises, had run the economy into the ground when a severe two-year drought struck in 1983.

Incredulity at how far the country has come since the early and mid-1980s is still the standard reaction from Ghanaians and outsiders alike.

“There was no food and no petrol, and two years of drought,” recalls a British businessman who has spent more than a decade in Ghana. “How these people survived and kept smiling was unbelievable.”

Not a few other African countries have seemingly scraped bottom and gone on, against all odds, to sink even lower, sticking to increasingly tired and useless prescriptions of “African socialism” and so on. Ghana was different.

“The self-evident failure of the former system was hard to argue with,” says G.K. Agama, the governor of the Bank of Ghana.

The result was an economic recovery program almost radical in its scope. Not only did Ghana devalue its currency roughly 100-fold, from 2.75 cedis per $1 to roughly 275, but it has tied the cedi to the open market by legalizing what in many other African countries is an illicit black market in foreign cash.

The devaluation itself demonstrated tremendous political courage. An earlier regime that tried a devaluation in 1971 was ousted within weeks of that step, and the lesson was not ignored for a decade. During that period the cedi stayed pegged at 2.75 to the dollar. Prices were so distorted that a one-carat diamond mined in Ghana and sold abroad netted just enough cedis to buy a half-dozen eggs in Accra, the capital.

In Ghana, almost uniquely in Africa, one can walk today into any of several hundred “forex” (for foreign exchange) bureaus and buy and sell as many dollars, pounds, or francs as one wishes.

That alone has helped revitalize parts of the economy. Tens of thousands of Ghanaians working abroad now send large remittances back to their families, confident they will get a fair price in cedis in transactions that no longer require keeping one eye out for the police.

Last year, their first in operation, the bureaus became Ghana’s second-largest earner of foreign currency after cocoa, bringing in more than $100 million in foreign remittances. This year, say economic sources, the total could be closer to $200 million, money that goes to help small businesses buy spare parts and raw materials abroad.

At the same time, the Rawlings government has instituted a determined “redeployment” of civil servants. More than 12,000 ministry workers a year have been laid off, most of them “extra drivers and extra cooks, that sort of thing,” says one economist here. In all, 53,000 government-paid workers have lost their jobs; many are being directed to return to their rural villages to take up farming.

For all that, today Ghana’s economic program is suspended in that difficult limbo between having come a long way and having far to go. That gives the country an air of having on display Africa’s full range of pitfalls and potential: its intractable poverty and the promise of its rich resources.

This is evident in Accra itself, where the legacy of Ghana’s post-colonial history lives cheek by jowl with its beckoning future.

To any first-time visitor the steamy, overgrown coastal capital resembles a dozen major African cities in dire need of a paint job. But to anyone who was here as recently as 1985, the place looks like a boom town.

“If you were here then, you’d never believe it today,” says John Richardson, a Ghanaian tobacco executive who heads the Assn. of Ghana Industries, in a typical comment. On street corners where people used to line up Soviet-style for such mundane necessities as toilet paper, there are shops with some of the best-stocked shelves in the region.

“Back then, you would see one car on the street . . . then 10 minutes later you would see a second one,” recounts Mawuli Addey, a social worker, as he waits in one of today’s more characteristic traffic jams of late-model Toyotas and Hondas and four-wheel-drive trucks. “You wouldn’t see any of these shops along the street. The street lights all along here would be dark.”

To a visitor returning after two or three years away, Accra is a paradise of consumer goods on display: not only staple foods, but stereos, televisions and musical instruments.

Unfortunately, one of the bleaker lessons of Ghana’s recent experience is that it takes many years for this veneer of recovery to filter throughout the population.

“The average Ghanaian feels he’s probably worse off,” says Richardson. “He sees goods in abundance, but he also sees the cost of utilities and school fees going way up.”

“If the ordinary worker can afford to buy anything in the shops, it’s just soap, sugar and rice,” says Augustus Kwesi Yankey, secretary general of the Ghana Trades Union Congress. “The TVs and radios are just for the well-to-do, mostly the traders.”

That is one of many signs that the immediate dislocations caused by the economic recovery program will get harsher before they get better.

“The meaning of ‘retrenchment and redeployment’ is supposed to be to move labor from one place to another,” remarks S.O. Nunoo-Quaye, head of the international department of the Trades Union Congress. “Actually, it’s termination. In this country we don’t have unemployment benefits, so when people are turned out, their fate is in their own hands.”

Echoes a local economist: “The economy here just hasn’t recovered to the point where there are jobs being created.”

Those who still have their jobs are scarcely better off than those without. Ghana’s wage scales are the lowest in West Africa by a wide margin. In 1988, when the minimum monthly wage for a laborer in Senegal was $111, in Ghana it was $17.09. A college professor here receives an average of $100 a month; the governor of the Bank of Ghana, one of the top fiscal officials of state, $150.

Part of the reason for the low wage rate is Ghana’s tradition of overstaffing public enterprises, the practice the redeployment exercise is designed to combat. As one labor leader puts it: “At all the boards and departments four people would be doing the work of one man, so they’d have to share one man’s salary.”

The gap between Ghana’s overt signs of prosperity and the lingering poverty of its average working people is not the only way in which the Ghanaian economy’s improvement is deceptive.

Virtually all of the country’s economic growth in the last three years is due to an enormous influx of foreign aid that kicked in when the Rawlings government implemented the IMF program. Ghanaian officials have been almost universally disappointed in the West’s failure to ante up the private investment that will lead the economy to the next plateau.

Part of the West’s reluctance to put private money where its public mouth is results from what the Bank of Ghana’s Agama calls his country’s “burden of history”: a legacy of African socialism characterized by the nationalization of foreign-owned businesses.

These then evolved into the overstaffed and inefficient state-owned enterprises--mining companies that produced no gold, power companies that generated no electricity, cocoa marketing boards that presided over plunges in productivity.

Compounding that problem is a style of East-leaning political rhetoric increasingly at odds with its West-oriented economic program.

Ghana’s political friends are not the people that Western businessmen like to hang out with: Libya, Cuba and so on. The national celebration of the 80th birthday of Ghana’s founder, the late African statesman Kwame Nkrumah, took the form of an international conference co-sponsored by the Libyans on “Imperialism, Zionism, and Apartheid.”

These factors reflect an enduring mistrust of foreign influence, another legacy of the independence struggle and even of Nkrumah’s pan-Africanist philosophy.

“If someone comes here for a week or two and talks to a lot of people, they’ll pick up on a lot of ambivalence about foreign investors,” says a European commercial expert in Accra.

Those who have begun to consider investing in Ghana are basing their decisions on less tangible qualities. Ghana’s educational system is still one of West Africa’s best, despite a decade-long brain drain.

Says one businessman here: “The people are friendly, warm and articulate, and that’s why so many people have placed their bet on Ghana.”