COUNTRY REPORT Ghana 4th quarter 1998 The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. The firm is a member of The Economist Group. 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ISSN 1350-7052 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK Ghana 1 Contents 3 Summary 4 Political structure 5 Economic structure 6 Outlook for 1999-2000 11 Review 11 The political scene 15 The economy and economic policy 17 Mining and industry 19 Energy 21 Agriculture 22 Business and finance 23 Foreign trade, aid and payments 25 Quarterly indicators and trade data List of tables 10 Forecast summary 13 Corruption perceptions index: selected countries, 1998 15 Inflation, 1998 18 Gold production, Jan-Jun 23 Ghana’s mobile phone services, 1998 24 Timber exports 25 Quarterly indicators of economic activity 26 Foreign trade 26 Direction of trade List of figures 11 Gross domestic product 11 Real exchange rates 24 Trade with the UK EIU Country Report 4th quarter 1998 © The Economist Intelligence Unit Limited 1998 Ghana 3 November 5th 1998 Summary 4th quarter 1998 Outlook for 1999-2000: The NDC will have problems maintaining party unity following the recent emergence of a new faction, the Reform Group. Vice-president Atta Mills must rally political allies if he is to secure the party leadership in 2000. President Rawlings will focus his attention on regional issues, while donor relations will continue to improve, despite increased domestic pressure to slow economic reforms. GDP growth is set to rebound to 4.8% in 1999, once the energy crisis is resolved, with a further acceleration in 2000. Inflationary pressures will remain strong in 1999, before weakening slightly in 2000. The cedi will lose value against the dollar, halting its real appreciation of the past two years. Cocoa and gold output will rise, but only modest improvements in prices are forecast. The political scene: The battle for the presidential succession is far from over as the Reform Group threatens to split the ruling NDC. The opposition NPP has elected John Kuffour as its candidate. Government relations with students and the press remain tense. Relations with Nigeria are improving. The economy and economic policy: Inflation has fallen, prompting a cut in interest rates. Economic policy management has come under renewed criticism. The cedi has continued its real appreciation, which is undermining export competitiveness. The tax burden on rural banks has been eased. Ghana shows improvement on the UN’s development index, but a cholera outbreak is reported in the north. Mining and industry: The mining sector has continued to face low gold prices and higher electricity costs, but gold production has risen. Steel and aluminium firms have been hit hard by the energy crisis. Energy: Although the energy crisis has eased considerably, industrial con- sumers are still suffering shortages. Electricity prices have been doubled. A proposed regional gas pipeline project seems to be making progress, but offshore oil results are disappointing. Ghana’s cities may face water shortages. Agriculture: The main cocoa marketing season has begun and a task force is to examine productivity-enhancing measures. The World Bank is assessing Ghana’s fishing development programme. Business and finance: A $320m loan has been arranged for Cocobod. The Securities Regulation Commission has finally been inaugurated. The stock- market had a bearish third quarter. Foreign trade, aid and payments: Togo was Ghana’s main export destina- tion in 1997. Timber export earnings are slightly up this year. New loans have been secured from Japan and China. Editor: Piers Haben All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 4th quarter 1998 © The Economist Intelligence Unit Limited 1998 4 Ghana Political structure Official name Republic of Ghana Form of state Unitary republic Legal system A new constitution, based on the US model, was approved by referendum in April 1992 National legislature Parliament; 200 members elected by universal suffrage every four years National elections December 7th 1996 (presidential and legislative); next elections due in 2000 Head of state President, elected by universal suffrage for a maximum of two four-year terms; currently Jerry John Rawlings, serving a second term National government Cabinet, partially appointed by the president in February-May 1997 Main political parties Progressive Alliance (PA), the ruling coalition, consisting of the National Democratic Congress (NDC, the majority party) and the Every Ghanaian Living Everywhere (EGLE) party. Opposition parties include: the New Patriotic Party (NPP); the People’s National Convention (PNC); the National Convention Party (NCP); the People’s Convention Party (PCP); United Ghana Movement (UGM) President Jerry John Rawlings Vice-president John Atta Mills Key ministers Attorney general & justice Obed Asamoah Communications Ekwow Spio-Garbrah Defence Mahama Iddrisu Education Christine Amoako-Nuamah Employment & social welfare Mohammed Mumuni Environment, science and technology J E Afful Finance Richard Kwame Peprah Food & agriculture Kwabena Adjei Foreign affairs Victor Gbeho Health Samuel Nuamah-Donkor Interior Nii Okaidja Adamafio Lands & forestry Cletus Avoka Local government Kwamena Ahwoi Mines & energy Fred Ohene Kena Parliamentary affairs Joseph Owusu-Acheampong Roads & transport Edward Salia Tourism Mike Gizo Trade & industries John Frank Abu Works & housing Issac Adjei-Mensah Youth & sports Enoch Teye Mensah Ministers of state without portfolio Daniel Ohene Agyekum Margaret Clarke-Kwesie Ebenezer Kobina Fosu Alhaji Abdullai Salifu Kwabena Fosu Mumuni Abundu Seidu Kofi Awoonor Central bank governor Kwabena Duffour EIU Country Report 4th quarter 1998 © The Economist Intelligence Unit Limited 1998 Ghana 5 Economic structure Latest available figures Economic indicators 1993 1994 1995 1996 1997a GDP at market prices (C bn) 3,674 4,950 7,417 10,384 13,876 Real GDP growth (%) 4.8 3.6 4.5 5.2 4.1 Consumer price inflation (av; %) 25.0 24.9 74.3 34.0 27.9b Population (m) 16.38 16.86 17.34 17.83 18.30 Exports fobc ($ m) 1,064 1,236 1,431 1,571 1,521 Imports fobc ($ m) 1,728 1,580 1,678 1,937 1,952 Current account ($ m) –558 –264 –144 –324 –383 Reserves excl gold ($ m) 409.7 583.9 697.5 828.7 500.0 Total external debt ($ m) 4,880 5,464 5,872 6,148 6,047 External debt-service ratio, paid (%) 20.7 22.9 21.4 24.5 27.4 Cocoa productiond (’000 tonnes) 255 290 404 340a 400 Gold production (m fine oz) 1.4 1.5 1.6 1.6 1.6 Exchange rate (av; C:$) 649.1 956.7 1,200 1,754 2,250b October 30th 1998 C2,340:$1 Origins of gross domestic product 1996 % of total Components of gross domestic product 1996 % of total Agriculture, forestry & fishing 40.6 Private consumption 74.0 Industry 14.2 Government consumption 11.0 Manufacturing 8.1 Gross domestic investment 17.0 Services 48.4 Exports of goods & services 26.0 GDP at factor cost 100.0e Imports of goods & services –28.0 GDP at market prices 100.0 Principal exports 1996 $ m Principal imports 1990 $ m Gold 612 Capital goods 544 Cocoa beans & products 552 Intermediate goods 356 Timber 147 Fuel & energy 210 Consumer goods 124 Main destinations of exports 1997f % of total Main origins of imports 1997f % of total Togo 13 UK 15 UK 12 Nigeria 14 Germany 10 US 10 US 9 Germany 6 France 7 Spain 5 a EIU estimates.